Everyone Together Now?


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ASEAN states are scheduled to open their skies in 2015 – but major stumbling blocks remain, writes Simon Lewis.

A long time in the making, a move to open the skies of the economically dynamic region of South East Asia is set to be enacted in 2015 and the 10-nation Association of Southeast Asian Nations, or ASEAN, is outwardly confident its Open Skies policy is on track. However, there are suggestions that national interests are threatening to compromise a liberalisation that airlines hope would allow them to dramatically expand their route networks across the region.

First proposed as early as 1995, the regional deal for aviation, dubbed the ASEAN Open Skies policy, is part of a package of regional policies designed to create the so-called ASEAN Economic Community in 2015.

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The bloc includes wealthy and open economies such as Singapore alongside developing states such as Myanmar, which is emerging from oppressive military rule.

The start of a unified economic community, which aims to open up the movement of goods and skilled labour between the countries, was originally envisioned at the start of 2015, but is now slated for the last day of that year.

Indonesia

Indonesia, the largest member, with about 40% of the region’s 600 million people, could also prove to be a stumbling block in the scheme, with the country believed to favour a protectionist approach to open skies.

Despite this, within the Jakarta-based ASEAN Secretariat there is confidence that the new dawn in regional aviation will arrive on time.

“We are ahead of the schedule,” insists Tran Dong Phuong, the ASEAN Economic Community Department’s head of the Infrastructure Division.

Tran Dong Phuong says the legal instruments to enact the Open Skies policy have been in place since 2010, and the key parts have been ratified by all nations, except Indonesia and the Philippines. Even if some countries balk, those states that are willing to can go ahead with the plan, he says.

“It doesn’t have to wait until all members states have ratified, but it will come into force for individual members states when that member state ratifies it,” he says.

Infrastructure worries

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One stumbling block for the Philippines, and, crucially, Indonesia, is infrastructure, with concerns that both nations’ large networks of airports, many of which have not been recently upgraded, will be overwhelmed by liberalisation.

“If the agreements are implemented, the skies are open to every [ASEAN] airline to fly in. With the expected surge in aviation demand, the current infrastructure is not yet sufficient. So some governments would rather wait until they have developed infrastructure or increased capacity,” says Tran Dong Phuong.

“They are trying; they are investing in new airports or upgrading the current airports, so I think they will be able to implement in all countries by 2015,” he adds.

According to local media reports, the Philippines, which has 10 international airports, has plans to expand the capacity of Manila’s International Airport. This will be alongside a dramatic expansion of Clark Airport, which also serves the city, increasing the airport’s capacity from 2.5 million passengers per year to more than four million.

Indonesia has 29 international airports, but its Transport Ministry has said it only plans for five key airports – Jakarta, Surabaya, Medan, Denpasar and Makassar – to be opened up to airlines from other ASEAN states in 2015.

According to a report released this year by researchers Batari Saraswati and Hanaoka Shinya at the Tokyo Institute of Technology, Indonesia’s airports, which are all managed by state-owned companies, are already overstretched.

“The government has already fallen behind in providing adequate infrastructures. Sixteen of Indonesia’s 25 largest airports are currently operating above design capacity,” the report says, citing official data.

“Jakarta is the most congested, with existing terminals operating well above capacity and the airport’s two runways fully utilised during peak hours. The airport served more than 50 million passengers in 2012, more than twice its design capacity. A major upgrade project for [Jakarta’s] Soekarno-Hatta Airport finally commenced in 2013 and will increase the airport’s capacity to 62 million passengers,” it adds.

The researchers point out, however, that by the time that expansion is completed in 2015, the passenger traffic at Jakarta’s main airport will likely have exceeded the increased capacity.

Ready and willing

Outside Indonesia and the Philippines, there is more readiness.

In a statement, Malaysia Airports, a public company that operates most of the country’s airports, including Kuala Lumpur, said it was “fully supportive” of the efforts to open South East Asia’s skies.

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“It augurs well with the company’s aspiration of bringing in more passengers through its airports, as liberalisation would provide a less restrictive operating environment for airlines,” the company says.

