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Monday 10 October 2011

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1. DOTC eyes NAIA transfer to Clark

The government is eyeing the transfer of the Ninoy Aquino International Airport (NAIA) from Metro Manila to Clark, Pampanga, Transportation Secretary Manuel Roxas II told a Senate hearing yesterday.

Roxas said the 440-hectare NAIA, if privatized, would raise up to $2.5 billion in revenue for the government.

“And that in effect will pave the way for the transfer of the airport to Clark,” he told the Senate committee on finance.

“But the key to the transfer is the high speed rail because without that, it really becomes very inconvenient,” said Roxas.

The issue cropped up during the hearing when Senate President Juan Ponce-Enrile asked for the latest updates on the government’s North Rail project with China.

At that point, Enrile raised the possibility of transferring the international airport to Clark once the project becomes successful.

“It will be beneficial to the country because it will link Central Luzon, specially Clark, with Metro Manila. We can transfer the international airport to Clark and leave the present international airport for further development,” Enrile said.

Meanwhile, members of the Airline Operators Council (AOC) at the NAIA said they would transfer to Clark or the Diosdado Macapagal International Airport (DMIA) if the facilities and the transportation are well in place.

“If the terminals and the high speed transportation like the speed train from Manila to Clark are in place, there is no doubt we will transfer,” AOC chair Ma. Lourdes San Juan said.

It had been reported earlier that the NAIA is already congested and has reached its “critical level.”

Civil Aviation Authority of the Philippines (CAAP) director general Ramon Gutierrez said that to solve the aircraft congestion at the NAIA, operations here should be closed and eventually transferred to the DMIA.

Roxas lauded

Clark International Airport Corp. (CIAC) president and chief executive officer Victor Jose Luciano lauded Roxas’ support for the Ramos-era plan to transfer the country’s main international airport from Manila to Clark.

Luciano made the statement as he bared plans of an investor to construct more hangars that could accommodate wide-bodied aircraft at the DMIA complex.

He, however, declined to give details about the project pending the finalization of contracts.

In April 1994, former president Ramos signed Executive Order No. 174 designating the Clark airport, later named after former president Diosdado Macapagal, as the “future site of the country’s premiere international airport.”

EO 174 cited the International Air Transportation Association’s forecast at that time “that more than 376 million enplanements (51.1 percent of world total) will be in the Asia-Pacific by the year 2010, a fourfold increase from 1990.”

The executive order also noted that in other Asian countries, airport expansion were outside major cities “to alleviate congestion in airspace, runways and terminals, and to keep pace with rapid economic development.”

It also stressed the need of “relieving Metro Manila of further increase in migration, congestion, pollution, traffic and other urban ills.”

Luciano said that the CIAC “is prepared to assume fully the requirements of a full fledged international airport.”

“The commitment of President Aquino and Secretary Roxas, which they have now made public, is expected to finally remove any hesitation on the part of potential investors to come to the DMIA with solid optimism,” he said, amid plans to construct a world-class passenger terminal on top of the existing terminal at the 2,500-hectare aviation complex.

NAIA expansion

Meantime, while the transfer of the NAIA from Manila to Clark is being studied, the Department of Transportation and Communications (DOTC) will conduct a feasibility study on the possible expansion of the NAIA complex in Pasay City in view of the recent move of President Aquino authorizing the transfer of the huge Nayong Pilipino property to the Manila International Airport Authority (MIAA) for the extension of airport and cargo facilities.

Roxas said that the issuance of Executive Order No. 58 was just part of the game plan towards the development of the NAIA, and the overall five-year transport infrastructure master plan being drawn up by the DOTC worth some P490 billion.

“The EO is a major part of the game plan to build a world class transportation infrastructure for land, air and sea that would ensure safe and convenient travel for all Filipinos,” Roxas said.

In Executive Order No. 58, the President said the 22.3-hectare land of the Nayong Pilipino Foundation Inc. (NPF) will be used for the expansion of the NAIA Terminal 2.

2. PAL: Unsafe flights claim part of ‘black propaganda’

Flag carrier Philippine Airlines reassured passengers on Sunday evening of the safety of its flights as it belied insinuations that overworked staff and untrained personnel are endangering its operations since it spun off three of its non-core businesses last Oct. 1.

