| ||||||
The franchise is expected to boost Seair’s value, making it more attractive to potential buyers, according to an airline official and a legislator who coauthored a bill granting the franchise.
Seair owners, led by the foreign partnership of Iren Dornier and Nikos Gitsis and the Filipino group of Tomas Lopez Jr., have been trying to negotiate for a buyout of their shares with prospective investors, after their talks with Filipino-Chinese businessman Alfredo Yao fell through in May. Dornier and Gitsis own 40 percent of Seair while the rest of the shares are owned by Lopez’s group. Yao wanted to merge the operations of Seair with that of Zest Airways, formerly Asian Spirit, which he acquired in March 2008.
As this developed, a Seair official said the airline is still on an expansion mode and unaffected by the current global economic crisis which is seen dampening tourism worldwide. In its October 2008 report, the World Tourism Organization projected global tourism growth slowing down to a range of zero percent to 2 percent for 2009, from a revised growth of 2 percent to 3 percent in 2008. Average tourism growth from 2004 to 2007 was 7 percent.
Interviewed over the weekend, Seair president Avelino Zapanta said the law granting the carrier’s congressional franchise was recently signed by Sen. Manuel Villar, “among his last acts as Senate President,” and is now in Malacañang “awaiting the signature of President Arroyo.”
He said the Senate virtually adopted House Bill (HB) 3788, coauthored by Reps. Eleajandro Jesus Madrona, Ferjenel Biron, Teodoro Locsin Jr., et al.—who comprise the House Committee on Legislative Franchises—which is “more complete than that of the Senate’s bill.”
Through Committee Report 97, HB 3788 was endorsed for approval by the Senate Committee on Public Services, chaired by Sen. Juan Ponce Enrile, on August 28, “without amendment, taking into consideration Senate Bill (SB) 2376.” The latter was coauthored by Senators Ponce Enrile and Juan Miguel Zubiri. SB 2376 is likewise a proposed legislation granting Seair the “franchise to establish, operate and maintain domestic and international air transport services, with Clarkfield, Pampanga as its base.”
Seair’s congressional franchise has a term of 25 years upon the law’s effectivity.
Meanwhile, in a text message from London, Locsin said the congressional franchise “gives Seair permanency,” such that its operations cannot just be indiscriminately cancelled by any government agency without due cause.
This was echoed by Zapanta, who said the franchise gives the airline “a sense of legitimacy; that we’re not operating like a colorum anymore.” Colorum is a Filipino term usually applied to jeepneys and buses which do not have the license to ply certain routes. While it flies without a congressional franchise, Seair has a certificate of public convenience and necessity from the Civil Aeronautics Board (CAB), allowing the carrier to operate scheduled flight services.
Locsin added that with the franchise, the airline “can also borrow [loans], as well as sell its equity at a premium.”
Asked about the advantage of having a congressional franchise, considering that Seair has been operating and expanding since 1995, Zapanta explained that while “some banks will probably consider that [an airline’s franchise] before extending a loan, until you sell that airline, that value [of having a congressional franchise] is not actually manifested. It strengthens your value.”
The airline executive agreed that now that Seair has acquired its franchise, its owners could demand a higher price from potential buyers. When Yao group’s offered to buy out Seair’s owners, the latter were only offered $2 million (worth P84.63 million in May) in cash. With the congressional franchise, industry analysts estimate that Seair owners can now command even “three times that amount.”
Zapanta said the congressional franchise also gives the airline tax incentives such as duty-free importation of capital equipment and income tax holidays.
Locsin, meanwhile, said the franchise would enable Seair to continue flying, fostering competition among the airlines. “I believe that when you have more competition in the industry, it can only result in better service for the airline travelers.”
Meanwhile, Zapanta said Seair remains optimistic about the local and regional tourism market despite projections that the global financial crisis will slow down international travel beginning next year. “We’re bullish and even expanding our routes. We recently were allowed to operate in Singapore, for instance.”