“In taking cognisance of KLIA’s position as the main gateway to Malaysia, it is imperative that the flow of traffic is not impeded by restrictive aviation policies, thus enabling airlines to fully capitalise on the market potential,” it adds.

Malaysia Airports says it has capacity to handle more airlines operating more routes and is broadly supportive of liberalisation.

“The industry has always been moving towards some form of liberalisation through alternative means such as codeshares and revenue sharing. The benefits have been obvious and ASEAN Open Skies is a more formal approach towards such liberalisation,” it says.

Protecting flag carriers

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As well as the burden on infrastructure, some fear that opening up the region’s skies, which has been actively lobbied for by major airlines, may squeeze out smaller or state-owned competitors.

“There have been those concerns,” admits Tran Dong Phuong. “But at the end of the day, member states realise that the benefit brought along by more competition is overwhelming the challenges.”

With plenty of room for growth in South East Asian aviation, the risk of monopolies forming is minimal, he insists, pointing to the region’s unsaturated aviation market and strong economic growth.

Gross domestic product in ASEAN states is expected to continue its trend of healthy growth, with the International Monetary Fund predicting 5.6% GDP growth across the 10 members for 2013.

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IHS Global Insight predicted in May that the size of the 10 ASEAN states’ economies combined will more than double from $2 trillion to $4.7 trillion by 2020. That growth goes alongside growth in tourism and foreign investment in almost all ASEAN countries.

“With increasing business activity and regional growth, the opportunities are there for everyone, whether they are big or small airlines,” says Tran Dong Phuong.

“You can see that the number of low-cost airlines in ASEAN countries is growing. Every year there are new low-cost airlines opening in the region,” he adds.

Low-cost boom

According to CAPA – Center for Aviation’s yearbook for the South East Asia region, low-cost carriers are more dominant in some regional countries than anywhere else in the world.

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“The four largest domestic markets in South East Asia – Indonesia, Philippines, Malaysia and Thailand – all now have LCC penetration rates exceeding 50%,” it says, predicting that penetration in the Philippines would reach 85% this year.

CAPA adds that, while some of the low-cost carriers were approaching saturation on current routes, “market conditions overall remain favourable and can support rapid growth, driven by the strength of the region’s economy and the continued rapid rise of the middle class.

“The increase in discretionary incomes feeds into the hands of LCCs as a larger portion of the population can afford to fly but generally only on budget airlines,” it adds.

“South East Asian flag carriers are also growing, particularly their budget and regional full-service subsidiaries, albeit at slower rates.”

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Not an EU carbon copy 

It is hoped the Open Skies policy will be a boost for regional carriers, but it is not planned to be a complete single aviation market like Europe’s unified skies.

All states, except the Philippines and Indonesia, have signed up to giving third, fourth and fifth freedoms to other member states. However, Indonesia, Laos and Cambodia have not yet agreed to extend the rights beyond their capital cities. And without full agreement on the current modest Open Skies proposal, seventh right freedoms, which allow flying between two other countries without a link back home, and the right to fly routes between airports inside a foreign country, are not yet even being considered.

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“The ASEAN Open Skies just opens the skies to give the right to an airline from the ASEAN member state to carry passengers from their own country to another ASEAN country, and then from there to a third ASEAN country,” says Tran Dong Phuong.

He explains the ASEAN model was never intended to be a carbon copy of the European Union’s aviation market. This means that ownership rules and other aviation freedoms, like the right for airlines to fly routes between two other countries without originating in its home country, are still off the table.

“The EU is a single airspace, a single aviation market, so they are operating like within one country in the whole EU. Whereas, in ASEAN, we are not up to that stage yet.”

Alan Khee-Jin Tan, professor of aviation law at the National University of Singapore, has also stressed that the most important contrarian nation is Indonesia.

“There is no guarantee that Indonesia will accept the agreements by 2015,” Professor Tan says.

“If it, and the other member states, do accept by 2015, there will be effectively open skies for the region, but this stops at third, fourth and fifth freedom relaxations. So, it is true that there is a chance the project might come into effect by 2015, in this limited way.

Laos

“Although there are obviously still benefits to this, Indonesia’s staying out will hamper the project significantly since it is the region’s largest economy and has nearly half the entire population of ASEAN,” Tan says.