In a note on its Facebook account, PAL dismissed as "black propaganda" allegations that it said came from some former PAL employees. It said it expects more black propaganda to come.

“We assure our passengers that all aircraft utilized in our flights are released only after thorough assessment and safety checks," PAL president and COO Jaime Bautista said in the Facebook note.

Over the weekend, Gerry Rivera, head of the PAL Employees Association (PALEA), called on the Tourism Congress for an investigation of passenger safety issues at PAL.

“We ask the Tourism Congress to take up the cudgels for the riding public by inquiring about safety and service concerns at PAL given that overworked and untrained replacement workers are now servicing passengers. If the Tourism Congress is anxious about the impact of the labor dispute on the influx of tourists, then it should also be worried about any possible accidents due to unsafe work practices by contractual workers," he said.

PALEA cited news reports that two Danish tourists backed out of a PAL flight to Cebu over safety concerns. It said the two reportedly questioned PAL’s replacement workers at the check-in counter including a supervisor about safety issues but were left unsatisfied with the answers.

PAL is working to normalize its operations after spinning off three non-core businesses, which its then ground crew union had claimed would render 2,600 workers jobless.

Over the weekend, it claimed it had normalized its international flights.

More "disinformation" expected

Bautista said they expect "disinformation" to escalate especially since some disgruntled employees are getting "desperate by the day."

“We hope our passengers will carefully discern fact from the fiction being peddled by those out to destroy the flag carrier’s good name and reputation," he said.

He cited as one example of "black propaganda" the allegations that "overworked" PAL staff and untrained personnel were compromising airline safety.

“Former PAL ground workers are so used to working less than their 7.5-hour daily shift for five days, such that they consider our volunteers’ eight-hour shifts, six days a week as ‘overwork,'" he said.

“Even claims that an airstep bumped and caused damage to one of PAL’s Airbus A340s is a fabrication concocted by (PAL Employees' Association president Gerry) Rivera and his cohorts. All our aircraft undergo regular checks and no such damage has been found by PAL’s Aircraft Engineering Department and Lufthansa Technik, PAL’s maintenance provider," he added.

Bautista reiterated that safety is the cornerstone of PAL’s operations, adding the Civil Aviation Authority of the Philippines (CAAP) has a surveillance inspection team especially assigned to PAL.

He said all PAL aircraft are maintained by Lufthansa Technik Philippines and other reputable maintenance, repair and overhaul (MRO) companies abroad.

All safety regulations are likewise complied with particularly those enforced by CAAP, US Federal Aviation Administration and US Transport Security Administration, as well as regular safety checks under the stringent IATA Operational Safety Audit (IOSA), he said.

PAL is the only IOSA-certified Philippine carrier, he added.

“Apart from strict security checks, PAL flights also undergo a final safety check by our highly-trained and experienced pilots. A PAL plane will not take off until pilots are fully satisfied with the aircraft's airworthiness and only after they have determined the safe load of passengers and cargo," he added.
Bautista said PAL’s current corps of admin volunteers, former union members who joined the service providers and new hires all underwent proper training and certification prior to handling official ground duties.

3. Philippines top court wants to review ruling on Philippine Airlines

Manila: The Supreme Court called for a review of its September ruling which imposed on the Philippine Airlines, the country's flag-carrier, to reinstate 1,400 flight attendants who were retrenched for holding a strike in 1998.
"The court en banc further resolved to recall the resolution dated September 7, issued by the (Supreme Court's) second division in the case. The court further resolved to re-raffle the case to a new member-in-charge," said the Supreme Court's ruling dated October 4, but was released only on Monday (October 10).
In response, leaders and members of the Flight Attendants' and Stewards' Association of the Philippines (FASAP) said the High Court's recent ruling was ‘seriously disturbing".
FASAP has been calling for the implementation of the Supreme Court's pro-FASAP rulings this year and in 2008.

n its September 7, 2011 ruling, the Apex Court dismissed two motions for reconsideration filed by PAL in 2008, and said the airline company did not observe proper procedure when it retrenched 1,400 flight attendants in 1998.
"Many of these employees have since then moved on, but the arbitrariness and illegality of PAL's actions have yet to be rectified..This case has dragged on for so long and we are now more than duty-bound to finally put an end to the illegality that took place," the September 7 ruling said.
Last July 2008, the Supreme Court upheld FASAP and ordered the reinstatement with full back wages of 1,400 flight attendants who were retrenched during a pilots' strike.