On November 28, the airline will commence flights to Kota Kinabalu; in April 2009, Singapore and Macau; August 2009, Bangkok and Hong Kong, as well as Cebu and Davao; and in September 2009, “we’re looking at Inchon, Kuala Lumpur and Kaohsiung,” he added. All new flights will be out of the Diosdado Macapagal International Airport in Clark, Pampanga, which has more liberal aviation policies.
He stressed that the regional flights are “basically a Seair operation,” but using two aircraft, Airbus 320s, leased from Tiger Airways, a budget carrier based in Singapore. On July 31, the CAB approved the lease agreement between Seair and Tiger Air, two years after both carriers signed it. Local airlines had been opposing the agreement, saying it was a prelude to granting fifth freedom rights to Tiger Air, which they claimed would fly local destinations using Seair.
Fifth freedom rights allow an airline to pick up passengers from one country, transport them to another country, pick up passengers there, and fly to yet another country, like Philippine Airlines’s Manila-Vancouver-Las Vegas-Manila route.
Under the terms of its congressional franchise and in accordance with provisions in the Philippine Constitution on public utilities, Seair is also mandated to offer at least 30 percent of its outstanding capital stock to the public, “within five years from commencement of its operations.” But under the rules of the Philippine Stock Exchange, a company may list its shares in the market after three years of continued profitability. However, in certain instances, this requirement has been waived, as in the case of mining companies and small and medium enterprises.
In May this year, Seair owners rejected the offer of Yao to purchase 60 percent of the airline, because they felt it was a very low price for their shares. While the agreement between both groups was for Yao to purchase Seair for $3.75 million (P158 million then), the actual cash involved would only be $2 million.
| I Found this little Gem by Jarius Bondoc Updated November 21, 2008 12:00 AM |
Manila International Airport Authority came out with guns blazing at me in Wednesday’s Letter to the Editor — toy guns, that is. Atty. Melvin Matibag, head assistant, inexpertly tried to debunk my column of Nov. 12 about their squeeze play on a private firm. Stern but shallow language.
My article was about MIAA’s moves to force out the private Security & Safety Corp.-Philippines. SSCP has been providing security services to foreign airlines for decades, with ten client-airlines at present. MIAA has taken interest in the lucrative business, for an influential person. Instead of vying for the airlines’ attention, it is employing foul means.
Last Sept. MIAA deputy Angel Atutubo announced from out of the blue the impending repeal of SSCP’s accreditation as NAIA concessionaire. Meaning, SSCP guards may no longer enter airport premises to secure the counters, gates and hangars of its client-airlines. Atutubo claimed without showing proof that SSCP had committed many security breaches.
Tony Maniwang, SSCP president, learned about it only from a news bit in The STAR. Writing Atutubo, he asked what was up for he’d never been told of SSCP’s supposed lapses. In the habit of his DOTC bosses of flouting the Code of Conduct for Public Officials and Anti-Red Tape Law, Atutubo did not find decency to reply. Then on Nov. 5 Matibag summoned the clients to a meeting that same day on the bar on SSCP starting 2009. Six came to hear his unsubstantiated badmouthing; two protested that they be left to hire the security firm of their choice.
Next day Maniwang again wrote Atutubo pleading for due process such as a formal investigation before canceling his permit. Still no response, although Atutubo was just somewhere at the airport trying to justify his abduction of Jun Lozada in Feb. Only on Nov. 11 did Matibag, not Atutubo, finally correspond with Maniwang. Apart from mentioning a “consolidated derogatory report,” he gave no details, of SSCP’s supposed “malpractices”.
Then a Japanese passenger was caught on Nov. 8 trying to sneak out P1 million at NAIA. The smuggler cried that airport cops directly under Atutubo manning baggage x-rays — not any of the private airline guards — mauled him inside the toilet to steal the cash. Newsmen got wind of it only because the guy filed a complaint. Atutubo’s men had been accused in the past of international white slavery, extorting from outbound workers, and stealing from carry-on bags. One of the latest modus was inserting bullets into the bags of aged passengers, then demanding grease money to drop charges.