“So, there will still be a positive overall impact, just that if Indonesia stays out, the impact will be much reduced in significance.”

Scope for expansion

Tan says in the long-term it is critical for the region to look at seventh freedom rights.

Such liberalisation would certainly be even more of a sticking point for protectionist-minded policy-makers, and would force airlines to compete with carriers from other countries on every transnational route.

But, Tan says, a failure to open up the seventh freedom – what he calls “the true hallmark of a real ‘single’ aviation market” – would hurt regional airlines when it comes to connecting the region to the rest of the world.

“The effect of not having seventh freedom rights can be detrimental to ASEAN airlines,” he says.

“This is because, apart from the intra-ASEAN agreements, ASEAN has adopted an agreement with China that provides unlimited third and fourth freedom access for airlines from both sides. The effect is that Chinese carriers will be able to connect any point in China – since China is a unified market – with any point in ASEAN member states that accepts this agreement.”

But Tan says that, without the seventh freedom rights, a Thai carrier would not be able to connect Singapore and Shanghai, and therefore regional airlines would miss out on opportunities to expand.

The ASEAN bloc has had some success in fostering economic ties in the region, preventing conflict and creating some sense of peoples united, despite the many differences that divide states. As Tan points out, regional co-operation is based on consensus in ASEAN, and the group’s secretariat has little power to strong-arm members into anything.

“[The] problem is that we are not like the EU where there is the European Commission which can force member states to adhere to community law,” he says.

With economic integration on its way, this region could become a powerful force in aviation, if it sticks together, that is.

Source: Routes News 2013 Issue 6.

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SMC Keen On Tapping UK Air Traffic Firm


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LONDON—Conglomerate San Miguel Corp. is keen on tapping NATS, the leading provider of air traffic control services in the United Kingdom, for its prospective airport projects in the Philippines.

Asif Ahmad, UK ambassador to the Philippines, told visiting reporters from Manila that NATS is interested in participating in airport projects in the Philippines.

SMC president Ramon Ang’s recent visit here provided an opportunity to talk about a prospective partnership, Ahmad said.

Ang was in London to mark the return of Philippine Airlines to Europe via Heathrow International Airport.

Ahmad said Ang was “so impressed” that he is interested in employing NATS in upcoming Philippine airport projects, such as SMC’s bid for the upgrade of the Mactan-Cebu International Airport.

Also, SMC is the lead shareholder in a consortium that operates the Caticlan international airport, the gateway to Boracay Island. It has likewise talked about building a major international airport to serve Metro Manila.

NATS handles 2.2 million flights and 220 million passengers, all within UK’s airspace. In addition to providing services to 15 UK airports, including Heathrow and Gatwick, it maintains a presence in more than 30 countries around the world, according to its website.

As such, Ahmad said, Ang is interested in tapping NATS’ expertise and experience in airport management.

Also, Ang said that SMC had invested in Philippine Airlines to help boost the tourism industry.

He added that the talks for a third party investor to buy out the stake held by taipan Lucio Tan in PAL had reached an advance phase.

Ang described the negotiations to be in its final stages.

Source: Doris C. Dumlao, Philippine Daily Inquirer

United Airlines Launches Fund-Raising Effort for Philippines


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United Airlines has announced it will partner with AmeriCares, the American Red Cross and Operation USA to help raise funds for the tens of thousands of people affected by Typhoon Haiyan in the Philippines. Chicago-based United (NYSE: UAL) also said it will offer customers a gift of bonus MileagePlus miles if they donate funds to the relief effort.

The United Airlines Foundation will donate up to $50,000 to match donations to the carrier’s partner organizations involved in Typhoon Haiyan relief efforts.

MileagePlus members who donate between $50 and $99 dollars will receive a 250-mile bonus. Those who contribute $100 to $249 will receive a 500-mile bonus, while members who give more than $250 will get 1,000 bonus miles. United said it will make available up to 5 million bonus miles for the Philippines relief effort.

Said Mark Anderson, United’s senior vice president of corporate and government affairs: “Our hearts go out to the people in the Philippines as they recover from this devastation. In difficult times like these, our employees and customers always show their generosity.”

