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Viewing cable 05MANILA4421, Aviation Safety Raised with Transport Secretary

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Reference ID Created Released Classification Origin
05MANILA4421 2005-09-20 01:28 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Manila
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS SECTION 01 OF 04 MANILA 004421 
 
SIPDIS 
 
Sensitive 
 
STATE FOR EAP/PMBS 
STATE ALSO PASS USAID FOR AA/ANE and AA/G 
TREASURY FOR OASIA 
TRANSPORTATION FOR FAA 
SINGAPORE AND TOKYO FOR FAA 
 
E.O. 12958: N/A 
TAGS: EAIR PGOV EINV RP
SUBJECT: Aviation Safety Raised with Transport Secretary 
 
REF: A) Manila 3760 
     B) Manila 3838 
     C) Manila 3955 
 
Sensitive but Unclassified - Not for Internet - Protect 
Accordingly. 
 
------- 
Summary 
------- 
 
1.  (SBU)  During the Charge's call, Department of 
Transportation and Communications (DOTC) Secretary 
Mendoza addressed concerns on aviation safety, pledged 
continued support for transportation security 
initiatives, and expressed commitment to infrastructure 
construction.  Mendoza admitted that the 40% or 300- 
person shortfall in air traffic controllers was 
"dangerous" and said he had asked President Arroyo to 
fund an additional 150 controllers.  The long-stalled 
aviation bill would provide a permanent solution to 
staffing shortages and salary concerns by allowing an 
independent civil aviation authority to determine 
spending needs.  Mendoza said a local firm had agreed to 
buy out the German investor in the new airport terminal, 
paving the way for its completion and opening.  Japanese 
contractors had agreed to finish and refurbish the 
terminal by early 2006; the government would be the 
operator.  Mendoza did not oppose negotiating an Open 
Skies agreement, but did not appear convinced there were 
clear benefits for either side.  End Summary. 
 
------------------------------------- 
Air Traffic Controllers Under Control 
------------------------------------- 
 
2.  (SBU) In a meeting with Charge September 12, 
Department of Transportation and Communication Secretary 
Mendoza admitted that budget constraints and emigration 
have led to a 40% deficit in the number of air traffic 
controllers (ATC) needed to sufficiently staff all 
airports.  He is trying to address this 300-person 
shortfall by bringing in 40 ATCs from the Philippine Air 
Force.  Mendoza recognized that having the ATCs work 
overtime to make up the deficiency is "dangerous" so 
other solutions eventually must be found.  He said he 
wrote a letter to the President asking for a supplemental 
budget to hire 150 new air traffic controllers, even if 
he must forego infrastructure funds.  In particular, the 
country needs additional ATCs to manage the new radar 
system recently installed at the international airport at 
Clark.  According to Mendoza, following his appeals to 
their patriotism, ATCs for now are not planning any 
strikes or work slowdowns (ref a-b). 
 
3.  (SBU)  Mendoza believes Congress should expedite 
passage of the Civil Aviation bill to resolve this issue. 
The Philippines is one of the few countries in the 
International Civil Aviation Organization (ICAO) without 
an independent Civil Aviation Authority (CAA), he noted. 
The Civil Aviation bill would allow the Air 
Transportation Office (ATO), which earns twice as much as 
it spends, to hire and pay controllers from its own 
revenues.  Mendoza said that under a restructuring plan, 
the government would downsize some DOTC divisions but 
would increase the size of the ATO to meet international 
standards of aviation.  At present, the government is 
constrained by its salary standardization scheme that 
keeps controller salaries at less than 10% of their 
counterparts in other countries.  He said that nobody 
should be surprised that many newer and younger 
controllers try to emigrate.  In response to the Charge's 
question, Mendoza said there was no direct opposition to 
the bill, but Congress has not treated it as a priority. 
 
