Airline, cargo companies welcome pullout of FedEx from Subic Freeport

Local airline and cargo companies have welcomed the planned pullout of Federal Express (FedEx) from the Subic Freeport in 2008, saying the American cargo carrier’s operations in the country was in violation of the Constitution.

Robert Lim Joseph, president of Save our Skies (SOS), said local airline and freight forwarding companies were not surprised when FedEx announced in Hong Kong last week that it was closing its Asian hub in Subic and transferring it to Guangzhou, China in 2008.

"This only shows that foreign companies would go where the market is. China is a big market for the United States. The company sees more traffic between the US and China and other Asian destinations," Joseph said.

He said the company would only use the Philippines as transit point to other destinations in Southeast Asia when it transfers its operations to China.

Joseph said the pullout of FedEx from Subic would have no negative economic impact on the Philippines.

He said the investment of FedEx in the Philippines is insignificant and that it pays only a small amount of taxes as the bulk of its taxes is still paid in the US.

"Their operation here did not even result in lower cargo rates," Joseph said.

On the contrary, he said, the company’s pullout would return the business that it has taken from local and foreign carriers and local freight forwarding companies.

"The cargo that is destined from the US to the Philippines and vice versa will still be there even without FedEx," he added.

According to Joseph, the decision to allow FedEx to establish a hub in Subic in 1995 was not a "win-win" situation.

"The Philippine government trumpeted over nothing," he said, referring to its delight when it got FedEx to set up its hub in Subic over other competing areas. "The government just surrendered its patrimony and went against the Constitution."

He said Subic is also not viable as an international airport where it can accommodate jumbo jets because of its limited space.

"Subic is more suitable as a port because of its deep water. The former Clark Airbase in Pampanga is more suited as an international airport as it has a huge land space," Joseph emphasized.

Earlier, the SOS has strongly protested the alleged 7th freedom flights of FedEx in violation of the Constitution. Seventh freedom gives a carrier operating entirely outside the territory of the flag state to fly into the territory of the grantor state and there, discharge or take on traffic coming from or destined for a third state or states.

The SOS said the RP-US Air Transport Agreement (ATA) does not allow 7th freedom flights by the American cargo carriers.

Local freight forwarding companies have also complained that FedEx and foreign cargo airlines United Parcel Service (UPS) and DHL are now engaged in domestic commerce by directly competing with local cargo agents.

They said even though FedEx, UPS and DHL are known as cargo airlines, they are in fact operating as air freight forwarders competing with local cargo forwarders.