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