In his letter, Matibag tried in vain to belie my story. He claimed that SSCP engages in human smuggling, extortion and “baggage fixing”, whatever that is. Supposedly SSCP’s airline clients lose revenues and their security is imperiled. “We can sustain these claims, if it warrants,” he said emptily.
Any good lawyer would present evidence to bolster his arguments. Matibag should have attached official reports, if any, of SSCP’s alleged faults and let the documents speak for themselves. He didn’t. When an aide e-mailed me Matibag’s letter Monday, I immediately asked her to tell him to give proof. What he sent back was an unsigned “consolidated derogatory report” that lists supposed infractions by SSCP guards, but no investigation details. (He gave no explanation of the new crime of baggage fixing, which in plain English simply means repairing broken suitcases.)
It was Maniwang who gladly dug up from his files old memos from MIAA cops about the supposed breaches in the “consolidated report”. He was confident these were far from “derogatory”. Most, in the cops’ own words, were nothing more than their mistaken suspicions of wrongdoings. In each case, though, they either warned the SSCP guard or took back his NAIA access pass for a week as punishment. SSCP took it all in stride as part of business hassles. Little did Maniwang suspect these would one day be used to make his security firm look like a fiend and kicked out of NAIA.
Meantime, Matibag might chew on real documentary evidence. His letter made it look like SSCP’s ten client-airlines are blaming it for losses. Well, six of them have issued certifications of SSCP’s satisfactory work. Eva Air, Etihad Airways, Malaysia Airlines and Asiana Airlines did so in late Sept. upon learning of Atutubo’s dark designs. Saudi Arabian Airlines and Singapore Airlines followed suit after my exposé came out. The staff of the four others has informed their overseas bosses of MIAA’s plan to monopolize security services. They worry that no one will secure them once SSCP guards are disaccredited.
There’s more. Matibag also wrote: “Be informed further that approval of accreditation of NAIA’s security provider is not the sole responsibility of MIAA but also of the PNP-Aviation Security Group.” Well, it’s he who must be informed: on Nov. 7 the PNP-ASG too issued a certification of SSCP’s good conduct. Chief Insp. Romeo Desiderio, as head of the ASG’s Security Agencies and Guards Supervision Branch, stated: “This is to certify that SSCP has no pending administrative case filed with this office as of this date. No SSCP private security personnel have been involved in any illegal activities within our AOR. No complaint has been filed in this office against the subject private security agency as of this date.” What does that make of the criminality claimed by Atutubo and Matibag? How come they haven’t reported to the real police?
In a disclosure to the local exchange, Cebu Pacific’s holding firm, JG Summit Holdings, Inc. said the airline had lost P1.87 billion in the nine month period — a turnaround from the P2.53 billion profit the company made in the same period last year.
"[These losses were] due to higher operations-related expenses, particularly, fuel cost which posted a 96% increase" to P6.53 billion this year from P3.33 billion last year, the parent firm said.
Jet fuel prices peaked at $180 per barrel in July, or near double its price from a year ago.
Today however, jet fuel, which is more expensive than regular gasoline, has gone down to $84 per barrel, or just under 20% lower than its price a year ago.
"Cebu Pacific recognized a foreign exchange loss from its dollar denominated obligations amounting to P1.57 billion during the period compared to a foreign exchange gain of P1.06 billion recorded last year," the company said.
Excluding the foreign exchange and mark-to-market effect, the airline would have posted a net income of P187.71 million for the nine months.
The airline’s costs and operating expenses went up 47.33% in the nine-month period, to P13.23 billion from just under P9 billion last year.
The airline posted a 28.3% increase in revenues for the nine-month period to close to P14 billion, from just under P11 billion in the same period last year, "brought about by additional routes and flights."
