Premature opening delays Laguindingan Airport completion by five months

Feb 5, 2014

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Airlines lose P228-M over 12-day period

The completion of Laguindingan Airport has been moved back by five months due to the national government’s insistence to open it as a Visual Flight Rule (VFR) airport last June 15, 2013, raising the specter of more losses to Northern Mindanao due to flight cancellations due to inclement weather.

 

The yearend report of the Department of Transportation and Communication on the Air Navigation System and Support Facilities (ANSSF) project component of the Laguindingan Airport Development Project (LADP) states that due to the June opening of the airport, the contractor is restricted to working only during night time, prompting them to request the DOTC for an extension of five (5) months.

 

The request of the contractor is now with the DOTC, awaiting the approval of Sec. Joseph Emilio A. Abaya. Once approved, the revised completion of the project is November 2014.

 

Contractors facilities

 

However, the business community, represented by the Coalition of Chambers in Cagayan de Oro and Misamis Oriental, is vigorously opposing the request for an extension by the Korean contractor and has instead proposed a review for a “realistic and early completion date for navigational aids installation of Laguindingan Airport contractor through the adoption of innovative fast-tracking construction methods.”

 

“We cannot allow an extension until November, 2014,” said a former official of the Oro Chamber. “This will further affect our competitiveness and disrupt all planned conventions and conferences in the city. We cannot even count the impact to our visitors who have been inconvenienced by the cancellations; likely, they will shelve future plans of going to Cagayan de Oro or Region 10 at some point in the future.”

 

The National Competitiveness Council cited Cagayan de Oro City as “The Most Competitive City in the Philippines” in 2012. As the capital city of Northern Mindanao, Cagayan de Oro is the prime mover which has made it the second largest regional economy in Mindanao with a Gross Regional Domestic Product (GRDP) of P239.677-billion (26.3% of the Mindanao economy) in 2012.

  

Flight statistics at the Laguindingan Airport complied by the Civil Aviation Authority of the Philippines (CAAP) show that for the 10-day period covering January 10-22, 2014 some 304 commercial flights or 56 percent of 546 scheduled flights were cancelled due to limited visibility brought by inclement weather and the lack of landing lights and navigational aids.

 

Hundreds of air commuters line up at Laguindingan Airport hoping their flight can get through

 

Flight cancellations over the period averaged 12 flights a day or 57 percent of the 21 flights scheduled daily. The bulk of the cancellations occurred during the period Jan. 19-22 with 74 flights or 49% of the total 152 cancelled due to Tropical Storm Agaton and the Low Pressure Area (LPA) which immediately followed.

 

According to sources from within the airlines, the operating cost of a round trip flight from Manila to Cagayan de Oro and back of  a A320 Airbus which is the standard aircraft used by airlines operating at Laguindingan is conservatively P1.5 million at 80% passenger load factor or 150 passengers with cargo. 

 

Based on this benchmark, airlines lost P31.5M for every day that all the 21 scheduled flights (or 42 round trip flight) at Laguindingan were cancelled. Total losses for the 304 cancelled flights were approximately P228-M or an average of P17.5M per day over the period, affecting some 22,800 passenger or an average of 1,800 daily over the 12-day period.

 

Counterpoise Foundation Works at DVOR-DME Area 2

 

This is approximately the same amount of damage caused by TS Agaton and its aftermath to infrastructure (P273.62 million) and agriculture (P253.49 million) reported by the National Disaster Risk Reduction and Management Council (NDRRMC) last Jan. 30, 2014.

The Cagayan de Oro Chamber of Commerce and Industry Foundation, Inc. (Oro Chamber) conservatively estimates the cancelled flights cost Cagayan de Oro alone approximately P20-M daily in actual and opportunity costs.

 

“This still doesn’t count indirect losses. A lot of business opportunities were lost, meetings cancelled, additional travel expense to Davao or Butuan for many, rebooking charges for international flights, new bookings for many who needed to have other options, plus a lot of other intangibles,” said a former chamber executive who preferred to remain anonymous.

 

Prior to its opening last June 15, 2013, the Oro Chamber vigorously campaigned against what it termed as the “premature opening” of the Laguindingan Airport. At the time, the focus of the chamber’s opposition centered on the VFR operation of the new facility which would only be operational from 6AM to 6PM thereby effectively disallowing early morning or late evening flights.

 

Manhole Ground Checking

 

Compared to a high of 28 daily flights at the old Lumbia Airport, there has only been a maximum of 21 flights allowed daily from Laguindingan Airport. The cancellation of night flights has especially constrained the shipping out of high value seafoods and vegetables which need the night flights to link to early morning flights to their markets overseas.

 

However, due to the DOTC and the CAAP’s insistence that the Laguindingan was an all-weather airport, they failed to allow for the wholesale cancellation of even daytime flights due to the limited visibility which would have not been a constraint had the installation and commissioning of the  runway lights and navigational aids been implemented as originally scheduled by the contractor.

 

Unloading materials at site

 

 “I cannot believe that it is not possible to finish the installation if all the equipment is already available at the site,” the former chamber executive noted. “The DOTC yearend report shows most of the physical plant needed for the Airnav and lights are already 100 percent completed.

 

Oro Chamber President Efren Uy, in behalf of the Coalition of Chambers in Cagayan de Oro and Misamis Oriental, said it is possible to expedite work on the ANSSF project by immediately starting work after 5:00 p.m.or after the last flight and stopping before the first flight the next day; and, deploying more personnel for the civil works and for those jobs which can be done off the runway during daytime.”

 

Another recommendation put forward by a former chamber official is the provision of a supplemental contract which would provide incentives for the Korean contractor, SKY-KR Consortium, which would allow the firm to field additional workers and longer working hours.

 

Coring holes in runway at night

 

“Since the Korean contractor won with a much lower bid than the NEDA estimate of P700 million, providing him with incentives not exceeding the P700 estimate is still a viable option worth pursuing given the economic losses now being incurred by the people of Northern Mindanao with the flight cancellations and loss of night and early morning flights.”

 

The contract amount for the ANSSF supply project awarded to SKY-KR Consortium was  

P 411,561,000.00 or 32 percent lower against the ABC of P609, 258,191.41 and 42 percent lower than the NEDA approved cost of P 708,137,138.00.

             

The Original Construction Schedule was 15 months from March 2013 to June 2014 based on the unrestricted working time condition. 

 

Region X made the second largest contribution to growth in Mindanao in 2012 with 1.96, and remains its fastest growing regional economy, averaging an annual growth rate of 5.8 percent for the last 10 years. It is the domestic trade leader in Mindanao, its PhP 57.9-billion (2010) accounting for 11.3 percent contribution to the Philippines (Commodity Flow, NSO) and was the leading agriculture producer in Mindanao for the period 2010-2012 (National Accounts, NSCB).

 

Northern Mindanao also has the biggest industrial sector among Mindanao’s regions for the period 2010-2012 as well as the highest manufacturing output over the same period. Consequently, it was also the top revenue producer in electricity and water over the same period.

 

Not the least, the 2010 Annual Survey of Philippine Business and Industry (ASPBI) showed Northern Mindanao as having the highest revenues per worker, value added per worker, average revenue per establishment, and average profit per establishment among the Mindanao regions. (BWM News & Features)

 

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