Source: , Reporter-Chicago Business Journal

Japan Airlines Extends Support to Philippines Typhoon Haiyan Relief Efforts


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Transport of Relief Goods

JAL will transport relief goods and supplies at no charge from November 12 to December 13, 2013. Relief goods and supplies will be carried as air freight and under the conditions specified below:

– The shipper and consignee must be governments, embassies, local municipalities and agencies of the United Nations (such as UNICEF) etc.

– Contact information of the shipper and consignee must be provided in detail.

– The arrival point must be Manila International Airport and the departure point must be Tokyo (Narita) Airport.

– Arrangements for customs clearance and surface transport at the departure point and arrival point must be completed by the shipper beforehand.

– Shipments must not contain dangerous goods, live animals, or other restricted items.

– The weight of relief goods and supplies should be within one ton for each transport.

– Shipment is subject to space availability.

Transport of Relief Aid Personnel

JAL will also provide free air transport on its flights between Tokyo (Narita) and Manila for persons supporting local relief operations and coordinating volunteer activities who belong to the authorized non-profit organizations introduced by Japan Platform (JPF)*1, starting from November 12 to December 13, 2013.

Mileage Donation Drive

JAL is offering its full support to devastated area in Philippines and is calling on its JAL Mileage Bank (JMB) members to donate miles to raise funds necessary for relief work.

– Application period: November 14, 2013 ~ December15, 2013

– Mileage for application: Donation will be accepted in units of 3,000 miles, as an amount of JPY 3, 000 for donation. JMB member can make mileage donations on JAL’s website or by telephone to each region’s JAL Mileage Bank Center.

Website (English):http://www.jal.co.jp/en/jalmile/use/charity/

Enquiries

Media: +81-(0)3-5460- 3109

Others (Transport of relief goods and aid personnel): +81-(0)3-5460-3104

*1Japan Platform (JPF)

Flying Giant in Cebu


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The world’s biggest aircraft is set to make an appearance at the Mactan-Cebu International Airport early tomorrow morning (Tuesday) to make a very important delivery.

According to our sources, the Russian-built Antonov An-225—dubbed by some as the “aluminum overcast”—will fly to Cebu to deliver some outsized equipment (most likely power turbines) for the Lopez-controlled First Gen Corp.

Only one An-225 was ever made by the former Soviet Union, meant to ferry on its back the USSR’s version of the Space Shuttle in the 1980s. It is powered by six jet engines and has a total of 32 wheels (to distribute its weight evenly and thus prevent damaging the concrete on airport runways).

The Ukranian-registered plane also holds the world record for heaviest take off weight of a little over 253 tons. Needless to say, it is larger and heavier than either the Airbus A380 or the Boeing 747.

For a better idea on how big the An-225 is, imagine its cargo hold which has a volume of 1,300 cubic meters (6.4 meters wide, 4.4 meters high and 43.3 meters long).

The entire first flight of the Wright brothers’ “Flyer” could have been performed comfortably within the An-225’s cargo hold.

First Gen officials have confirmed that the aircraft has been hired for the delivery, but are tight-lipped on what exactly it will be delivering on its early morning flight. We’ll know by Tuesday morning.

Source: Daxim L. Lucas, Philippine Daily Inquirer

AirAsia X Bides Time on Clark International Airport Operations Proposal


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AirAsia X Bhd., the long-haul arm of Malaysian budget airline Air Asia Bhd., said the time was not yet ripe to establish operations in the Philippines despite the interest of a local affiliate for them to set up shop in Clark International Airport in Pampanga, a top executive said.

AirAsia X CEO Azran Osman-Rani, who was in the Philippines last week to participate in a business forum, said several hurdles remained for its business model to work in the country, including crucial airport slots and bilateral rights with countries like Japan and Australia.

“Definitely, the market potential in the Philippines is there. But I think one of the key things is going to be access, especially with bilateral rights,” Rani told reporters.

“If we don’t resolve slots and availability, everything else cannot work,” he added.

Rani confirmed that there were internal discussions together with local affiliate Philippines AirAsia for the long-haul carrier to operate in Clark.

“We have submitted a paper to [Philippines Air Asia] but now we just want to have a better understanding [of the issues],” he said, without elaborating.