The company is looking to grow its passenger base to 7 million passengers a year by the end of 2008, from the five million passengers it carried all of last year.
The Gokongwei-led carrier plans to do this by expanding to more routes and fielding a total of six aircraft — four 72-seater ATR Turboprops and two 180-seater Airbus 320s — which the company expects to be delivered next year.
The Gokongwei-owned airline is being barred, however, from using the airport's rehabilitated terminal building since it stands on property owned by rival carrier Philippine Airlines.
Because of this, Cebu Pacific has had to locate its terminal operations--like passenger check-in, pre-departure, and arrival services--under a tent adjacent to the newly refurbished passenger terminal, which is owned by the state-run Civil Aviation Authority of the Philippines (CAAP).
At present, passengers waiting to board Cebu Pacific's Monday-Wednesday-Friday ATR 72 turboprop ferry flight between Cebu and Ozamiz sit on benches outside the airport's perimeter fence while waiting to board the aircraft.
"What we don't understand is why we're not being allowed to use a facility that was built using public funds," said Cebu Pacific vice president for commercial planning Alex Reyes.
Nonetheless, he expressed optimism about the potential of passenger traffic between both cities, given the traditional trade links of Cebu with Visayan-speaking residents of Ozamiz in Misamis Occidental.
Both inbound and outbound inaugural flights last Wednesday were fully booked, despite the conditions at the Ozamiz airport.
During ceremonies to mark the inaugural flight, Misamis Occidental governor Loreto Ocampos vowed to remedy the situation, saying that the current condition--where one airline uses a government facility and another uses makeshift tents--was unacceptable.
"What we will do is that [the provincial government] will just buy this property so that everyone can use it," he said in Visayan.
Ocampos pointed out, however, that the provincial government presently does not have the funds for such an undertaking, adding that he would ask President Macapagal-Arroyo for additional resources to boost the budget of the local government.
The CAAP expressed resignation over the issue, saying PAL's stand was affirmed by the Office of the Government Corporate Counsel.
"CAAP did not bar Cebu Pacific from using the Ozamiz terminal building, but they were made aware that CAAP sought the legal opinion of the OGCC on the legality of allowing them to occupy a space in the terminal building," the agency's legal chief Deo de Ocampo told the Inquirer.
"Records appear that the terminal building was constructed at the time when PAL was majority-owned by the government," he added. "PAL is claiming ownership over the terminal building based on legal principle. The accessory, terminal building, follows the principal, land."
Philippine Airlines' subsidiary Air Philippines operates flights between the city and Manila using a Boeing 737--a service that Cebu Pacific, so far, cannot match because the 1.8-kilometer runway of the Ozamiz airport is not designed to to handle the weight of an Airbus A320.
Philippine Airlines did not respond to requests for comment on the issue.
Clark International Airport Corp. (CIAC) officials said they were looking for a new builder after Admiral Energy LCC, the US firm which won the bid last September, was found not to have an experienced airport operator for a partner.
"[Admiral] failed the post-qualification check because they did not have a partner airport operator," CIAC Executive Vice-President Alexander S. Cauguiran told reporters over the weekend.
Admiral officials were not available for comment.
Instead of a new auction, however, CIAC will just accept proposals from interested parties. "We’ll be accepting ’unsolicited proposals’ until the end of the month," Mr. Cauguiran said.
Mr. Cauguiran is head of the Joint Venture Special Committee which conducted the initial bidding for the project last September. During that auction, Admiral Energy was the only one out of the three firms to pass eligibility requirements.
The Chicago-based firm offered a P108-million upfront payment within 10 calendar days, a minimum guaranteed annual payment of P261 million, and a total proposed investment of P12.4 billion, almost double the floor price of P6.4 billion.
However, Admiral Energy’s supposed partners for the project were found out to be experts only in the procurement and installation of airport equipment, not airport operations.
Under the deal, whoever gets the contract for the project has to design, build, finance and operate the new airport. The facility — capable of handling seven million passengers annually — is part of the government’s bid to develop Clark as the country’s next "premiere" international gateway.
