ACTSI wants to maintain your aircraft in the Philippines

With the main Manila airport becoming saturated with airline traffic, business aviation is being pushed out of the Philippine capital’s metro area and into airports around the city’s periphery.

There are two suitable airports within close distance of Manila. The first, to the north, is Clark. What was once a US Air Force base is now serving several regional flights as well as a handful to the middle east.

And then there is Subic Bay International Airport to the West.

Subic Bay was originally constructed as a US Navy base in the early 1950s but has twice faced potential closure. The first was at the beginning of the 1990s. The US Navy, having already been at the airport for 40 years, tried to extend its tenure. The Philippine Senate narrowly voted against it and gave the US Navy a year to vacate the base.

After several years of handling a small number of commercial flights, FedEx, the US-based parcel delivery carrier, chose the airport as its intra-Asia hub. After building up the airport facilities and strengthening the runways and taxiways to handle a fully loaded MD-11 freighter, FedEx began operations at Subic Bay in 1995. Then, after 14 years of successful operations, FedEx made the decision to move its intra-Asia hub to Guangzhou, China.

Faced with potential closure once more, this time with a plan to turn the ground into a logistics hub, Aviation Concepts Inc, a Guam-based FBO company set up shop at the airport, hoping that business aircraft owners would use the airport as an alternative parking location to the busy and already congested Hong Kong area airports.

Aviation Concepts already had experience in the same field. Its Guam FBO had been opened to serve as an alternative to the costly Tokyo airports.

Subic Bay, much like Guam, benefits not only from comparatively lower landing and hangarage costs than in Hong Kong and Tokyo but also from the fact that there are no slot requirements or parking limitations.

The owners of Aviation Concepts Technical Services Inc, the Razon Group, are no strangers to aviation. As long-time Gulfstream owners themselves, they recognised early on the need not only for proper FBO facilities in their native Manila but also the need for the aircraft to be maintained.

And Subic Bay seemed like the perfect place to do that, especially as airports in surrounding Asian countries become increasingly saturated.

Razon Group’s chairman, Enrique K. Razon made his money through container port services. His grandfather had built up Manila’s original port and shipping services and upon his death in 1987 his grandson, Enrique Razon, inherited his company, International Container Terminal Services, Inc.

According to the latest Forbes rich list, he is the fifth richest Filipino, with an estimated fortune of $3.2 billion.

Although Razon’s Gulfstream was managed by another company, he quickly realised the need for more facilities in the Philippines, with Subic Bay being the ideal location.

In mid-2018 the Razon Group acquired the Subic Bay facility. Since then it has been working exclusively on Gulfstream aircraft today has maintenance approvals from the Bermuda (VP/Q-B) and Cayman Island (VP-C) authorities for G450 and G550 aircraft.

“We have many years of experience with Gulfstream aircraft, on the pilot’s side and the maintenance side and from the company’s owner himself exclusively owning Gulfstreams,” says Mark Moss, the company’s maintenance manager.

Moss had been brought into the company thanks to his experience with working on Gulfstream aircraft. Employed by the manufacturer for 37 years, he has worked on all types of Gulfstream aircraft, from the original jet-powered Gulfstream II, right the way through to the latest G650ERs.

Expansion at the airport will come with the company acquiring two hangars, which ACTSI is currently working on refurbishing, with the aim of having them operational in the second half of this year.

“The hangars were there already, the structures were already there, but they weren’t being maintained in the past. So, we are doing all of the renovations ourselves,” says Jerry Wong, business development director for the company.

Once Phase One of the planned expansion is complete, the overhauled facility will be able to accommodate eight to ten large-cabin, Gulfstream or Global type, aircraft. Phase Two will provide hangar space for five to six additional large-cabin aircraft.

To go hand in hand with the new hangars, ACTSI is also in the process of applying for US Federal Aviation Administration (FAA) maintenance approvals, which will allow it to perform maintenance on US N registered aircraft.

Although business aviation in the Philippines has been growing in popularity, the latest Asian Sky Group fleet report shows that the number of aircraft in the country has remained fairly static over the past few years, mainly hovering just below the 50 aircraft mark.

The aircraft that are in the country are largely older, smaller aircraft, with many older-generation Hawker and LearJet aircraft seeing out their final days in the country. AMSTAT, the business aviation data company, says that the average age of the aircraft fleet in the Philippines is 18.7 years.

Despite this, Wong says that in recent years Filipinos have increasingly been embracing business aviation. “General Aviation has been in the Philippines for many years already, but business aviation is growing steadily. It’s not like in China in, where after the global financial crisis of 2008 it was suddenly boom time, it is more of a gradual growth in the Philippines,” says Wong.

With only a handful of Gulfstream aircraft in the country, ACTSI is looking to attract owners and operators from around the region to use its maintenance facilities, particularly those on the Chinese mainland, Hong Kong, Singapore and Malaysia.

A big part of the incentive for owners to choose ACTSI is Subic Bay. Although the Philippines is a transient destination for aircraft in its own right, the company says it is able to keep the costs of maintenance lower than at surrounding sites, mostly due to the lower costs associated with the airport.

“We believe that the higher cost of maintenance in the Hong Kong area, specifically the hangarage and some other fees, is a good incentive for aircraft owners to come to the Philippines, because if you look at the cost of the hop from Hong Kong or Singapore then there will probably be a lower cost than performing the maintenance in either of those locations,” says Moss. “So, I think that’s definitely a good incentive for operators to come here. And, of course, there are no slot restrictions either.”

Midway through 2018 the firm signed a 25-year lease agreement (as well as a 25-year option) with the local government that will see the airport transformed into a regional business aviation hub, with a fifty plus years potential.

With more and more airports in Asia struggling to keep up with increased demand from airlines, business aviation is being pushed out to make way for the increase in flights. That could make Subic Bay more attractive to users who struggle not only to get arrival and departure slots at congested airports but to find parking and hangarage as well.

“We want to be able to make Subic Bay a business aviation hub. In this region, a lot of airports have different restrictions; slot restrictions, parking restrictions,” says Wong. “Even in Manila they have restrictions, business aircraft cannot operate between midday and 19h00 daily. So, this is why we foresee that Subic Bay might be the best option for private jets.”

ACTSI has access to extra capital through its ownership by the Razon Group if it needs to invest further into the airport and its facilities, although as Raul F. Trinidad Jr, business development director says, there would need to be proper justification to access further funding.

“If the business case is there and we can justify it, then absolutely. But we have to be able to justify it of course,” says Trinidad “It’s not so much that we can just go in and request additional funding. We have to be able to show that it is justified and that the business case shows that the demand is there.”

With the company looking to grow Subic Bay Airport into business aviation hub, it is also keen to give something back to the community. Although during the early years it relied on bringing in talent from overseas, as part of its corporate social responsibility it understands that it has an untapped potential talent pool on its doorstep and is keen to develop it in the future.

“At the beginning we are trying to get very experienced engineers, for example, somebody like Mark (Moss), who has a deep background in aviation, especially with Gulfstream aircraft,” says Trinidad “But eventually down the line, we envision that they will transfer their knowledge to the new trainees that come in. But right now, we are focussed on getting people with the right experience. We want to be able to use that first and build our reputation, build our credibility.”

By having maintenance professionals who have already acquired many years of experience on board, ACTSI believes that it will quickly be able to cement its reputation as one of the premier maintenance providers in the region, which will give it the platform it needs for further expansion.

“That is a key selling component that we have, is that the people that we have on board are experienced professionals who will be able to give customers the quality service that they demand and need.”