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1. Group seeks resolution of airline, union row
The Tourism Congress on Thursday wants an immediate resolution of the controversy between Philippine Airlines and union members before it wreaks havoc on the travel industry.
“We are seriously concerned that the current dispute will further exacerbate the problem of the downgrading of the Philippines from Category 1 to Category 2 status by the US Federal Aviation Administration and the European Commission’s ban on our carriers,” the congress said in a statement.
“We strongly urge the Palea (Philippine Airlines Employees Association) to observe the rule of law and comply with lawful decisions rendered by the Department of Labor and Employment, the Office of the President, and the Court of Appeals aimed at upholding the public interest,” it said.There is no debating on the fact that local pump prices have reached levels that are insanely high.
We also know that the reason for these high prices is the simple fact that we as a country are dependent on imported crude oil and finished products. And unless we can dig up some oil or find viable and sustainable alternative sources of fuel to run our vehicles, or unless we want to go back to the good old days of using horse-drawn carriages or kalesas, then we unfortunately do not have a choice.
We can understand why there are people, especially militant groups and politicians especially, who have been observing the movement of world crude oil prices to find out if there is reason enough to ask for a rollback on local pump prices. Prices of imported crude oil and finished products have been highly volatile, resulting in upswings and downswings in local pump prices.
Just recently, militant groups have been claiming that prices should be rolled back by P8 to P10 per liter, but when pressed for basis of the claim, none could be presented.
Dubai crude, which is the benchmark for crude trades in the Far East, had been fluctuating from $100 per barrel in February this year to $106.56 per barrel as of end-September. The September Dubai crude price is about 15 percent higher than at the start of the year.
There are over 200 crude oil types in the world priced based on a few crude oil benchmarks namely Brent, World Texas Intermediate (WTI), and Dubai. Over the past few years, WTI has lost its relevance as an international benchmark due to logistical limitations at Cushing, Oklahoma - the oil trading hub and delivery point for WTI crude. Limited pipeline facilities flowing from Cushing has caused an influx of crude oil, overwhelming refining capacity and, depressing WTI prices. WTI reflects more the local demand-supply balance in the United States.
To further illustrate this “disconnect,” WTI is averaging about $86 per barrel in September versus $114 for Brent – a nearly $30 barrel differential EVEN if WTI crude quality is better than Brent. Dubai crude meanwhile is averaging around $107 per barrel for the month.
So we should be wary when politicians and other groups use WTI as a reference point as it only adds to the confusion of an already complex situation. Could this be the reason for the alleged P8 to P10 per liter overprice? Some sectors might be using WTI when it is not the basis for pricing in the region.
While Dubai is the benchmark for crude oil prices in Asia, Mean of Platts Singapore (MOPS) is the region’s basis for finished products. Dubai benchmark refers to crude oil, while MOPS benchmarks finished products such as gasoline and diesel.
The Philippines imports around 40 to 50 percent of total domestic consumption of finished products. Finished products in the region are usually based on MOPS prices. Refiners in the country also use MOPS as basis for the prices of their production to be competitive with finished product importers.
Considering that all oil players in the Philippines adopted previous week’s average MOPS to adjust finished product prices, they seem to have the same level of pricing to ensure they do not lose volumes to competitors if they price above MOPS, or lose margins if they price below MOPS.
Now, we can better understand if the local oil players will not give in to the demands for an P8 to P10 per liter rollback.
Dismal third quarter. Philippine Long Distance Telephone Co. (PLDT) chairman Manuel V. Pangilinan says the telecommunication giant’s revenues for the third quarter of this year are lower than that of the same period last year but is more optimistic about the company’s overall performance for the year. The telecommunications industry is not alone. GMA Network chairman Felipe Gozon tells this writer that their third quarter numbers are below their expectations. The numbers are down due to a general reduction in industry advertising spend, particularly from the multinationals, he says.