AirAsia’s Philippine unit recently shifted its focus in the country after formally suspending “temporarily” its struggling operations in Clark International Airport last month.

It will instead focus on supporting AirAsia Zest, formerly Zest Airways, which operates regional and domestic routes and has valuable slots in Ninoy Aquino International Airport in Manila.  AirAsia Bhd has a minority stake in AirAsia Zest.

Because AirAsia Zest operates in Manila, it is in a better opportunity to capture traffic as Naia remains the country’s busiest airport because of its location within the capital region. Clark International Airport, being developed as a secondary airport to Naia, is located more than an hour away by land.

“The ability to be very flexible in slots, to create that maximum aircraft utilization, is very important to the success of the long haul model,” Rani said.

Philippines AirAsia vice chair Michael Romero last month told reporters that their strategy in Clark “was not working” and that they were convincing AirAsia X to operate in Clark.

AirAsia X flies to China, Australia, Taiwan, Korea, Japan, Nepal, Jeddah with a fleet of 13 Airbus A330-300s, information on its website showed.

AirAsia Zest operates a fleet of 13 aircraft and currently servicing nine domestic and four  international routes. Among domestic carriers, it  operates  most flights to and from Kalibo which is a gateway to the popular resort island of Boracay.

Source: 

8 Airports Reopen as CAAP Assesses Damage


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What remains of Tacloban Airport after typhoon Yolanda pummeled the city.

MANILA, Philippines – The Civil Aviation Authority of the Philippines (CAAP) announced Saturday, November 9 that 8 airports have been reopened, while 4, including the one in Tacloban, which was badly hit by super typhoon Yolanda, would remain closed.

CAAP director general William K. Hotchkiss III said that airports in Iloilo, Caticlan, Romblon, Dumaguete, Bacolod, Masbate, Legaspi and Surigao have resumed normal operations.

The Roxas City airport would be closed till Sunday, November 10, while the Kalibo airport is expected to be operational by Monday, November 11.

The Tacloban and Busuanga airports would remain closed until further notice due to severe damage from super typhoon Yolanda (international codename Haiyan).

The two airports were badly hit. CAAP deputy director general Capt. John Andrews said the terminal, tower, and communications equipment of the Tacloban airport were all destroyed, according to an airport manager’s assessment.

A report by CAAP area manager Efren Nagrama to Hotchkiss said there were no casualties at the airport but communication options were limited due to lack of power.

The report added that his team, made up of 25 CAAP, aviation security, and airport personnel in Tacloban had been clearing the runway since 5 am.

Ground personnel reported seeing around 100 dead bodies near Tacloban airport. Another 100 were found injured and were requesting medical assistance.

Hotchkiss directed Andrews to fly to Tacloban to lead a team bringing needed supplies, food, medicine and a set of communication equipment. Bayantel volunteered to install satellite communications equipment at the airport. Hotchkiss and his team will arrive Sunday to assess the situation.

Yolanda made a total of 6 landfalls when it slammed into the Philippines Friday. It left the Philippine Area of Responsibility on Saturday afternoon.

In a text message to Rappler, Transportation secretary Joseph Emilio Abaya said relief operations for Tacloban are being carried out through the use of C130. “Government is currently conducting relief operations by air through C130,” he said.

Source: Rappler.com

453 Flights Canceled at Manila Airport


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Major airlines suspended more than 450 flights to and from Ninoy Aquino International Airport (Naia) on Friday as Super typhoon “Yolanda” battered central Philippines.

The Manila International Airport Authority said that as of 12 noon, 445 domestic and eight international flights were canceled by Cebu Pacific, Philippine Airlines, PAL Express, Air Asia Zest and Tiger Airways.

NAIA Terminal 3 had the most cancellations, with 364 flights canceled, followed by Terminal 5, 51, and Terminal 2, 38.

Terminal 1, which handles international flights, reported no cancellations.

Passengers notified

According to airline staff, their ticketing and customer service units notified passengers about the cancellations through social media, e-mail and text messages.

Most of the cancellations were announced as early as Thursday afternoon.

But several passengers, mostly tourists and overseas Filipino workers, arrived at NAIA expecting to book as chance passengers but instead got stranded and were forced to wait at the airport for new flight schedules.