Clark’s current terminal, the Diosdado Macapagal International Airport, has a capacity of two million passengers a year. In comparison, Manila’s airport system has a combined capacity of over 30 million passengers a year.
Mr. Cauguiran said the Clark area has more room for growth than Manila, with around 4,200 hectares of land which can be used for expansion. Manila’s airports have already filled up the 700 hectares available in the capital, he pointed out.
Clark also has two full runways with room to build two more, compared to Manila which only has space for one runway.
Omni Aviation Corp. (OAC) has ordered three Cessna 152s including an Aerobat that will be used for advanced maneuvers such as upset recovery. These aircraft will be enjoyed by more than 100 students, including foreigners from 18 countries currently training at Omni Aviation.
Founded by retired Boeing 747 pilot Capt. Ben Hur Gomez, OAC now has a total of 19 planes plus the latest training equipment and an instrument flight simulator
With the influx of foreign flight students Capt. Gomez said the school looks like the United Nations. “We have students who are Americans, British, Canadians, French, Japanese, Chinese, Koreans, Indians, Sudanese, etc.”
Omni claims to have the best instructors and the best maintained aircraft in the business.
Omni Aviation is a fixed base operator with its own private runway and hangar facilities in a 32-hectare complex within the Clark, Freeport Zone, Pampanga. It’s host to the Philippines Airline Aviation school, Philippine State College of Aeronautics flying schools, Clark Aviation, and its own Omni Aviation flight school, Asian Aeronautics Services, Inc., and Marlin Metal Enterprises.
Omni Aviation has formal ties with Flysky College, Taiwan; Global Training Center, Japan; and Selecta Education Group, Malaysia who deploy their students to Omni for flight training courses.
President Gloria M. Arroyo led the opening of Petron fuel additives blending plant here, Teletech’s newest customer management center in San Fernando, Pampanga, as well as the ground-breaking for a $100-million maintenance, repair and overhaul (MRO) facility at the Clark Civil Aviation Complex.
Petron Chairman and Chief Executive Officer Nicasio I. Alcantara said the project resulted from a Fuel Additives Blending Agreement entered into by Petron and Innospec — formerly Associated Octel Ltd. — a leading global fuel additives supplier in Asia and the Pacific.
"The project combines Petron’s first-rate technical services, marketing capability, and strategic location with Innospec’s fuel additive technologies and strong presence in Asia," Mr. Alcantara said in a statement.
Petron said about 80% of the facility’s production will be exported to various Asia-Pacific markets, and the rest will be exclusively used by Petron for its Blaze, XCS, Xtra Unleaded, E10 Premium and DieselMax fuels.
Ms. Arroyo also led ground-breaking ceremonies of the $100-million MRO facility of SIA (Singapore Arilines) Engineering Corp. and Cebu Pacific Air in Clark. Both have formed SIA Engineering (Philippines) Corp. for this project, which involves construction of three hangars to service long-haul commercial aircraft in a 10-hectare area at the airport.
The first hangar will service narrow-bodied aircraft like Airbus 320s, while the second and third will service wide-bodied aircraft such as Boeing 747s and 777s.
Clark International Airport Corp. President and CEO Victor Jose I. Luciano said the facility is designed to improve services at Diosdado Macapagal International Airport, which is being positioned as the country’s premier gateway.
The facility is expected to generate at least 1,000 jobs during the construction phase and is scheduled to be completed by the second quarter of next year.
After the groundbreaking ceremony in Clark, Ms. Arroyo proceeded to Teletech’s newest customer management center, located in SM City in San Fernando, Pampanga.
Teletech’s newest facility, which is designed to have 1,720 seats, is expected to have 1,950 employees.
Teletech currently employs 18,500 workers in its 12 customer management centers in Fort Bonifacio, Pasay, Novaliches, Cainta, Dumaguete, Bacolod, Lipa, Cebu, Bacoor, Iloilo, Pampanga, and Sta. Rosa, Laguna.