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1. Greenhouse gases 1, US airlines 0: but only half-time in Europe

Case C-366/10 The Air Transport Association of America and Others, CJEU, 6 October 2011, Opinion of Advocate-General Kokott

In a recent post on US climate change litigation, I said that, by contrast with the US Courts, there was relatively little such strategic litigation in the UK and the EU. But that all changes when the US lawyers come over here – exactly the issue in this case. US airlines said to the EU Court that their rights under international aviation law have been infringed by a European Directive on greenhouse gas emissions from airlines. This EU Court Opinion goes right to the heart of how two systems of supra-national law fit together. EU law hits International Law. And, unsurprisingly, an EU lawyer thinks that EU law wins – so far, anyway, before the full EU Court of Justice decides the case.

The EU has sought to limit greenhouse gas emissions from heavy industry for some years – since its Emissions Directive in 2003. In 2008, the EU passed another amending Directive to regulate another element of heavy industry – the airborne one in my image. Both seek to “cap” emissions from a sector at a total figure, and then to allow those affected to “trade” emission entitlements within that sector so as to find the cheapest way of reducing emissions – a Good (market-based) Thing. And the airlines did not like this move. Hence this challenge in the UK Courts to the local regulations which implement the 2008 Directive. The Directive, in force from the beginning of 2012, seeks to regulate the emissions of any aircraft which takes off or touches down in the EU, and does so by looking at how far the aircraft had flown – as some sort of measure for how many tonnes of greenhouse gases had been emitted by the aircraft. It is these aspects – said to be extra-territorial in that they extend beyond the EU – which were focussed on in this challenge, as well as a whole slew of provisions in international aviation law.

The A-G summarised the airlines’ arguments:

42. In essence, the claimants and the interveners supporting them are challenging Directive 2008/101 on three grounds: First, they contend that the European Union is exceeding its powers under international law by not confining its emissions trading scheme to wholly intra-European flights and by including within it those sections of international flights that take place over the high seas or over the territory of third countries. Secondly, they maintain that an emissions trading scheme for international aviation activities should be negotiated and adopted under the auspices of the ICAO [an international organisation] it should not be introduced unilaterally. Thirdly, they are of the opinion that the emissions trading scheme amounts to a tax or charge prohibited by international agreements.

But slow down – it is not enough for an individual or company to point to a breach of international law. As the Advocate-General pointed out, whilst the EU must respect international law, and the EU Court must look to see if the validity of EU acts may be affected by some breach of international law, this does not mean that individuals

may rely at will on provisions or principles of international law in court proceedings in order to defeat acts of EU institutions. It is always necessary to determine specifically, with regard to each particular provision and principle of international law at issue, whether and to what extent it can be relied upon, in proceedings initiated by a natural or legal person, as a benchmark against which the lawfulness of EU acts can be reviewed.

Expanding that a bit, individuals can only rely on an international law agreement

if by the nature and broad logic of that agreement, it is capable of conferring rights which an individual can invoke before the courts.

In other words, therefore, the international agreement in question must affect the legal status of the individual. And legal status is affected where individuals are granted independent rights and freedoms under an international agreement, as is the case, for instance, with many association, cooperation and partnership agreements concluded by the EU and other non-EU states – an example might be an EU agreement with Turkey regulating how and when Turks can work within the EU. As the A-G also pointed out, international environmental agreements may also contain provisions on which any interested party is entitled to rely before the courts. Those familiar with the rules about when an individual in the EU can rely upon a directive which has not been made part of his or her domestic law will recognise this test – easy to state but difficult to apply, particularly as lots of people means different things by the concept of “rights” in this context.

So from the general approach to the specific measures relied upon by the airlines.

The first piece of international aviation law, the massively important Chicago Convention (with its 190 states as contracting parties and ICAO set up under its auspices) got short shrift from the A-G as a ground upon which the claimants could rely. This was because the EU was not a party to that Convention, even though all the Member States are. Efforts to spell out an obligation upon the EU of substantial compliance out of its history failed.

An attempt was also made to divine a principle of customary international law that ‘aircraft overflying the high seas are subject to the exclusive jurisdiction of the country in which they are registered, save as expressly provided for by international treaty’. This also failed, and even if it had succeeded, it would not have availed the claimants. Such rules may determine the scope of sovereignty of States and limit their jurisdiction, but by “their very nature and broad logic” cannot affect the legal status of individuals.