Standstill. Philippine Airlines (PAL) president Jimmy Bautista shares that given that the Ninoy Aquino International Airport (NAIA) is already congested, then the Diosdado Macapagal International Airport (DMIA) at Clark, Pampanga should be explored as an alternative for airline companies using the NAIA terminals. DMIA is indeed a viable alternative as a second international gateway. Unfortunately, the government seems to be dilly-dallying on tapping DMIA’s potentials. Clark International Airport Authority (CIAC) president Chichos Luciano revealed that there is no word from Malacañang on what to do with the proposed second terminal at the DMIA. The Philco-Aero group, which is supported by San Miguel Corp. (SMC) president Ramon Ang, submitted an unsolicited proposal during the time of President Arroyo to undertake the construction of a second terminal, but discussions on the terms of reference (TOR) for the conduct of a Swiss challenge have been put on hold. The Aquino administration has frowned upon the unsolicited proposal route, especially those submitted during the previous administration, and now wants to bid out everything, even if this means that the public sector has to foot part of the bill. Even the Metro Pacific Investments Corp. (MPIC) group has expressed interest in developing DMIA. Unfortunately, the DMIA management has to wait for an official policy decision on the matter, and until then, we have no choice but to use the NAIA terminals.
Security risk. President Aquino has given our local Civil Aviation Authority (CAAP) marching orders to take us out of the Category 2 list by the first half of next year. It will be recalled that from Category 1, the US Federal Aviation Authority (FAA) has downgraded the Philippines to Category 2 because the country “either lacks laws or regulations necessary to oversee air carriers in accordance with minimum international standards, or that its civil aviation authority – equivalent to the FAA – is deficient in one or more areas, such as technical expertise, trained personnel, record-keeping or inspection procedures.” In order to achieve Category 1 status, the CAAP must comply with the standards set by the International Civil Aviation Organization (ICAO), which has also classified the Philippines as having significant security risks. PAL was one of the most affected by the downgrade because it has brought in two Boeing 777-300ER aircrafts and cannot use them for the North American routes. Local aviation authorities are allowed to set standards higher than ICAO standards and the standards of the US FAA are definitely higher than ICAO standards. The US FAA just wants the Philippines to comply with the minimum standards, which we seem to have a hard time achieving. The European Union has also blacklisted the Philippines for non-compliance with ICAO standards. It was learned that other countries like Japan were also looking at doing the same, but changed their mind nevertheless.
3. Church group urges gov't intervention
Church officials have joined calls for the government to intervene in the ongoing labor dispute between Philippine Airlines and its ground –base labor union.
Church Labor Conference (CLC) said in a statement issued Saturday that President Aquino should call for a dialogue between PAL and the Philippine Airlines Employees’ Association (PALEA) to protect the rights of the workers.
“The Aquino government, the group said, should have played the role of a Knight protecting the rights of workers,” CLC said.
CLC criticized PAL’s implementation of its spin-off of its catering, call center and ground service department, which displaced thousands of its workers, despite its financial gains this year.
“To retrench employees and outsource regular posts at a healthy financial condition of PAL smacks of deceit and an outright disregard of the prevailing laws of the land,” CLC said.
“By calling the spinoff a management prerogative Malacanang precariously confers license to contractualization, random termination and a Fire-all-you can policy—a gateway to a contractual Philippines,” it added.
The Tripartite Industrial Peace Council (TIPC), composed by at least 20 labor groups, issued a statement last Friday urging the government to defend the contractual employment policy being implemented by PAL.
The group also urged the airline management to fill as soon as possible the vacuum left by its decision to terminate more than 2,600 employees in favor of outsourced personnel and resolutely work toward normalizing all operations.
“This is a matter of grave national interest because issues that adversely affect the tourism industry will have a negative impact on the economy,” the TC.
2. Philippine government looking into Manila airport terminal’s structural flaws
A senior Philippine official said Friday that studies have found structural flaws in a 9-year-old Manila airport terminal that suffered a partial ceiling collapse in 2006.
