The new international terminal, built by a Philippine-German joint venture, was expropriated by the GRP in 2004 when the owners were accused of corruption and overpricing. The two arbitration cases filed in the International Criminal Court in Singapore and International Centre for Settlement of Investment Disputes in Washington, have been decided in favor of the government in that the Anti-Dummy Law was violated. The DOF has given assurance that the government is committed to pay any amount the local Expropriation Court decides is due investors. Meanwhile, Cebu Pacific, the other major Philippine-owned airline, and Air Philippines and PAL Express have been allowed to relocate their NAIA flights from the ancient domestic terminal to T-3. International carriers, unwilling to move to T-3 until the ownership dispute is resolved, continue to operate from the very outdated Terminal 1 (T-1).
Full operation of T-3 will require the present taxiway to be closed so that only one runway will be available to all domestic, international, and general aviation flights. A fuel depot and lines must also be in place. Aside from T-3 being underutilized, the lengthy period since the government expropriation has created an irritant in RP-European relations and harmed the country’s investment image abroad. Expansion of NAIA beyond its current area of 600-hectares would require extensive demolition of business and residential areas.
The 1991 eruption of Mt. Pinatubo and subsequent erosion of Philippine political support for American military bases gave the GRP operational control of two extremely large installations at Clark and Subic in Central Luzon. Two decades later the special economic zones together host almost 145,000 employees and are becoming increasingly integrated, with Subic the international seaport and Clark the international airport serving the adjacent provinces.72 DMIA has room to build a 2nd and even a 3rd parallel runway adjacent to the two existing runways.
The Subic-Clark zone has tremendous potential for aircraft and ship assembly and maintenance, education, ITES, logistics, manufacturing, medical tourism, retirement, and tourism and could host many hundreds of thousands of more jobs with sound policies, promotion, and investment. Road connections from Manila to Clark and to Subic have greatly improved. In the decade ahead, the North Rail will become operational to San Fernando. A high-speed rail to link NAIA and DMIA has been proposed, and extension of rail service to Subic in the future should be considered, should the project be implemented (see Map 1).
Outside Central Luzon, airports in the various regions are being improved, although only a few have international service. Under the new National Tourism Act of 2009 (RA 9593), a province can be declared a Tourism Economic Zone, which could allow air or cruise ship service of any flag to operate with low taxes. Pocket open skies, which has stimulated tourism in several places in Asia, has not been tried in the Philippines, despite urging of such a policy for Clark from domestic business groups and foreign chambers.
However, the GRP negotiated bilateral air traffic rights agreements with 26 countries from May 2007 through February 2010, greatly expanding the potential number of flights between the Philippines and each country.73 These agreements are effectively bilateral open skies agreements since it will take many years to fully utilize the allowable inbound flights. Foreign airlines are burdened with the Common Carriers Tax (CCT) and Gross Philippine Billings (GPB), as well as customs, immigration and quarantine (CIQ) overtime charges, taxes and fees not imposed elsewhere and which make serving the Philippines less attractive for foreign airlines than more business-friendly regional destinations.
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72 Clark: 57,118 (2010) and Subic: 86,631(2010); total for freeports is 143,749.
73 Australia, Bahrain, Brunei, Cambodia, Canada, Finland, Hong Kong, Iran, Japan, Kuwait, Libya, Macau, Malaysia, Netherlands, New Zealand, Oman, Qatar, Russia, South Korea, Singapore, Spain, Thailand, Turkey, United Arab Emirates, United Kingdom, and Yemen.
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