In a statement issued yesterday, Teletech President Kenneth Tuchman said his firm has decided to increase Teletech’s work force in the Philippines to 25,000 by the end of next year. — R. M. Garcia
”It is just a reminder and that BFP is just updating us in order for us to comply our commitment,” Lansang told the Philippines News Agency.
He said that Civil Aviation Authority of the Philippines (CAAP)CAAP Director General Ruben F. Ciron is now working on the payment for the administrative fine amounting RR6,000 to prevent the implementation of the closure order.
He cited that BFP-Region 4-B Director Senior Supt. Norman V. Pinion last Oct. 7, issued a letter to ATO reminding the payment of the administrative fine.
He admitted that to date, ATO or PPCA has not complied in relation to the BFP’s imposition of administrative fine.
The imposition of the fines is based on an order of payment issued by the BFP-Region 4-B to Lansang pursuant to Presidential Decree No. 1185, otherwise known as the Fire Code of the Philippines.
It was recalled that in January, 2007, the fire safety inspectors (FSI) of Puerto Princesa City, equipped with Mission Order (MO) No. 1087-07, inspected the PPCA to determine the airport’s compliance with fire safety standards.
They discovered major violations and deficiencies, which included non-existence of fire alarm and warning system; non-installation of wet standpipe system; non-availability of emergency lights; absence of pre-fire and exit plans at the airport’s hallways and passengers lounge; non-availability of any firefighting equipment; and failure to conduct fire safety seminars.
Lansang assured that fire safety equipment are all incorporated in the airport terminal building which is presently undergoing major rehabilitation under the Department of Transportation and Communication (DOTC), as implementing agency. (PNA)
More flights and choices for travellers will come only when the 10-member countries--Brunei, Cambodia, Indonesia, Laos, Malaysia, Burma, the Philippines, Singapore, Thailand and Viet Nam--ratify the agreement.
Some, like Indonesia, are still undecided.
Tri S Sunoko, the Transport Ministry's director of air transportation, told The Straits Times in a telephone interview that no decision had been made on when an existing ban on foreign budget carriers would be lifted.
He said: "We support the principles of liberalisation but this is something we will embark on step by step. I cannot say at this time when we will open up more routes to foreign airlines.
"We first have to ensure that our national carriers are in a position to compete effectively with the other regional airlines."
The need to protect its fledgling air transport industry was cited by the Indonesian authorities in 2005 when they banned foreign low-cost airlines from flying to four key cities--Jakarta, Medan, Surabaya and Denpasar (Bali).
On whether the current global financial turmoil, which has hit airlines everywhere, would delay the process of liberalisation, Sunoko reiterated that the government will have to consider the health of its national carriers before making any decisions.
An Asean spokesman told The Straits Times in an e-mail response to queries that while member states are urged to ratify the Asean agreement "as soon as possible", the reality is that some "may take more time than others to ratify, as domestic procedures for ratification differ".
It does not, however, stop individual countries from liberalising their air links.
Singapore and Malaysia, for example, have decided to fully open the Singapore-Kuala Lumpur air route next month.
More flights are also progressively being added between Singapore and the East Malaysian states of Sabah and Sarawak.
Industry talk is that Penang is next.
Singapore carriers are also hoping that new opportunities will open up in the Philippines as well as in Indochina.
Jetstar Asia chief executive officer Chong Phit Lian said liberalisation had been good for consumers, adding that the airline looks forward to "official news of new points and opportunities that will be available within the region".
Her wish list? "More flights to and from Singapore and other points in Malaysia, as well as more rights to the Philippines and Indonesia."
The liberalisation between capital cities is the first step in a long-term plan to create the Asean Single Aviation Market by 2015.
When that happens, all carriers of member states will be able to criss-cross the region's skies without any restrictions. (By KARAMJIT KAUR/ The Straits Times/ ANN)