Two engineering companies and one engineers’ association that examined Ninoy Aquino International Airport’s Terminal 3 found flaws of varying degrees of seriousness, said Transportation and Communication Secretary Manuel Roxas II.
He said one study found only slight defects that can easily be fixed, another said it’s more serious and the third believes it’s “very serious.” The terminal was largely completed in 2002 but not opened until 2008 because of a legal fight between the government and the terminal consortium led by Germany’s Fraport AG.
Asked what the defects were, Roxas said: “Part of it design, part of it is the execution.” He did not elaborate.
A government attempt to open the showcase terminal in 2006 was marred when part of a ceiling collapsed. No one was injured.
Takenaka Corp., a Japanese company that was subcontracted by the consortium to build the terminal, maintains it has no defect.
Roxas said the government “has taken every precaution” to ensure passenger safety but that the measures are only “stop gap in nature and our objective is still to fix the structural flaws.”
The government will have the terminal subjected to stress tests using computer simulation and other procedures to determine the extent of the defects.
“Structural defect means it can fall on your head, so we have to resolve that,” Roxas said. “Isn’t it that the most responsible thing to do now is to find out which of these (assessments) is correct rather than just mindlessly react?”
The marble-and-glass terminal was embroiled in controversy from the beginning.
The government has been locked in a legal battle with Philippine International Air Terminals Co. Inc., the German-led consortium that was to operate the terminal for 25 years, after canceling its contract in 2002.
The government took over the facility but its opening was repeatedly delayed over the years as Fraport sued the Philippine government for expropriation without compensation. The Philippines has won international arbitration cases in Washington and Singapore.
Terminal operations have not been fully computerized including baggage handling because of ongoing talks with Takenaka to turn over the software for the system and to repair defects.
Roxas said Takenaka’s claim that the terminal has no defects carries some weight because the company “it is not a fly-by-night entity.” Takenaka has built major airports in Japan and was a contractor for Singapore’s Changi Airport, he said.
The terminal can handle 10 million passengers annually. Last year, the airport was used by 9.6 million passengers — 8.1 million domestic and 1.5 million international. Local budget airlines Cebu Pacific, PAL Express and Air Philippines plus Japan’s All Nippon Airways currently operate at the terminal.
3. Getting the facts right
There is no debating on the fact that local pump prices have reached levels that are insanely high.
We also know that the reason for these high prices is the simple fact that we as a country are dependent on imported crude oil and finished products. And unless we can dig up some oil or find viable and sustainable alternative sources of fuel to run our vehicles, or unless we want to go back to the good old days of using horse-drawn carriages or kalesas, then we unfortunately do not have a choice.
We can understand why there are people, especially militant groups and politicians especially, who have been observing the movement of world crude oil prices to find out if there is reason enough to ask for a rollback on local pump prices. Prices of imported crude oil and finished products have been highly volatile, resulting in upswings and downswings in local pump prices.
Just recently, militant groups have been claiming that prices should be rolled back by P8 to P10 per liter, but when pressed for basis of the claim, none could be presented.
Dubai crude, which is the benchmark for crude trades in the Far East, had been fluctuating from $100 per barrel in February this year to $106.56 per barrel as of end-September. The September Dubai crude price is about 15 percent higher than at the start of the year.
There are over 200 crude oil types in the world priced based on a few crude oil benchmarks namely Brent, World Texas Intermediate (WTI), and Dubai. Over the past few years, WTI has lost its relevance as an international benchmark due to logistical limitations at Cushing, Oklahoma - the oil trading hub and delivery point for WTI crude. Limited pipeline facilities flowing from Cushing has caused an influx of crude oil, overwhelming refining capacity and, depressing WTI prices. WTI reflects more the local demand-supply balance in the United States.
To further illustrate this “disconnect,” WTI is averaging about $86 per barrel in September versus $114 for Brent – a nearly $30 barrel differential EVEN if WTI crude quality is better than Brent. Dubai crude meanwhile is averaging around $107 per barrel for the month.