Airports closed

As part of safety measures, the Civil Aviation Authority of the Philippines (CAAP) yesterday suspended for 24 hours operations at 12 airports, mostly in the Visayas.

Closed were airports in Bacolod, Busuanga in Palawan, Tacloban, Surigao, Kalibo, Roxas, Caticlan in Aklan, Iloilo, Romblon, Legazpi, Masbate and Dumaguete.

CAAP Deputy Director General John Andrews said the suspensions were forced by the weather bureau’s hoisting of Signal No. 4, which meant “very strong winds of more than 185 kilometers per hour for at least 12 hours.”

Andrews said the winds were so strong that an airplane could be blown off course. On the ground, planes would have difficulty landing or taking off, he added.

Andrews said the 12 airports would resume operations by 6 p.m. Saturday.

The CAAP said the Cebu-Mactan and Clark airports were not available as alternative airports because of their full schedules.

Source: ,

Philippine Carriers Uniform Parade


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Blue in. Taupe Out. New uniform of Philippine Airlines / PAL Express.

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Cebu Pacific shining through in yellow uniform.

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Air Asia Zest / Air Asia Philippines: stylish & simply beautiful.

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Air Asia Zest / Air Asia Philippines weekend uniform.

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SEAir’s light blue uniform.

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Tigerair Philippines, tail of the tiger as scarf.

NAIA-T1 Starts Renovation on December


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MANILA, Philippines – Transportation Secretary Joseph Emilio Abaya said the transformation of the ‘world’s worst airport’ facility will be complete by late 2014.

In a press briefing on Monday, October 21, Abaya said construction works on the Ninoy Aquino International Airport Terminal 1 (NAIA-1) will start in December and will be finished before November 2014 in time for the Asia Pacific Economic Cooperation ministerial meetings. The Philipppines will host the APEC Summit in 2015.

“We are ready to award the construction services and consultancy services mid- November. We will start hammering the first nail by December,“ Abaya said.

“The deadline given to us by the APEC organizing committee is that NAIA-1 should be operational and rehabilitated by November 2014, “ he noted.

Voted as the worst airport by visitors of travel site “The Guide to Sleeping in Airports, NAIA-1 has long been in the government’s to-do list. (READ: What’s the real score in NAIA 1 project)

Its redesign, restructure and rehabilitation have been postponed by changes in leadership of the DOTC as well as delays in choosing the teams of designers, engineers and architects for the planned renovation. (READ: Rivals to partners: Cobonpue, Locsin to make over NAIA-1)

Major renovation

Abaya said the rehabilitation of NAIA Terminal 1 will include major upgrade of the structural, mechanical and electrical components of the airport facility.

“We have procured a third party consultant to address performance on structural performance,” he said.

This is to ensure that the facility will be “earthquake-proof and wouldn’t collapse or endanger lives,” he noted.

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Moving to NAIA-3

Changes in the architecture and interior design include the expansion of arrival area, Abaya stressed.

“We are giving back space for the passengers that offices currently occupy,” he said in a mix of Filipino and English.

Allocating more space for the passengers, Abaya noted, is also needed as NAIA-1 has been accommodating volume of passengers that is higher than its 4.5 million passenger capacity a year.

“The plan is to reduce passenger load of NAIA-1 to design capacity. We are now at 8 million. We plan to bring that down to 4.5 million,” he said.

Part of the plan is to transfer the excess volume to NAIA Terminal 3 (NAIA-3), he added.

NAIA-3 was originally designed to accommodate international flights, but before the airport facility was launched in 2012, the Arroyo government abrogated the contract with the Filipino and German consortium it awarded the project to.

Years of legal battles here and in arbitration courts abroad mothballed the facility. Only half of the facility was considered structurally safe since it was partially opened in 2008. (READ: Aquino on NAIA-3 delays: Please bear with me)

The Aquino government is working on sealing a long delayed deal with Japanese firm Takenaka to complete the renovation and rehabilitation works on NAIA-3.

Abaya earlier said that construction works would be completed within 8 to 10 months after the signing of the contract with Takenaka. (Read: 100% of NAIA-3 operational by end-2013: Abaya) – Rappler.com