A WEEK into the New Year, Tourism Secretary Ace Durano was up in the clouds, presiding at a news conference to confirm what the sector had known: the country had breached its target, finally, of 3 million tourist arrivals for 2007, and all indications showed to even better performance in 2008.

Then the clouds burst, and the rains fell, in torrents, courtesy of the United States Federal Aviation Administration (Faa), which let down the boom on Philippine civil aviation—subsequently dealing the buoyant tourism industry a major blow.

It did this with the simple, sweeping act of downgrading the Philippines’ Air Transportation Office (ATO) from Category 1 to the very damning Category 2. Meaning, the system did not have what it takes to consistently ensure safety in all aspects of civil aviation; no matter that the flag carrier that flew so many times each week to the US had recently passed the tightest international safety audits.

The downgrade, which has drawn a wide, collective protest from Filipinos, including the usual grandstanders in Congress and the Pilate-like bureaucrats of the Executive, had a most telling effect on the country’s collective psyche because it signalled that the Philippines, one of the first Asian countries to operate an airline, had fallen so far, among other achievements. It has also affected Philippine Airlines (PAL), the only Filipino jetliner that flies to the United States. Until the problem is fixed, PAL would not be able to expand its coverage of the North American territory, while US citizens are warned at the same time to patronize only American flag carriers. The other local carriers, such as Cebu Pacific, are stymied from pushing through with plans to fly to the US routes while Category 2 is in effect.

The Faa regularly conducts an assessment of the civil aviation authorities of countries with air carriers that operate in the US as part of their International Aviation Safety Assessment (Iasa) program. The aim is to determine compliance with standards spelled out by the International Civil Aviation Organization (Icao), the world’s civil aviation arbiter whose word is law and can only be ignored at one’s peril.

The Iasa audit of the ATO found a dearth of specific operating regulations, technical guidance, qualified technical personnel, licensing and certification obligations, continued surveillance obligations and resolution of safety issues. In July 2007, after completing its audit, the Faa held discussions with ATO to forge an action plan and corrective measures to improve its oversight functions. The government representative from ATO and Congress admitted the deficiencies and vowed to undertake corrective measures, including revising/updating of safety policies and procedures, hiring and training more qualified technical inspectors and passage of pertinent civil aviation laws. Between then and now, it seems nothing that local authorities did had convinced the Faa that the efforts would lead to somewhere soon.

The Faa will revert the Philippines to Category 1 only after the ATO shall have passed the next periodic review, which would at least take one year, according to an Icao representative—effectively putting in question the brave words of the Department of Transportation and Communications (DOTC), mother agency of the ATO, that we can get the upgrade in a few months. As an indication of how tedious is the review being conducted, the Icao expert, one of five invited by ATO as consultants, had to read word-for-word a thick document—one among dozens of documents—correcting every word, comma and punctuation and adding new supplements, annexes and updates. The Faa churns out voluminous records of these documents every year, including the latest addendum, edict, decree, order, declaration, meetings and conventions and to keep up with their output, the ATO would need a separate building and staff to manage the paper tsunami.

Before the downgrading, the ATO had three hearings in Malacañang: the first with a Cabinet member, another during a Legislative-Executive Development Advisory Council (Ledac) meeting, and the third in the presence of President Arroyo. Apparently moved by the report, the President, in her State of the Nation’s Address (Sona), urged Congress to approve the Civil Aviation Authority of the Philippines (Caap) bill. But then it was too late. By the time the bill was being tackled by the 14th Congress, the Faa handed down its verdict downgrading the country.

Following the announcement that we have been removed from the company of first-class aviation bodies and dumped in the company of 19 other nobodies, local officials searched for scapegoats and the ax fell on the hapless Daniel Dimagiba, who was just an officer in charge, having been appointed to the post in October after former assistant secretary Nilo Jatico resigned.

The Philippines has reason to be embarrassed to be in the company of Bangladesh, Bulgaria, some African states such as the Congo (formerly Zaire), Gambia, Swaziland, Zimbabwe, and South American states of Guyana, Haiti, Honduras; including the dots in the Pacific such as Kiribati and Nauru.

Those were the days

In the heyday of Philippine aviation, flag carrier Pal used to span two-thirds of the globe; we were the first Asian airline to fly to Europe, touching down in Rome, Amsterdam, the United Kingdom, China, the Middle East, Australia, Southeast Asia and North America. We were the first country in Asia to mount a commercial flight, and PAL used to teach here in Manila the cabin crew of flight attendants and stewardesses of then-fledgling Japan Airlines.

