Olongapo SubicBay BatangGapo Newscenter

Tuesday, September 18, 2007

Options on Fedex Subic hub weighed

Subic Bay Metropolitan Authority is considering two options on the 300,000-square foot facility to be vacated by US-based Federal Express in the Subic free port when it relocates its Asia-Pacific hub operations to Guangzhou next year.

Administrator Armand Arreza told reporters that the agency was in talks with several groups for the possible takeover of the facility after the termination of FedEx’s lease next year.

Arreza said FedEx had not officially signed the pre-termination of its lease contract with the agency. The lease is set to expire in 2010 but FedEx has opted to end its contract two years earlier and move its Asia- Pacific hub operations to Guangzhou.

“We are still negotiating with FedEx for the termination of the contract. There are pre-termination penalties but these are very minimal,” Arreza said.

He said FedEx would have to pay the lease fees until 2010 as penalty fort the early termination of the contract. But FedEx advanced some of the equipment used in the facility as advanced lease payments.

“Our income from FedEx is about P200 million every year. The landing fees account for P160 million, and the balance from the rentals,” he said.

The loss of FedEx’s hub operations in Subic Bay is considered a significant loss to the country.

The Subic Bay airport accommodates an average of 18 flights each day and charges $800 per “touch and go” of FedEx planes. The moment FedEx starts to scale down its daily flights, “all these revenues will go down to drain,” Arreza said.

FedEx’s pullout would also leave around 800 Filipinos jobless.

“One of the options is to tap one terminal operator to run the facility. Cargo operators can then land and fly from the terminal similar to the Hong Kong model,” Arreza said.

The agency has been looking at Hong Kong-based operators, with have tie-ups with different airlines servicing regular cargo terminals, to run the airport after FedEx pulls out.

He said the Hong Kong International Airport might serve as a model for Subic airport cargo terminal operations in providing services to several international airlines. The Hong Kong companies could replace the large-scale air cargo transshipment operations of FedEx by setting up similar operations in the free port, he said.

The second option, he said, was to get at least two couriers to jointly use the facility, which is adjacent to the Subic Bay International Airport.
By Elaine Ruzul S. Ramos - Manila Standard Today

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