So we should be wary when politicians and other groups use WTI as a reference point as it only adds to the confusion of an already complex situation. Could this be the reason for the alleged P8 to P10 per liter overprice? Some sectors might be using WTI when it is not the basis for pricing in the region.
While Dubai is the benchmark for crude oil prices in Asia, Mean of Platts Singapore (MOPS) is the region’s basis for finished products. Dubai benchmark refers to crude oil, while MOPS benchmarks finished products such as gasoline and diesel.
The Philippines imports around 40 to 50 percent of total domestic consumption of finished products. Finished products in the region are usually based on MOPS prices. Refiners in the country also use MOPS as basis for the prices of their production to be competitive with finished product importers.
Considering that all oil players in the Philippines adopted previous week’s average MOPS to adjust finished product prices, they seem to have the same level of pricing to ensure they do not lose volumes to competitors if they price above MOPS, or lose margins if they price below MOPS.
Now, we can better understand if the local oil players will not give in to the demands for an P8 to P10 per liter rollback.
Not so hidden agenda
Dismal third quarter. Philippine Long Distance Telephone Co. (PLDT) chairman Manuel V. Pangilinan says the telecommunication giant’s revenues for the third quarter of this year are lower than that of the same period last year but is more optimistic about the company’s overall performance for the year. The telecommunications industry is not alone. GMA Network chairman Felipe Gozon tells this writer that their third quarter numbers are below their expectations. The numbers are down due to a general reduction in industry advertising spend, particularly from the multinationals, he says.
Standstill. Philippine Airlines (PAL) president Jimmy Bautista shares that given that the Ninoy Aquino International Airport (NAIA) is already congested, then the Diosdado Macapagal International Airport (DMIA) at Clark, Pampanga should be explored as an alternative for airline companies using the NAIA terminals. DMIA is indeed a viable alternative as a second international gateway. Unfortunately, the government seems to be dilly-dallying on tapping DMIA’s potentials. Clark International Airport Authority (CIAC) president Chichos Luciano revealed that there is no word from Malacañang on what to do with the proposed second terminal at the DMIA. The Philco-Aero group, which is supported by San Miguel Corp. (SMC) president Ramon Ang, submitted an unsolicited proposal during the time of President Arroyo to undertake the construction of a second terminal, but discussions on the terms of reference (TOR) for the conduct of a Swiss challenge have been put on hold. The Aquino administration has frowned upon the unsolicited proposal route, especially those submitted during the previous administration, and now wants to bid out everything, even if this means that the public sector has to foot part of the bill. Even the Metro Pacific Investments Corp. (MPIC) group has expressed interest in developing DMIA. Unfortunately, the DMIA management has to wait for an official policy decision on the matter, and until then, we have no choice but to use the NAIA terminals.
Security risk. President Aquino has given our local Civil Aviation Authority (CAAP) marching orders to take us out of the Category 2 list by the first half of next year. It will be recalled that from Category 1, the US Federal Aviation Authority (FAA) has downgraded the Philippines to Category 2 because the country “either lacks laws or regulations necessary to oversee air carriers in accordance with minimum international standards, or that its civil aviation authority – equivalent to the FAA – is deficient in one or more areas, such as technical expertise, trained personnel, record-keeping or inspection procedures.” In order to achieve Category 1 status, the CAAP must comply with the standards set by the International Civil Aviation Organization (ICAO), which has also classified the Philippines as having significant security risks. PAL was one of the most affected by the downgrade because it has brought in two Boeing 777-300ER aircrafts and cannot use them for the North American routes. Local aviation authorities are allowed to set standards higher than ICAO standards and the standards of the US FAA are definitely higher than ICAO standards. The US FAA just wants the Philippines to comply with the minimum standards, which we seem to have a hard time achieving. The European Union has also blacklisted the Philippines for non-compliance with ICAO standards. It was learned that other countries like Japan were also looking at doing the same, but changed their mind nevertheless.