Then as now, since it has more resources than ATO, Pal conducts its own oversight and has maintained an independent record of strict adherence to world safety levels. It passed the International Air Transport Association (Iata) operational safety audit in 2007; its fleet is being maintained by Lufthansa Technik Philippines, an affiliate of the world’s largest maintenance, repair and overhaul service provider. It also meets the requirements of the US FAA, French DGAC, European Aviation Safety, as well as the international aviation industry standards of the Iata.

Beginning of civil aviation

In 1931, long before the Icao was organized, we had the Air Commerce Act that created the Office of Technical Assistant on Aviation Matters under the Department of Commerce and Communications. Eventually, we had a coherent aviation body with the crafting of Republic Act 776 that created the Civil Aeronautics Administration (Caa) in 1952.

We should have noticed early on what was wrong with our aviation policy. While commercial flights grew by leaps and bounds, from the popular 30-seater DC-3 in the ’50s, to the first B747 jumbo jet in the ’70s and now the 600-passenger behemoth that is the Airbus 380; and while communication and air traffic management had leapfrogged from High Frequency (Hf) and Ultrahigh frequency (Uhf) after World War II to the satellite-based system now in use worldwide, the Philippines seems to have gone in the opposite direction.

The Caa that used to govern our aviation was diluted, under strongman Ferdinand Marcos, to the Bureau of Air Transportation (Bat) and placed under the powerful Ministry of Transportation in July 1979—apparently for easier control by political leaders. And in April 1987 the creation of Executive Order 125 further diminished the Bat into what is now the Air Transportation Office (ATO), an adjunct of the DOTC. Certainly a far cry from the independent—operationally and financially—civil aviation agency mandated by international auditors.

The signs of deterioration of air service had become apparent as the whole legal and operational structure of civil aviation declined. Air-traffic controllers, who used to enjoy higher salary and perks, were included in the salary standardization law, making them no better off than regular government workers. The flimsy argument was that the air controller’s salary could not be higher than that of a military general or a Cabinet member—ignoring the fact that these latter positions carry with them a bundle of perks. Or that the salaries of executives in government-owned and -controlled corporations run into the millions. The emasculated ATO could not intervene since its meager budget is dictated by its mother agency, the DOTC.  We eventually saw the plunge in morale of a highly specialized group, many of whom joined the exodus to emerging aviation centers in the Middle East and Africa. The brain drain goes on until now. Our veteran air controllers, made to work under the ever-tightening constraints of the lack of infrastructure and a salary scale barely fit for survival, leave the service at an attrition rate of 10 percent a year.

Former Faa official David Moores, who came to the Philippines last year as an Icao representative and had a short-term contract to evaluate the ATO, came away with reports detailing the critical lack of infrastructure, specifically the air-traffic control system. However, he had nothing but praise for the controllers who, in spite of great odds, have been able to do a good job. Shortly before he left the country sometime in July last year, Moores noted that the ATO’s organizational “infirmities” as caused by lack of funds could only be remedied when a Caap is in place. The ATO, which would become the Caap, could exercise fiscal autonomy to finance badly needed upgrading and maintenance and operating expenses. Unlike the situation now, when technical staff had to wait long even for vital equipment owing to budget constraints.

On the matter of the controllers, one notes that it costs millions of pesos to train them and it would take a particular trainee about two years before he is deemed ready or even allowed to handle sensitive assignment. In the screwed-up priorities of our officialdom, it seems better to allow them to leave after they have been with ATO for at least five years and trained with taxpayers’ money, than to upgrade their pay so they’ll stay. A supposedly cash-strapped government opted to let them leave and waste its training investment; and worse, spend millions more to train their replacements, when the money could have gone to increasing their take-home pay. At the moment, the ATO has lined up 300 trainees within the next three years, graduating about 100 a year—yet the industry would not truly feel the impact of their costly training until two years after they have joined the service.

The noble ones who remain in the ATO stable are a morose lot but are still able to adhere to the high standards of their profession. There was a time they had this silent wish, that if only one legislator would meet an air mishap—and yet survive—because one of our old navigational aids malfunctioned, or a sudden thunderstorm caught him in midair and the radar conks out, then they could have a champion for immediate legislation to improve aviation service in this country. But because airplane and engine designs have improved so much that accidents are few and far between, the flying public has been lulled into believing that we are in the midst of progress.

The fragility of our state of safety and efficiency in the last few years, according to Cesar Cruz, the chief of the Manila Tower, is mirrored in the long separation times between airplanes, a tactic used by air controllers to minimize the risk of accidents in the face of infrastructure problems. The long separations have delayed airplane arrivals and departures, hurting airlines, especially during peak travel seasons like Christmas.

