Reference ID Created Released Classification Origin
OO RUEHCHI RUEHFK RUEHHM RUEHKSO RUEHPB
DE RUEHML #2776/01 2270849
ZNY CCCCC ZZH
O 150849Z AUG 07
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7886
INFO RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION IMMEDIATE
RULSDMK/DEPT OF TRANSPORTATION WASHDC IMMEDIATE
RHMFISS/FAA NATIONAL HQ WASHINGTON DC IMMEDIATE
C O N F I D E N T I A L SECTION 01 OF 02 MANILA 002776
SINGAPORE AND TOKYO FOR FAA REP
E.O. 12958: DECL: 08/15/2027
TAGS: EAIR ECON RP
SUBJECT: PHILIPPINE AIRLINES CHAIRMAN CONVEYS CONCERNS ABOUT POSSIBLE FAA DOWNGRADE
REF: STATE 77690
Classified By: CDA Paul Jones, reasons 1.4 C,D
¶1. (SBU) Summary: Philippine Airlines Chairman and Chief
Executive Officer Lucio C. Tan met with Embassy Manila Acting
Deputy Chief of Mission Jon Lindborg, Econ, and FCS late on
August 13 to express his alarm over recently learning of a
possible Federal Aviation Administration (FAA) International
Aviation Safety Assessment (IASA) downgrade of the
Philippines from Category 1 to Category 2. He offered his
personal assurance that the problems noted by the FAA would
be corrected within six months if the FAA decision could be
delayed for that long. Post in turn emphasized need for
Philippine Aviation Transportation Office to take actions to
address long standing regulatory and safety oversigh
defficiencies. Action request para 6. End Summary.
Negative Impact on Philippine Economy
¶2. (SBU) To open the meeting, Tan provided Embassy with
copies of a page taken from a draft of FAA report indicating
serious deficiencies were found in Philippine air safety
regulations during a July 2007 assessment. He did not say
where he obtained this report, but expressed shock that he
had been told that a downgrade would take place immediately
once the negative report was made public by the FAA in the
near future. Tan noted this action would have serious
financial implications for his company and negative
implications for the overall Philippine economy in terms of
tourism and tourism related travel. He said that a downgrade
would make it difficult to use the new Boeing 777 planes that
his airline had recently agreed to purchase for new routes to
the United States. However Post noted that first delivery of
the 777 order is not expected untill early 2009.
Tan wants to make a deal
¶3. (SBU) Speaking in Chinese, Tan offered that in exchange
for a six-month “grace period” in announcing the FAA finding
he would give his personal guarantee that the Philippine
Government would take all necessary steps to overcome the
problems listed in the FAA report, including new legislation
that would give more power to Philippine Aviation
Transportation Office (ATO, the civair regulator) and its
hiring of better qualified technicians. He said he would
meet with the Philippine President to ensure the government
understood the seriousness of the issue and what steps needed
to be taken.
¶4. (SBU) Embassy explained that the FAA had been warning for
years that the Philippines was at high risk of being
downgraded and that we all wanted to see the safety
deficiencies resolved as quickly as possible. Embassy agreed
to report Tan’s concerns back to Washington agencies and
inform him of the response.
FAA Report Status?
¶5. (SBU) In June, Embassy delivered to Philippine Government
officials reftel talking point that “The Embassy will provide
FAA’s written assessment report to the GRP within two weeks
following the completion of the assessment team’s visit”.
The assessment team visit took place on July 23-27, but
Embassy has not yet received such any such report.
Embassy comment and action request
¶6. (C) Tan’s willingness to offer his personal guarantee of
extensive Philippine Government action reveals the kind of
political influence he has traditionally wielded. His
linkage between his purchase of Boeing aircraft and the FAA
downgrade shows the type of deals he is used to making.
Embassy believes Tan has the influence to get the Philippine
Government to implement some of the safety reforms that the
FAA has been asking of the ATO for years.However given to
fact that new legislation and regulatory reforms may well be
required his actual span of influence may be more limited.
Embassy requests a timely response from Washington agencies
to the Tan proposal described in para 3. Since the negative
FAA report has appeared now leaked to some business people
Embassy also requests a copy of the report and talking points
for explaining it.
MANILA 00002776 002 OF 002
Bio Note on Lucio Tan
¶7. (SBU) Lucio C. Tan (Pinyin: Chen Yongzhan) is one of the
best known and richest Chinese-Filipino businessmen in the
Philippines. In 2007 Forbes magazine listed him as the 407th
richest person in the world. He was born in Fujian Province,
China in 1934 and considers the Fujian dialect as his native
language. In addition to Philippine Airlines, the Lucio C.
Tan group of companies includes extensive agribusiness,
banking, chemicals, education, food, and retail businesses.
According to his published biography, in his capacity as vice
president, president, and now honorary president of the
Federation of Filipino-Chinese Chambers of Commerce and
Industry, Mr. Tan has worked toward fostering friendly
relations between his adopted and native countries.