PHILIPPINES CIVAIR: LETTER FROM PHILIPPINE AIRLINES

UNCLAS MANILA 003646 SIPDIS SIPDIS SENSITIVE STATE FOR EAP/MTS AND EEB/TRA/AN FAA FOR API-1/AFS-50/AGC-7 SINGAPORE FOR FAA REP TOKYO FOR FAA CARL STROMBOM E.O. 12958: N/A TAGS: EAIR ECON RP SUBJECT: PHILIPPINES CIVAIR: LETTER FROM PHILIPPINE AIRLINES REGARDING AVIATION SAFETY REF: STATE 149143 ¶1. On November 6, 2007 we met with the Philippine public-private task force which was formed in response to the FAA summary report regarding aviation safety oversight. ¶2. We subsequently received a letter dated November 8 from task force member and Philippine Airline President Jaime Bautista summarizing the meeting. ¶3. Begin text of the letter: [Greetings] This has reference to our meeting yesterday at the Century Hotel to discuss the latest developments and chart responses to the US Federal Aviation Authority's (FAA) intention to place the Philippines under Category 2 status on 29 November 2007 unless significant and concrete reforms are instituted immediately by the Philippine government in having the Air Transportation Office (ATO) effectively discharge its oversight and regulatory function over aviation safety. All participants in the meeting were in agreement that the consequence of a Category 2 status will be devastating to the tourism industry of the Philippines and to the local airline industry. In so far as PAL is concerned it will adversely affect the investment it made in acquiring six (6) brand new Boeing 777-ERs, which are to be dedicated in expanding PAL's transpacific route to the United States starting 2009. Further, it removes the business case for two (2) additional Boeing 777-ERs that PAL is planning to add to its fleet by 2008. The participants from the US embassy suggested that Philippine carriers PAL and Cebu Pacific get together to lobby the Philippine government to complete the legislative and administrative reforms needed to implement the deficiencies identified by the FAA inspection team. PAL reported that, more than a month ago, it submitted to the Chairman of the Transportation Committee of the House of Representatives a comprehensive bill proposing the creation of an independent Civil Aviation Authority. The bill had safeguards such as fiscal autonomy, security of tenure and non-application of the Salary Standardization Law to fortify the Authority's independence. The bill also incorporated the FAA model Civil Aviation Safety Act to institutionalize and strengthen the regulation and oversight of aviation safety. PAL also reported that it engaged the services of ex-ATO officials to develop a program of action. During the meeting the team of ex-ATO officials led by former ATO Chief Ortega submitted to Transportation Secretary Mendoza a program of action identifying the corrective actions needed, a complete timetable for completion and their availability to help out in any way deem fit by the Secretary. Transportation Secretary Mendoza promised to integrate all the foregoing inputs to the legislative and administrative plan of action, which his team is completing in response to the findings of the FAA.' He assured that the budget is available to fund the resources needed to implement the reforms. He emphasized that Philippine President Arroyo has already certified the legislative package of reforms in civil aviation as an urgent legislative agenda of her administration. Secretary Mendoza advised that he would meet with FAA officials to present his program. As can be seen from all of the foregoing activities, the Philippine public and private sectors are intensely working together to produce the institutional reforms that will overhaul and strengthen the regulation of civil aviation safety. Under the circumstances, a little more forbearance of several months will allow the completion of the package of reforms and avert a major setback to the economic recovery of the nation. Thus, extending the 29 November 2007 deadline for placing the Philippines under Category 2 status will go a long way in achieving the objectives of the FAA of helping a developing nation like the Philippines become a model of transformation in regulating its civil aviation industry. We deeply appreciate your continuing efforts in helping the cause of the Philippine government and the local civil aviation industry. We gratefully look forward to your continued support. Sincerely, JAIME J. BAUTISTA President and COO End text of letter Kenney