The infrastructure problems are legion: the old Tagaytay long-range radar, built with a guarantee of 10 years but actually in use for 26, had to be taken down regularly for repairs. That’s the “see” part of monitoring aircraft. 

Through the years, air traffic at the Ninoy Aquino International Airport (Naia) has kept mounting while departures are subjected to “slotting”—where pilots are told when to leave because of congestion in the airways. The airlines, in turn, suffer the higher operating costs, while tourism is affected because tourists and airlines would rather be some place where there are superior runways, airport facilities and related infrastructure.

‘We are not alone’

To be fair, we are not alone in this respect because in the US—particularly in the busy hubs of Atlanta, Georgia, Chicago and New York—air-traffic controllers have been leaving in droves, with the consequent implication on the safety margins of air travelers. According to a recent Associated Press report, the Faa has so few veteran controllers left that the workers’ union said it could not guarantee completely safe handling of the volume of aircraft of the four major airports mentioned during the busiest periods of the day.

“They are being asked to handle so much volume with so little rest and fewer eyes and ears that they are fatigued, and when you are fatigued you make mistakes,” Faa’s chief operating officer Hank Krakowski was quoted as saying. He added that the agency is aggressively hiring new controllers, although new ones could take up to three years to become fully certified for all tasks at busy facilities.

The National Air Traffic Association (Nata), which has a continuing dispute with the Faa over contract negotiations, estimates that 500 veteran controllers will have retired during the first third of the budget year that began October 1, 2007; while in March 2007 the Faa estimated 695 more would retire during the remaining months of the year.

But the US, which has 14,974 controllers, has even more resources than the Philippines to address its problems. Meanwhile, the ATO, which has to look after the welfare of less than 400 controllers, has seen its regulatory function also retrogress. Certified pilots are offered a starting monthly salary of P25,000 when the going rate elsewhere starts at $4,000 (P200,000). Many pilot positions thus remain vacant. These pilots inspect and review airline companies, airplanes and their pilots before getting their licenses from the ATO. The permits run the gamut of aviation business permit, air-carrier permit, air agencies permit, trading permit, flight safety program, aircraft licensing and airworthiness, and pilot licensing. The ATO is also responsible for the maintenance of air navigation services, financial billings and air-traffic control.

The few remaining check-pilots of the ATO have had to make personal sacrifices to keep body and soul together. Despite such sacrifices, there are persistent rumors that some of them thrive by resorting to corruption—in exchange for the certification, validation and renewal of licenses.

The weak infrastructure of the ATO and the corresponding weak links that bind the agency are not lost on either the Faa or the Icao, which conduct regular oversight functions on 190 contracting states. It is said that Icao had to intervene with ATO because it found it ironic that a country so far advanced in aviation in comparison with the other 18—which had practically just emerged from a state of aviation unconsciousness recently—was in such dire straits.

For a bit of history, the Icao, a specialized agency of the United Nations, was created with the signing in Chicago, on December 7, 1944, of the Convention on International Civil Aviation. Initially it had 52 member-states which today have grown to 190. One of its early works was the adoption of the International Standards and Recommended Practices (Sarps) to regulate international air transport.

In 1998, during the 32nd Icao General Assembly, it urged all 190 members to “establish autonomous civil aviation authority due to the problems on bureaucracy and difficulty to meet Icao standards.”

Local aviation master plan

Unknown to many, the ATO had already crafted a Civil Aviation Master Plan, under the aegis of the Asian Development Bank in 1996; and in 1997, a bill was filed in the 11th Congress, creating the Philippine Civil Aviation Authority (Pcaa), under the Dotc’s Third Airport Development Project.

However, the “Caap” was later adopted because the Pcaa initials were similar to Pakistan. At the moment, Icao representative in the Philippines Florante Magdamo notes that majority of the members have had autonomous civil aviation authorities in their respective states, while the country remains among the laggards.

Magdamo, a former controller, coordinates between the ATO and the Icao to streamline the paperwork necessary so that we could go back to our former Category 1 status.

During the 12th Congress, the Caap bill was not discussed, busy as the nation was in the ouster of then-President Joseph Estrada. During President Arroyo’s tenure, the bill remained in the dustbin, and Malacañang certified it only as urgent when the Faa warned that we would soon lose our preeminent status in the aviation community.