Aviation NEWS By
Neha Jain
Aviation NEWS Reporter
1. Group seeks resolution of airline, union row
The Tourism Congress on Thursday wants an immediate resolution of the controversy between Philippine Airlines and union members before it wreaks havoc on the travel industry.
“We are seriously concerned that the current dispute will further exacerbate the problem of the downgrading of the Philippines from Category 1 to Category 2 status by the US Federal Aviation Administration and the European Commission’s ban on our carriers,” the congress said in a statement.
“We strongly urge the Palea (Philippine Airlines Employees Association) to observe the rule of law and comply with lawful decisions rendered by the Department of Labor and Employment, the Office of the President, and the Court of Appeals aimed at upholding the public interest,” it said.There is no debating on the fact that local pump prices have reached levels that are insanely high.
We also know that the reason for these high prices is the simple fact that we as a country are dependent on imported crude oil and finished products. And unless we can dig up some oil or find viable and sustainable alternative sources of fuel to run our vehicles, or unless we want to go back to the good old days of using horse-drawn carriages or kalesas, then we unfortunately do not have a choice.
We can understand why there are people, especially militant groups and politicians especially, who have been observing the movement of world crude oil prices to find out if there is reason enough to ask for a rollback on local pump prices. Prices of imported crude oil and finished products have been highly volatile, resulting in upswings and downswings in local pump prices.
Just recently, militant groups have been claiming that prices should be rolled back by P8 to P10 per liter, but when pressed for basis of the claim, none could be presented.
Dubai crude, which is the benchmark for crude trades in the Far East, had been fluctuating from $100 per barrel in February this year to $106.56 per barrel as of end-September. The September Dubai crude price is about 15 percent higher than at the start of the year.
There are over 200 crude oil types in the world priced based on a few crude oil benchmarks namely Brent, World Texas Intermediate (WTI), and Dubai. Over the past few years, WTI has lost its relevance as an international benchmark due to logistical limitations at Cushing, Oklahoma - the oil trading hub and delivery point for WTI crude. Limited pipeline facilities flowing from Cushing has caused an influx of crude oil, overwhelming refining capacity and, depressing WTI prices. WTI reflects more the local demand-supply balance in the United States.
To further illustrate this “disconnect,” WTI is averaging about $86 per barrel in September versus $114 for Brent – a nearly $30 barrel differential EVEN if WTI crude quality is better than Brent. Dubai crude meanwhile is averaging around $107 per barrel for the month.
So we should be wary when politicians and other groups use WTI as a reference point as it only adds to the confusion of an already complex situation. Could this be the reason for the alleged P8 to P10 per liter overprice? Some sectors might be using WTI when it is not the basis for pricing in the region.
While Dubai is the benchmark for crude oil prices in Asia, Mean of Platts Singapore (MOPS) is the region’s basis for finished products. Dubai benchmark refers to crude oil, while MOPS benchmarks finished products such as gasoline and diesel.
The Philippines imports around 40 to 50 percent of total domestic consumption of finished products. Finished products in the region are usually based on MOPS prices. Refiners in the country also use MOPS as basis for the prices of their production to be competitive with finished product importers.
Considering that all oil players in the Philippines adopted previous week’s average MOPS to adjust finished product prices, they seem to have the same level of pricing to ensure they do not lose volumes to competitors if they price above MOPS, or lose margins if they price below MOPS.
Now, we can better understand if the local oil players will not give in to the demands for an P8 to P10 per liter rollback.
Dismal third quarter. Philippine Long Distance Telephone Co. (PLDT) chairman Manuel V. Pangilinan says the telecommunication giant’s revenues for the third quarter of this year are lower than that of the same period last year but is more optimistic about the company’s overall performance for the year. The telecommunications industry is not alone. GMA Network chairman Felipe Gozon tells this writer that their third quarter numbers are below their expectations. The numbers are down due to a general reduction in industry advertising spend, particularly from the multinationals, he says.