4.  (U)  ATCs serve seven international and fifteen 
domestic airports in total, Mendoza said.  The airport 
that needs more staff is Clark, which is becoming the 
"new gateway" to the Philippines.  It currently serves 37 
flights with 22,000 passengers each week.  He expected 
the number of flights to increase to 50 per week by 
October.  Clark serves the new discount airlines bringing 
in less affluent tourists from Korea, Taiwan, Hong-Kong, 
and Macau.  They may choose to stay at gambling and golf 
resorts at Clark, connect by plane to Palawan, Cebu, and 
Bohol, or shuttle to Manila by car on the tollway. 
 
---------------------------- 
Terminal Completion Underway 
---------------------------- 
 
5.  (SBU)  Mendoza confirmed that the Manila Hotel 
Corporation (MHC) had purchased all the shares of the 
German investor Fraport in the new airport terminal at 
Ninoy Aquino International Airport in Manila (ref c).  He 
said despite proposals by private sector firms, the 
government has decided to operate the new terminal, 
though "maybe in time" the GRP would privatize the 
operation.  Mendoza said he understood the MHC's 
agreement with Fraport and the Philippine International 
Airport Terminal Company (PIATCO) called for the 
cancellation of arbitration involving the GRP initiated 
in Washington, D.C. and Singapore that sought "just 
compensation."  He said he had not seen a copy of the 
agreement.  Mendoza said the government signed a contract 
with Japanese contractor Takenaka last week to finish the 
construction and refurbish the new terminal's computer 
systems.  The contract is subject to the court's 
approval, but the DOTC already received clearance from 
the Supreme Court to fund the construction, so Mendoza 
did not foresee any problems moving forward.  The DOTC 
received a loan from the Development Bank of the 
Philippines to fund the project.  Mendoza also suggested 
the government could withdraw unused funds from an ADB 
loan for this purpose. 
 
6.  (SBU)  Mendoza said the new terminal would be ready 
to open in four months.  He expected the government to 
start signing lease agreements with the airlines for 
space in the new terminal.  According to Mendoza, the 
owner of Philippine Airlines (PAL), Lucio Tan, visited 
the new terminal site for the first time recently, was 
favorably impressed, and agreed to move PAL international 
operations to NAIA Terminal Three.  Eventually, the 
government plans to relocate all international flights to 
Terminal Three, move all domestic flights to Terminal 
Two, close Terminal One, and build a Terminal Four for 
Philippine Air adjacent to Terminal Three. 
 
----------------------------------- 
No Lift-off for Air Transport Talks 
----------------------------------- 
 
7.  (SBU)  As chairman of the panel responsible for 
aviation negotiations, Mendoza said that he recently 
wrote a letter to the Department of Foreign Affairs (DFA) 
requesting another round of talks.  Now that the cargo 
carriers have their Open Skies agreement, future 
negotiations should focus on "more services and points of 
entry" for passenger flights.  Despite the Charge's 
explanation that the US does not allow cabotage (domestic 
service by a foreign carrier), Mendoza said he hoped the 
US would allow Philippine air carriers to fly passengers 
beyond original points of entry in Guam and Honolulu to 
final destinations at other US cities. 
 
-------------------------- 
Support for Port Security 
------------------------- 
 
8. (SBU)  Charge complimented the DOTC for its 
cooperation in transportation security areas, including 
its support for a US Department of Energy "Megaports" 
program in Manila to screen for nuclear materials. 
Mendoza noted that the Philippines has a fledgling Office 
of Transportation Security (OTS) modeled after the US 
Transportation Security Administration with the 
Department of Homeland Security.  OTS Undersecretary 
Cecilio Penilla, who joined the meeting, praised efforts 
by the US Transportation Security Agency (TSA) to 
encourage compliance among airport officials with 
international standards.  He admitted, for example, that 
Philippine culture normally disallows security checks of 
VIPs, but this attitude is changing, in large part 
because of training of investigators and quality control 
screeners through TSA.  Penilla also told the Charge his 
office had achieved 70% compliance under the STAR 
Initiative, which aims to enhance security while 
increasing trade among APEC countries by protecting 
cargo, ships, planes, and people in transit.  The OTS 
embraces security issues and has fully applied the 
International Ship and Port Facility Security (ISPS) Code 
to domestic shipping. 
 