It was also in 1998 that the Icao had recommended adoption within 10 years of the Communication-Navigation-Surveillance/Air Traffic Management system (Cns/Atm), aiming to unite the communication and air traffic control of the world into a single, seamless network. So far, most countries have adopted the program, while others are right on target. The Philippines, after diverting the Cns/Atm fund to improve the Davao and Iloilo airports, said that it would have the system in place in 2012, with additional one year to streamline the network.

Why did the Caap bill remain sleeping in Congress for the last decade? Some blame a turf war between the Dotc and the ATO. Sometime in the 10th or 11th Congress, the Dotc proposed a Transportation Security Authority (TSA) that would handle all of the country’s aviation matters. This was opposed by the Icao, which mandated that a member-country should have a single authority where all civil aviation matters reside. At the same time, the Senate had balked at having a fiscally autonomous ATO able to dispense P3 billion in yearly income; it feared the money would be squandered through corruption. This was countered by the ATO, which pointed out that the Manila International Airport Authority (Miaa), with a larger income of P6.75 billion, is also subject to the Commission on Audit.

While the aviation bill continues to be refiled at every new Congress, the solution has remained elusive; its urgency lost on those who pull the levers of power. Until the Faa downgrade, the DOTC or the ATO has not set a single centavo to mobilize a campaign for the bill’s passage in Congress. Anacleto Venturina, a former controller, said that when he used to follow up the papers in Congress, he had to spend his own gasoline money going back and forth to the legislators. He stopped when the expenses burned a hole in his pocket. This year, when the ATO’s deficiency was exposed and the proverbial shit hit the fan, there was a flurry of finger pointing to assign the blame and the first to get it was Dimagiba, who was just an OIC recently thrown into the fray.

Dimagiba, an engineer who rose from the ATO ranks, is concurrently the flight safety officer in charge. He hopes to be appointed as Flight Safety Division head to assist the ATO in the implementation of the Caap once it is adopted.

Meanwhile, tourism and all its auxiliary sectors and businesses bleed from the cruel blow, while those who did so little to avert the crisis now get the chance to play hero.

Dreams a-crashing to the ground

A WEEK into the New Year, Tourism Secretary Ace Durano was up in the clouds, presiding at a news conference to confirm what the sector had known: the country had breached its target, finally, of 3 million tourist arrivals for 2007, and all indications showed to even better performance in 2008.

Making performance reviews less stressful–for everyone

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Beware of old technologies’ last gasps

When superior technologies emerge, old ones usually don’t simply fade away. To the contrary, their performance often leaps suddenly, thereby extending their lives and slowing the adoption of the new technologies.

Partner in building

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Winning: Don’t fear foreign investment

Q: What is your opinion about sovereign wealth funds taking ownership of US companies? The stakes being sold are substantial, like the government of Singapore’s 10-percent holding of UBS, and the management impact could be, too, like Saudi Prince Alwaleed bin Talal pushing Chuck Prince out of his job at Citigroup. ---Dipak Thakur, Decatur, Illinois

Copy This

GO ahead, copy this article. But passing this as an original and earning from it, well, that’s not only plagiarism but, as lawyer Alex Ferdinand S. Fider points out, it’s actually stealing.

Download Uproar

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International man of peace

THERE isn’t a day when headlines aren’t filled with stories of conflict. Whether it’s in the most famous—or infamous—conflict site in Iraq, where hundreds of thousands are estimated to have died since 2003, or in Darfur or even a new democracy like East Timor, some bloodshed is bound to make the headlines.

Manage like an entrepreneur

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THE BEST ADVICE I EVER GOT

Good advice often comes in the form of deeds, not words. The best advice I ever got came not by listening, but by observing one of my colleagues—by watching his behavior, coming to understand his philosophy and then adapting it to my own style.

One great moment

In an island reputed to be the world’s best beach, it’s not easy to make a big splash.

That was the challenge faced by the men and women behind Boracay’s “newly reborn” resort, OneMGM. For its inaugural event, they brought in foreign crooner Matt Monro Jr. for a special performance—a tack common among major hotels in large cities like Manila, Cebu or Davao but not in this Aklan municipality.

Winning: Making missions matter

Q: Like most start-ups, we launched ourselves with a big mission that was going to change the game. Now, several years out, it appears our mission isn’t going to deliver to the extent we hoped. How do we come up with another? Gerald McLaughlin, Shanghai, China 

A: What an honest question. And an admirable one, too.

Beyond the numbers

Listening to SGV founder Washington Sycip can be likened to a class in business, politics, history, education, values and meritocracy, among others.