Standstill. Philippine Airlines (PAL) president Jimmy Bautista shares that given that the Ninoy Aquino International Airport (NAIA) is already congested, then the Diosdado Macapagal International Airport (DMIA) at Clark, Pampanga should be explored as an alternative for airline companies using the NAIA terminals. DMIA is indeed a viable alternative as a second international gateway. Unfortunately, the government seems to be dilly-dallying on tapping DMIA’s potentials. Clark International Airport Authority (CIAC) president Chichos Luciano revealed that there is no word from Malacañang on what to do with the proposed second terminal at the DMIA. The Philco-Aero group, which is supported by San Miguel Corp. (SMC) president Ramon Ang, submitted an unsolicited proposal during the time of President Arroyo to undertake the construction of a second terminal, but discussions on the terms of reference (TOR) for the conduct of a Swiss challenge have been put on hold. The Aquino administration has frowned upon the unsolicited proposal route, especially those submitted during the previous administration, and now wants to bid out everything, even if this means that the public sector has to foot part of the bill. Even the Metro Pacific Investments Corp. (MPIC) group has expressed interest in developing DMIA. Unfortunately, the DMIA management has to wait for an official policy decision on the matter, and until then, we have no choice but to use the NAIA terminals.
Security risk. President Aquino has given our local Civil Aviation Authority (CAAP) marching orders to take us out of the Category 2 list by the first half of next year. It will be recalled that from Category 1, the US Federal Aviation Authority (FAA) has downgraded the Philippines to Category 2 because the country “either lacks laws or regulations necessary to oversee air carriers in accordance with minimum international standards, or that its civil aviation authority – equivalent to the FAA – is deficient in one or more areas, such as technical expertise, trained personnel, record-keeping or inspection procedures.” In order to achieve Category 1 status, the CAAP must comply with the standards set by the International Civil Aviation Organization (ICAO), which has also classified the Philippines as having significant security risks. PAL was one of the most affected by the downgrade because it has brought in two Boeing 777-300ER aircrafts and cannot use them for the North American routes. Local aviation authorities are allowed to set standards higher than ICAO standards and the standards of the US FAA are definitely higher than ICAO standards. The US FAA just wants the Philippines to comply with the minimum standards, which we seem to have a hard time achieving. The European Union has also blacklisted the Philippines for non-compliance with ICAO standards. It was learned that other countries like Japan were also looking at doing the same, but changed their mind nevertheless.
3. Church group urges gov't intervention
Church officials have joined calls for the government to intervene in the ongoing labor dispute between Philippine Airlines and its ground –base labor union.
Church Labor Conference (CLC) said in a statement issued Saturday that President Aquino should call for a dialogue between PAL and the Philippine Airlines Employees’ Association (PALEA) to protect the rights of the workers.
“The Aquino government, the group said, should have played the role of a Knight protecting the rights of workers,” CLC said.
CLC criticized PAL’s implementation of its spin-off of its catering, call center and ground service department, which displaced thousands of its workers, despite its financial gains this year.
“To retrench employees and outsource regular posts at a healthy financial condition of PAL smacks of deceit and an outright disregard of the prevailing laws of the land,” CLC said.
“By calling the spinoff a management prerogative Malacanang precariously confers license to contractualization, random termination and a Fire-all-you can policy—a gateway to a contractual Philippines,” it added.
The Tripartite Industrial Peace Council (TIPC), composed by at least 20 labor groups, issued a statement last Friday urging the government to defend the contractual employment policy being implemented by PAL.
The group also urged the airline management to fill as soon as possible the vacuum left by its decision to terminate more than 2,600 employees in favor of outsourced personnel and resolutely work toward normalizing all operations.
“This is a matter of grave national interest because issues that adversely affect the tourism industry will have a negative impact on the economy,” the TC.
2. Philippine government looking into Manila airport terminal’s structural flaws
A senior Philippine official said Friday that studies have found structural flaws in a 9-year-old Manila airport terminal that suffered a partial ceiling collapse in 2006.
