Sep 202014
 

http://wikileaks.org/cable/2009/07/09MANILA1390.html#
Reference ID Created Released Classification Origin
09MANILA1390
2009-07-01 05:18
2011-08-30 01:44
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Manila

VZCZCXRO3013
OO RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHML #1390/01 1820518
ZNR UUUUU ZZH
O 010518Z JUL 09
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4527
INFO RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC IMMEDIATE
RUCPDOC/USDOC WASHDC IMMEDIATE
RHMFIUU/TSA HQ WASHINGTON DC IMMEDIATE
RHMFIUU/FAA NATIONAL HQ WASHINGTON DC IMMEDIATE
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS IMMEDIATE
RUEHKO/AMEMBASSY TOKYO IMMEDIATE 3717
RHHMUNA/USPACOM HONOLULU HI//FPA// IMMEDIATE
UNCLAS SECTION 01 OF 02 MANILA 001390

SENSITIVE

SIPDIS

STATE FOR EAP/MTS AND EB/TRA
SINGAPORRE AND TOKYO FOR FAA

E.O. 12958: N/A
TAGS: EAIR ECON EINV ETRD RP
SUBJECT: Philippine Civil Aviation Update

REFS: a. 08 MANILA 02115, b. 08 MANILA 01619
c. 08 MANILA 01496 d. 08 MANILA 00548

¶1. (SBU) Summary: The progress of the Philippine civil aviation
regulator towards regaining a U.S. Federal Aviation Administration
‘Category 1’ safety rating has been stymied by bureaucratic
obstacles that block essential salary increases needed to attract
and retain qualified personnel. There is little chance of the
Philippines regaining a Category 1 safety rating unless these issues
are resolved. Aside from the safety implications, this obstacle
complicates pending U.S. aircraft deliveries and undermines hopes
for new air routes between the U.S. and the Philippines. Embassy
continues to work with stakeholders to advance needed safety
reforms. End summary.

Reform Stalled
————–

¶2. (SBU) Although reform-oriented legislation that became law in
April 2008 abolished the troubled Air Transportation Office (ATO)
and replaced it with the Civil Aviation Authority of the Philippines
(CAAP, ref D), further progress in implementing the reforms needed
to regain a Federal Aviation Administration (FAA) Category 1 safety
rating has proven difficult. The legislation that created the CAAP
provided it with additional revenues and a degree of independent
authority, but CAAP Director General Ruben Ciron has been unable to
push forward needed personnel changes. Long-term ATO employees
absorbed into the CAAP have raised numerous legal challenges to
further reforms, particularly any moves to replace unqualified
employees with qualified ones. Aviation industry sources believe
these employees would lose opportunities for income (the fees they
earn for certifying aircraft and pilots) and perhaps their jobs if
the reforms were fully implemented, and so they resist the reforms
as a matter of self-preservation.

CAAP Personnel Still Unqualified for Duties
——————————————-

¶3. (SBU) One of the critical deficiencies in the Philippine
regulatory agency identified by the FAA was the lack of qualified
personnel to conduct certification inspections of aircraft and
certification checks of pilots. According to International Civil
Aviation Organization (ICAO) and FAA regulations, these
certifications must be performed by inspectors or ‘check pilots’ who
themselves have been certified as qualified to maintain or fly the
type of aircraft inspected. The ATO and CAAP have been unable to
offer competitive salaries to attract such experts, who can easily
find much higher paying employment in the private sector, either in
the Philippines or in other countries.

¶4. (SBU) The issue of adequate salaries was supposed to be
addressed in the legislation that created the CAAP. However, the
old ATO employees have challenged the new qualifications and salary
standards and insisted on the right to be re-trained and receive
preference for employment at CAAP. The authority of the CAAP to
offer higher salaries had to be clarified by Congress earlier this
year, and is now pending further review with the Civil Service
Commission and the Department of Budget and Management. Assuming
these reviews confirm a higher salary structure is allowed, it will
still likely take several months to find, hire, and train qualified
inspectors and check pilots.

¶5. (SBU) Our sources also believe that CAAP Director General
Ciron’s lack of commercial aviation experience limits his ability to
oversee operations and realistically evaluate progress towards
regaining a Category 1 rating. According to these sources, there is
no one on the CAAP governing board who understands civil aviation
safety, security, and airline operations fully enough to accurately
measure the progress of safety reforms.

Attempts to Reform Provoke Retaliation
————————————–

¶6. (SBU) Attempts to change the status quo have provoked
retaliation from long-term employees of the ATO/CAAP in the form of
allegations of the Director General’s misconduct, according to our
sources. In March 2009, Director General Ciron suspended his CAAP
second-in-command for alleged corruption. Shortly afterwards a
letter accusing Ciron of hiring many of his military friends without

MANILA 00001390 002 OF 002

regard for their qualifications was sent by CAAP officials and
employees to Civil Service Commission. In recent weeks, several
allegations of impropriety against Ciron have been reported in local
media. Industry sources have told us that the CAAP
second-in-command has powerful supporters in the top levels of the
Philippine government which make him a formidable opponent.

Pending U.S. Aircraft Deliveries and Routes Affected
——————————————— ——-

¶7. (SBU) As long as the CAAP remains in FAA Category 2, Philippine
Airlines (PAL) cannot implement its plans to add additional flights
to the United States. PAL has a contract with Boeing for the
purchase of two Boeing 777-300ER aircraft, with an option for two
more aircraft. PAL also has a separate agreement to lease two
additional Boeing 777-300ERs from General Electric Capital Aviation
Services. Delivery of the first 777-300ER is scheduled for later in
¶2009.

¶8. (SBU) Although our sources report that PAL still wants the new
Boeing planes because they are more fuel efficient than the planes
it currently uses, PAL will not be able to utilize them on routes to
the United States, as originally planned . Among other
implications, this restriction particularly affects the city of San
Diego, California, which has been pressing for a new Manila-San
Diego route, and had already received encouragement from PAL
regarding the new route.

ICAO October Safety Review
————————–

¶9. (SBU) The next scheduled review of Philippine civil aviation
regulation will occur in October 2009 when ICAO is scheduled to
conduct its Universal Safety Oversight Audit Program (USOAP)
examination. Industry sources tell us that there is little chance
the Philippines will receive high marks on this review because of
the well-known problems and the delays in implementing needed
reforms. The implications of a poor score on this USOAP review
include that other nations may follow the FAA in downgrading the
safety rating of the Philippine regulator and that the FAA will
likely decline to re-evaluate its rating of the Philippines until
there is material evidence of a significant improvement in the
regulatory situation.

Comment
——-

¶10. (SBU) Although, under strong Embassy urging the Arroyo
administration acted promptly to pass reform-oriented legislation
needed for improving its civil aviation administration, it has not
done well in implementing the reforms envisioned in this
legislation. Within the Philippine government, high-level interest
in the issue of air safety seems to be fading as the administration
shifts its focus to the 2010 presidential election. While we will
continue to press for full implementation of the needed safety
reforms, they seem effectively blocked for the time being by an
entrenched bureaucracy that benefits from the status quo and which
is backed by senior figures in the Arroyo administration.

KENNEY

   

 

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