However, the A-G found that two measures could be relied upon by the airlines. The first was Article 7 of a EU/USA ”Open Skies Agreement” (2007, supplemented in 2010) which says that the laws and regulations of one Party within its territory are also to apply to aircraft and the passengers, crew and cargo on aircraft of the other Party and are to be complied with by them. This was unconditional as regards its content. It was also sufficiently precise for it to have tangible legal consequences for individuals: it describes in detail the type of laws and regulations to which it relates, and categorically states that these laws and regulations ‘shall be applied’ and ‘shall be complied with’. It also specifically addresses individuals, as it is specifically the airlines (or their aircraft and cargo) and passengers and crew to which the relevant laws and regulations are to apply and by whom/which they are to be complied with. Hence, she concluded, Article 7 of the Open Skies Agreement fulfilled all the requirements for direct application.

The second was contained in Article 15(3) of the Open Skies Agreement, under which the parties are to apply any environmental measures affecting air services in accordance with the principle of fair and equal opportunity, in a non-discriminatory manner and in a way which must not prejudice the airlines’ prospects in competition with each other. This was unconditional and sufficiently precise. As with prohibitions on discrimination under external agreements and in a similar way to the competition principles applicable within the European internal market, this rule is capable of having direct application.

The A-G turned then to look to see if there had been any breaches of these specific international obligations. She found that there had not, so the claim was misconceived. In doing so, she rebutted the suggestion that the Directive had extra-territorial effect:

The fact that the calculation of emission allowances to be surrendered is based on the whole flight in each case does not bestow upon Directive 2008/101 any extraterritorial effect. Admittedly, it is undoubtedly true that, to some extent, account is thus taken of events that take place over the high seas or on the territory of third countries. This might indirectly give airlines an incentive to conduct themselves in a particular way when flying over the high seas or on the territory of third countries, in particular to consume as little fuel as possible and expel as few greenhouse gases as possible. However, there is no concrete rule regarding their conduct within airspace outside the European Union.

She also considered that there was no duty to negotiate emissions trading schemes under the auspices of the ICAO and hence no duty not to introduce such schemed unilaterally. Finally, she rejected the arguments that the emissions trading scheme amounts to a tax or charge prohibited by international agreements.

So a number of things of interest here. First of all, the whole underlying politics of the case – yes, the EU has, under trade pressure, been willing to open its skies to US carriers (that is what the whole Open Skies process was about), but, in a parallel measure, the EU is entitled to demand its price, namely some degree of regulation of the emissions which flow therefrom. Secondly, the whole clash of two sets of legal regimes: international aviation law meets EU emissions law. But that is nowhere as simple as saying that international meets EU, because the EU law in question is itself derived from UN measures on climate change including the Kyoto Protocol. And thirdly, the sustained analysis by the A-G of just what it is about a given measure to enable individuals or corporations to rely upon them as conferring rights – in domestic-law-speak, giving them grounds of challenge. Well worth a read – though a health warning – it is 240 long paragraphs, even before the inestimable pleasures of the 183 footnotes.

2. American Airlines to outsource some Tulsa work

American Airlines has notified its Transport Workers Union in Tulsa that the company will outsource heavy maintenance on four Boeing 757 aircraft by Nov. 1, company and union officials said.