Two engineering companies and one engineers’ association that examined Ninoy Aquino International Airport’s Terminal 3 found flaws of varying degrees of seriousness, said Transportation and Communication Secretary Manuel Roxas II.
He said one study found only slight defects that can easily be fixed, another said it’s more serious and the third believes it’s “very serious.” The terminal was largely completed in 2002 but not opened until 2008 because of a legal fight between the government and the terminal consortium led by Germany’s Fraport AG.
Asked what the defects were, Roxas said: “Part of it design, part of it is the execution.” He did not elaborate.
A government attempt to open the showcase terminal in 2006 was marred when part of a ceiling collapsed. No one was injured.
Takenaka Corp., a Japanese company that was subcontracted by the consortium to build the terminal, maintains it has no defect.
Roxas said the government “has taken every precaution” to ensure passenger safety but that the measures are only “stop gap in nature and our objective is still to fix the structural flaws.”
The government will have the terminal subjected to stress tests using computer simulation and other procedures to determine the extent of the defects.
“Structural defect means it can fall on your head, so we have to resolve that,” Roxas said. “Isn’t it that the most responsible thing to do now is to find out which of these (assessments) is correct rather than just mindlessly react?”
The marble-and-glass terminal was embroiled in controversy from the beginning.
The government has been locked in a legal battle with Philippine International Air Terminals Co. Inc., the German-led consortium that was to operate the terminal for 25 years, after canceling its contract in 2002.
The government took over the facility but its opening was repeatedly delayed over the years as Fraport sued the Philippine government for expropriation without compensation. The Philippines has won international arbitration cases in Washington and Singapore.
Terminal operations have not been fully computerized including baggage handling because of ongoing talks with Takenaka to turn over the software for the system and to repair defects.
Roxas said Takenaka’s claim that the terminal has no defects carries some weight because the company “it is not a fly-by-night entity.” Takenaka has built major airports in Japan and was a contractor for Singapore’s Changi Airport, he said.
The terminal can handle 10 million passengers annually. Last year, the airport was used by 9.6 million passengers — 8.1 million domestic and 1.5 million international. Local budget airlines Cebu Pacific, PAL Express and Air Philippines plus Japan’s All Nippon Airways currently operate at the terminal.
3. Getting the facts right
There is no debating on the fact that local pump prices have reached levels that are insanely high.
We also know that the reason for these high prices is the simple fact that we as a country are dependent on imported crude oil and finished products. And unless we can dig up some oil or find viable and sustainable alternative sources of fuel to run our vehicles, or unless we want to go back to the good old days of using horse-drawn carriages or kalesas, then we unfortunately do not have a choice.
We can understand why there are people, especially militant groups and politicians especially, who have been observing the movement of world crude oil prices to find out if there is reason enough to ask for a rollback on local pump prices. Prices of imported crude oil and finished products have been highly volatile, resulting in upswings and downswings in local pump prices.
Just recently, militant groups have been claiming that prices should be rolled back by P8 to P10 per liter, but when pressed for basis of the claim, none could be presented.
Dubai crude, which is the benchmark for crude trades in the Far East, had been fluctuating from $100 per barrel in February this year to $106.56 per barrel as of end-September. The September Dubai crude price is about 15 percent higher than at the start of the year.
There are over 200 crude oil types in the world priced based on a few crude oil benchmarks namely Brent, World Texas Intermediate (WTI), and Dubai. Over the past few years, WTI has lost its relevance as an international benchmark due to logistical limitations at Cushing, Oklahoma - the oil trading hub and delivery point for WTI crude. Limited pipeline facilities flowing from Cushing has caused an influx of crude oil, overwhelming refining capacity and, depressing WTI prices. WTI reflects more the local demand-supply balance in the United States.
To further illustrate this “disconnect,” WTI is averaging about $86 per barrel in September versus $114 for Brent – a nearly $30 barrel differential EVEN if WTI crude quality is better than Brent. Dubai crude meanwhile is averaging around $107 per barrel for the month.