9.  (SBU)  Charge noted that President Arroyo has 
indicated that she is prepared to sign the Proliferation 
Security Initiative.  Penilla said OTS supports the 
initiative and is coordinating with the DFA to work out 
the language for the Letter of Agreement. 
 
---------------------------- 
Telecom Progress and Digress 
---------------------------- 
 
10. (SBU)  In response to the Charge's query on moving 
the National Telecommunications Commission (NTC) back 
under the supervision of DOTC, Mendoza demurred that it 
was not his area.  When pressed, he argued that the move 
will have little impact on the NTC.  He said there is 
confusion regarding supervisory authority already since 
the NTC is a regulatory body that already reports to 
another regulatory body - the Commission on Information 
and Communications Technology (CICT).  The operational 
side of NTC will remain under CICT, he said, but DOTC 
will oversee the administration.  Mendoza said the GRP 
will conduct competitive bidding for 3G frequency band 
licenses soon, but he expected domestic telecom 
companies, faced with international competition, to seek 
a temporary restraining order. 
 
11.  (SBU)  Regarding both the recent promotion of Voice 
Over Internet Protocol (VOIP) and the upcoming 3G 
licensing tender, Mendoza said there is great excitement 
among families with overseas foreign workers (OFW) about 
the expected reduction in international phone charges. 
Mendoza said some Philippine OFWs in Hong Kong spend 30% 
of their salaries on phone calls home.  Mendoza said the 
Philippines welcomes US companies to participate in this 
sector, especially because they operate "above board" 
with no strings attached.  The telecom industry is 
booming, with 32 million subscribers already. 
 
------------------------------- 
Rolling out the Roads and Rails 
------------------------------- 
 
12.  (U)  Mendoza noted that the Arroyo Administration 
considers the Roll-On, Roll-Off (RoRo) or "nautical 
highway" system very successful.  Since implementation, 
the cost of commodities has dropped 30-40% and tourism 
has increased to 18,000 passengers per day.  Mendoza 
noted that a trip to Boracay Island now costs $13 using 
the public bus system and RoRo. 
 
13.  (U)  Mendoza said the Subic-Clark highway 
construction is already underway; projects to widen the 
Southern Luzon Expressway and connect it to the port in 
Batangas should be completed by 2010.  Work on the North 
Rail stalled over the relocation of "squatters," 
estimated in the hundreds of thousands, but Mendoza 
expects to settle this issue soon so work can continue. 
In the future, the urban rapid transit lines, the North 
Rail, and the National Railroad will all meet at a rail 
terminus in Manila. 
 
------- 
Comment 
------- 
 
14.  (SBU)  Although Secretary Mendoza was frank and 
informative, he did not completely dispel our concerns on 
aviation  safety.  Even if the funding request for 
additional air traffic controllers is approved, the 
Philippines would still have 150 fewer ATCs than 
necessary, even fewer if attrition continues because it 
takes many months to train new controllers.  Secretary 
Mendoza appeared overly optimistic on the new airport 
terminal as well.  Airlines will be unwilling to relocate 
and risk interrupting business during the upcoming peak 
travel season (December - April), pushing the start up 
date to mid-year 2006 at the soonest.  The incorporation 
of NTC back into the DOTC could set back liberalization 
of the telecommunication sector with VOIP and 3G 
technology. 
 
15.  (SBU)  In view of Mendoza's characterization of the 
ATC shortage as "dangerous" and other discussions with 
GRP officials (refs A and B), post continues to work with 
regional FAA officers to monitor safety issues to ensure 
that the Philippines is meeting International Civil 
Aviation Organization standards. 
 
Johnson