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Aerospace Resource Guide: Philippines

 

Philippines Statistics

Summary
Market Entry

Current Market Trends

Current Demand

Main Competitors

Best Prospects
Subsector Focus: Helicopters

Barriers

Trade Events/Associations

CS Contact

Capital: Manila
Population:
97.35 million GDP USD: USD 258.5 billion
Currency:
Philippine Peso (PHP)
Language
: Filipino (official; based on Tagalog), English (official); eight major dialects - Tagalog, Cebuano, Ilocano, Ilonggo, Bicol, Waray, Kapampangan, and Pangasinense

Summary

The Philippine government has awarded over USD 1 billion in aerospace-related projects from October 2013 to April 2014. These include signing a public private partnership deal for the operations and expansion of the second largest airport in the country, and the purchase of lead-in fighter trainer jets, search and rescue helicopters, combat utility helicopters, attack helicopters, and aircraft rescue and firefighting (ARFF) vehicles. Apart from these, the Philippines regained its Category 1 rating from the Federal Aviation Administration (FAA).

Market Entry


The best way to market aerospace products and services to the private and public sectors is through agents and distributors. Republic Act 9184 (RA 9184), or the Philippine Government Procurement Law, dictates that companies interested to bid on government projects must be 60% Philippine owned. The distributor/agent must be familiar with local regulations, have access to key customers, and have the capability to provide after-sales support. However, in the case of aircraft and engine sales to Philippine airlines, the customers prefer to deal directly with the manufacturers.

Current Market Trends


On April 9, 2014, the Federal Aviation Administration (FAA) announced that the “Philippines complies with international safety standards set by the International Civil Aviation Organization (ICAO) and has been granted a Category 1 rating.” This is a significant development in the Philippine civil aviation industry. The return to Category 1 will pave the way for aggressive expansion in the Philippines’ civil aviation industry. To date, Philippine Airlines (PAL) only flies to the U.S. West Coast. PAL announced its intention of adding more U.S. routes once the country regained its Category 1 rating. PAL bought 64 new aircraft in 2013, however, it is expected that they will still need additional wide bodies to service their new U.S. routes. There were indications that Cebu Pacific was pursuing the possibility of flying to Guam before the category downgrade. It is likely that the company will re-visit its plans to fly to the U.S. now that the Philippines has regained its Category 1 status.

Current Demand


The Department of Transportation and Communications (DOTC) signed the contract with the Filipino-Indian consortium, GMR Infrastructure of India and Megawide Construction Corporation, for the Mactan-Cebu International Airport (MCIA), a public private partnership (PPP) deal on April 22, 2014. The contract includes the operations of MCIA for 25 years beginning on October 2014 and the construction of a brand new terminal by 2018. The GMR-Megawide Consortium submitted the winning bid of USD 327 million for this project. This is on top of the USD 397 million to be spent on the construction of a new passenger terminal building. The DOTC has lined up several other airport development projects including a USD 163 million budget terminal for the Clark International Airport. The feasibility study for the master plan and design is ongoing and is expected to be completed by the third quarter of 2014. The Civil Aviation Authority of the Philippines (CAAP), an attached agency of the DOTC, awarded an aircraft rescue and firefighting (ARFF) vehicle contract worth over USD 30 million. More projects related to upgrading airport security equipment are expected later in the year and through 2016.

Competitors


The United States, while having an excellent reputation for quality and reliability, is facing very stiff competition from European and Asian companies. Airbus dominates the large commercial jet market. AgustaWestland has supplied the DND’s requirements for search and rescue and attack helicopters. Eurocopter is competing aggressively for other search and rescue helicopter requirements. Construcciones Aeronáuticas SA (CASA) of Spain and Indonesian Aerospace (PT Dirgantara Indonesia) are very active in pursuing the light and medium lift aircraft projects of the DND.

Best Prospects


Aircraft re-fleeting and upgrade of commercial airlines.
Airport ground support equipment for the planned airport expansion projects in Mactan-Cebu, Clark and smaller regional airports.
Airport security equipment including screening equipment for both passenger and cargo, and closed-circuit television (CCTV) cameras, and perimeter intrusion detection system (PIDS).
Rotary wing aircraft for multi-role use (search and rescue, VIP).
Aircraft used for maritime surveillance missions.
Light lift and medium lift aircraft.

Subsector Focus: Helicopters


Helicopter sales in the Philippines are growing. The Department of National Defense (DND) signed contracts for the purchase of search and rescue helicopters, lead-in fighter trainer jets, combat utility helicopters and refurbished UH-1H from October 2013 to April 2014. They are expected to continue buying more air assets to improve their maritime surveillance and defense capabilities. The private sector is also actively buying new rotary wing aircraft to be used by oil and gas and mining companies, as well as religious groups.

Barriers


A barrier in doing business with the Philippines is the eligibility requirements for government procurement. Of particular concern is a “Certificate of Reciprocity” that states that the United States allows Philippine companies to participate in procurement activities for the same requirements. The U.S. Commercial Service in Manila can work with U.S. companies in meeting this requirement.

Trade Events/Associations

Asia Defense and Security (ADAS) Show 2014

July 16-18 | World Trade Center, Pasay City, Philippines
www.adas.ph

ADAS 2014 is a Defense, Security and Disaster Management show supported by the DND (including the General Headquarters of the Armed Forces of the Philippines, and all the service commands - Army, Navy, Air Force) and the DOTC.

U.S. Commercial Service Contact Information:


Ms. Yna C. Quiambao
Commercial Specialist
Yna.Quiambao@trade.gov
+63 (2) 3012000 ext. 2176


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