So we should be wary when politicians and other groups use WTI as a reference point as it only adds to the confusion of an already complex situation. Could this be the reason for the alleged P8 to P10 per liter overprice? Some sectors might be using WTI when it is not the basis for pricing in the region.
While Dubai is the benchmark for crude oil prices in Asia, Mean of Platts Singapore (MOPS) is the region’s basis for finished products. Dubai benchmark refers to crude oil, while MOPS benchmarks finished products such as gasoline and diesel.
The Philippines imports around 40 to 50 percent of total domestic consumption of finished products. Finished products in the region are usually based on MOPS prices. Refiners in the country also use MOPS as basis for the prices of their production to be competitive with finished product importers.
Considering that all oil players in the Philippines adopted previous week’s average MOPS to adjust finished product prices, they seem to have the same level of pricing to ensure they do not lose volumes to competitors if they price above MOPS, or lose margins if they price below MOPS.
Now, we can better understand if the local oil players will not give in to the demands for an P8 to P10 per liter rollback.
Not so hidden agenda
Dismal third quarter. Philippine Long Distance Telephone Co. (PLDT) chairman Manuel V. Pangilinan says the telecommunication giant’s revenues for the third quarter of this year are lower than that of the same period last year but is more optimistic about the company’s overall performance for the year. The telecommunications industry is not alone. GMA Network chairman Felipe Gozon tells this writer that their third quarter numbers are below their expectations. The numbers are down due to a general reduction in industry advertising spend, particularly from the multinationals, he says.
Standstill. Philippine Airlines (PAL) president Jimmy Bautista shares that given that the Ninoy Aquino International Airport (NAIA) is already congested, then the Diosdado Macapagal International Airport (DMIA) at Clark, Pampanga should be explored as an alternative for airline companies using the NAIA terminals. DMIA is indeed a viable alternative as a second international gateway. Unfortunately, the government seems to be dilly-dallying on tapping DMIA’s potentials. Clark International Airport Authority (CIAC) president Chichos Luciano revealed that there is no word from Malacañang on what to do with the proposed second terminal at the DMIA. The Philco-Aero group, which is supported by San Miguel Corp. (SMC) president Ramon Ang, submitted an unsolicited proposal during the time of President Arroyo to undertake the construction of a second terminal, but discussions on the terms of reference (TOR) for the conduct of a Swiss challenge have been put on hold. The Aquino administration has frowned upon the unsolicited proposal route, especially those submitted during the previous administration, and now wants to bid out everything, even if this means that the public sector has to foot part of the bill. Even the Metro Pacific Investments Corp. (MPIC) group has expressed interest in developing DMIA. Unfortunately, the DMIA management has to wait for an official policy decision on the matter, and until then, we have no choice but to use the NAIA terminals.
Security risk. President Aquino has given our local Civil Aviation Authority (CAAP) marching orders to take us out of the Category 2 list by the first half of next year. It will be recalled that from Category 1, the US Federal Aviation Authority (FAA) has downgraded the Philippines to Category 2 because the country “either lacks laws or regulations necessary to oversee air carriers in accordance with minimum international standards, or that its civil aviation authority – equivalent to the FAA – is deficient in one or more areas, such as technical expertise, trained personnel, record-keeping or inspection procedures.” In order to achieve Category 1 status, the CAAP must comply with the standards set by the International Civil Aviation Organization (ICAO), which has also classified the Philippines as having significant security risks. PAL was one of the most affected by the downgrade because it has brought in two Boeing 777-300ER aircrafts and cannot use them for the North American routes. Local aviation authorities are allowed to set standards higher than ICAO standards and the standards of the US FAA are definitely higher than ICAO standards. The US FAA just wants the Philippines to comply with the minimum standards, which we seem to have a hard time achieving. The European Union has also blacklisted the Philippines for non-compliance with ICAO standards. It was learned that other countries like Japan were also looking at doing the same, but changed their mind nevertheless.
PHILIPPINES AVIATION NEWS
Aviation NEWS By
Neha Jain
Aviation NEWS Reporter
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