Pakistan’s Continuing Tragedy

PERHAPS this was a situation again of two people and one coffin, as one theory goes: Pakistan’s current US-backed dictator, Gen. Pervez Musharraf, did not want to share the space with Benazir Bhutto, and so the latter had to go.

Bhutto’s death shines light on husband’s money dealings

LONDON—During the stormy years Benazir Bhutto ruled Pakistan, her husband was a top power broker and a prime target of corruption allegations that toppled her.

Want more from Lean Six Sigma?

To help fund innovation and roll out a promising new product line, a multibillion-dollar consumer products manufacturer we’ll call ConsumerCo urgently needed to increase capacity at two of its plants and reduce overall operating costs.

Northwestern Mutual’s Ed Zore on staying relevant to customers

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Clear copy

James Henderson, the Asia-Pacific managing director for printer channel operations of Fuji Xerox Co. Ltd., is fascinated with working with the company as it continues to develop products for today’s consumers.

Winning: What makes a lousy leader?

Q: What is lousy leadership?
Goran Milic, Zagreb, Croatia

A: Now, why would you ask that question? Certainly not because you want to be a lousy leader yourself!

It can only be because you’re checking your instincts about someone you know. Maybe even the person who signs your paycheck.

Maintaining thresholds of performance

For some readers, the new rules of market leadership will be intuitively appealing. To others, they will raise stubborn questions. How can a company offer the best value proposition in the market (read: give its products and services away), and still make more money?

Notes to a tragedy

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Authorities pressed doctors to stay mum on Bhutto’s death

RAWALPINDI, Pakistan—Pakistani authorities have pressured the medical personnel who tried to save Benazir Bhutto’s life to remain silent about what happened in her final hour and have removed records of her treatment from the facility, according to doctors.

Lending a hand

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Winning: A year of pushing hot buttons

About this time last year, we received an e-mail from a reader who asked if we believed America’s competitive success was linked to its relative lack of corruption.

INVESTOR BRIEFING

WATER is still flooding the basement of a shopping mall in the Philippines’ central business district after an explosion in October. At least nine died and more than a dozen businesses were kicked out from their glass-walled shops now wrapped with white-painted boards.

REDUCING POWER COSTS

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RISING GDP

The Philippines’ robust economy continues to perform well, achieving a GDP growth of 6.6 percent in the third quarter of this year.

Brotherly love

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Winning: Breaking Through Bureaucracy

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A: Damages? How about deadens?

PLAYING ALONG

TO many children, Elmo, the much-loved furry red monster from Sesame Street, is more than just a plaything. To children ages two to five years old, Elmo is a trusty playmate—a friend to lug around the playground; one who won’t complain when hugged, pinched or smothered with kisses. For parents, Elmo even makes a good teacher.

TOY TEST 2007

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CONSUMER CONFIDENTIAL

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Lumads in the new world

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Mission: global customs service

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No run of the mill success

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Winning: Private equity’s very public problems

Q: Why are so many private-equity deals blowing up? Alan Engle, Great Neck, New York                 

A: The short answer is that the world has changed (read: the US sub-prime-mortgage mess has erupted). A lot of companies that were once hell-bent on acquiring hot new properties suddenly want out of deals that are starting to look too cold for comfort.

A Queen Stumbles

HIS eyes stared upward as he started with that familiar tuneful articulation about Iloilo at the peak of its grandeur. A few minutes later, his voice turned wobbly as he recounted how the province slipped from prominence. “So we lost our label being the country’s Queen City of the South.”

Teacher’s pet

WHY am I passionate about Vietnam? Because Vietnam has proven to the world that it is possible to simultaneously achieve robust and sustained economic growth with equitable income distribution. 

Putting imagination to work

SOON after World War II, from 1941 to 1945, the Philippines experienced a decade of unprecedented growth in the 1950s, with Manila—despite being the most devastated city during the climactic battle era—slowly regaining its vigor to once again become a center of industrial progress.

Five steps to building your personal leadership brand

You have a personal leadership brand. But do you have the right one?

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What Health Consumers Want

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How Bayan got its voice back

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Winning: Managing shooting stars

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A: Not as far as you’re probably considering, we imagine, given the panic that strikes most managers when a star threatens to shoot out the door.

Lighting the way

Dutch electronics and lighting giant Philips Electronics has been continuously doing business in the Philippines for the past 50 years.

In the name of the people

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In his 2003 debut at the Oakwood mutiny, then-Lt. Senior Grade Trillanes hemmed and hawed about his intentions.

Water Is Life

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Give your team a challenge they can’t resist

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Improve your return on returns

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A staged solution to the catch-22