The 757 work will be performed by TIMCO Aviation Services, an independent aircraft maintenance, repair and overhaul provider in Greensboro, N.C.
The 757 heavy maintenance, or "C checks," normally are performed at American's Maintenance and Engineering Center at Tulsa International Airport, company and union officials said, and the work takes from three to four weeks to complete.
American executives said a backlog of maintenance work at the Tulsa base compels the company to outsource the 757 maintenance as a temporary solution.
"American Airlines takes a very strategic approach to its maintenance planning needs," said American spokeswoman Andrea Huguely. "At this time, a short-term solution is required to address a large number of heavy maintenance checks for a portion of American's fleet.
"Over several years, we have outsourced a very few, specialized projects, usually on a short-term basis. That work is a minuscule fraction of our overall maintenance operation."
Spokesmen for the TWU's Local 514 in Tulsa, however, said American management knew about the 757 heavy maintenance requirements more than a year ago, failed to plan for the work and refused to consider TWU proposals for performing the maintenance in-house.
"This is another example of management failing to listen to its labor force and plan properly for the future," said John Hewitt, Local 514's chairman of maintenance. "Over a year ago, management decided to defer important maintenance items on the 757 fleet until a later date, and then we began to hear that some of the 757 work would be outsourced.
"In response, the TWU officers and members formed a '757 Save Team' that studied the situation and approached management with recommendations for keeping the work in Tulsa. They did not listen. The contract between American Airlines and the TWU clearly states that this maintenance work is to be accomplished by the TWU. It's time for management to start listening to its workers."
American is nearly alone among its airline competitors in performing its heavy aircraft maintenance at its own facilities with its own mechanics, industry officials say.
In the last decade, Northwest Airlines, United Airlines, Delta Air Lines and US Airways shed their in-house heavy maintenance capabilities through the bankruptcy process.
American averted a bankruptcy in 2003 when the TWU, the Allied Pilots Association and the Association of Professional Flight Attendants agreed to $1.6 billion a year in wage and benefit concessions.
Talk of the possibility of bankruptcy has swirled again recently. Parent AMR Corp.'s stock plunged to a 52-week low of $1.75 on Oct. 3. It rebounded somewhat last week to close at $2.50.
The situation is being watched closely by local civic leaders because American employs more than 7,000 people in Tulsa. The M&E center positions, especially, are considered high-wage jobs with good benefits.
The loss of a significant number of those jobs would be a blow to the local economy, observers say.
As AMR continues to report annual losses — it has posted three straight annual losses and is the only major U.S. carrier forecast by analysts to report losses in 2011 and next year — some Wall Street types have urged the company to sell its maintenance operation.
If American struggles with a $600 million to $800 million labor cost disadvantage compared with its competitors, shedding its aircraft maintenance division would reduce that disparity, analysts said.
As recently as three years ago, American executives said that although American's labor costs are higher, they are offset by superior quality, faster turn-times and availability of tooling and parts.
Today, some American mechanics sense management has a much less favorable view of the company's in-house maintenance operations.
Local 514 spokesman Terry Lesperance referred to the statement made a year ago by Jeff Brundage, American's senior vice president of human resources, that American's labor costs are "a big brick in our backpack to being competitive in this industry."
Lesperance said management increasingly sees American's maintenance operations as a cost center, rather than a profit center.
"When it comes to aircraft maintenance, (former Vice President of Base Maintenance) Carmine Romano and the management that prided themselves on aircraft maintenance have retired," Lesperance said. "Since Carmine left (two years ago), it's really been difficult."
TWU officials say the 757 C checks, which involve stripping flooring, seats, panels, overhead bins, communications and entertainment systems from the plane so every component can be inspected and tested, can be performed in Tulsa in 22 to 30 days.
TIMCO is scheduled to do the 757 heavy maintenance in 35 days, Lesperance said.
American's Huguely said the company planned for the 757 work, but it has taken longer than expected.
"There is only a set amount of space, machinery and employees to complete this maintenance work in-house," Huguely said. "If the work is not done in time, the aircraft would have to be grounded, forcing the airline to cancel flights and adversely affecting our customers and employees.
"As a result — and as a short-term solution — we are sending four 757 aircraft to TIMCO Aviation. ... Keep in mind, that's four of 124 planes in American's 757 fleet. That means our TWU employees will still handle nearly 97% of our 757 maintenance."
Michael Boyd, who follows American for Boyd Group International in Evergreen, Colo., said the Fort Worth carrier has limited hangar space and employees to maintain its 600-aircraft fleet.
"Airplanes are like teenagers. You have to know them to fix them," Boyd said. "In the long run, you can fix them cheaper in-house. TWU has worked with the company in the past to reduce costs. You don't want to mess with an asset like that."

3. Boeing Unveils Deer Jet’s Latest BBJ at NBAA Show in Las Vegas

At the National Business Aviation Association (NBAA) annual convention in Las Vegas on October 10, Boeing Business Jets unveiled the latest BBJ to enter the Chinese charter market with operator Deer Jet.

The new Boeing Business Jet, owned and operated by Deer Jet of Beijing, is the second of four BBJs for the airline, making Deer Jet the largest BBJ charter operator in China.

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