【Ex-post Monitoring of Completed ODA Loan Project】
The Philippines“Nationwide Air Navigation Facilities Modernization Project Phase III”
External Evaluator: George Terahara(International Development Center of Japan Incorporated)
Field Survey: April 2012
1. Project Description

Map of the Project Area

Laoag Control Tower

1.1 Project Objective
The project’s objective was to enhance the safety of air traffic services by developing air
navigation facilities nationwide, and thereby contribute to an increase in air traffic and growthof the air industry in the Philippines.
1.2 Outline of Loan Agreement
Loan Amount/ Disbursed Amount

6,386 million yen / 6,203 million yen

Loan Agreement Signing Date/

August 1995 / June 2004

Final Disbursement Date
Ex-Post Evaluation

FY 2006

Executing Agency

Air Transportation Office of Department ofTransportation and Communication (DOTC-ATO)((Current) Civil Aviation Authority of thePhilippines (CAAP))

Main Contractor

TOMEN Corporation ((Current) Toyota Tsusho
Corporation) (Japan)

Main Consultant

Japan Airport Consultants (Japan)-1-1.3 Background of Ex-post Monitoring
Before 1992 the traffic volume of the Philippines’ aviation sector had remained stagnant due
to political turmoil and economic recession. However, traffic volume has been increasing since
1992 as a result of population growth and economic development, as well as the introduction oflarger aircraft with improved performance and the building of new airports. Under thesecircumstances, the government of the Philippines has been striving to promote the developmentof air navigation facilities based on a master plan on air navigation aid.
In 1978, the Air Transportation Office of Department of Transport and Communication(DOTC-ATO) implemented the Nationwide Air Navigation Facilities Expansion Project (PhaseI) with an ODA yen loan. As part of the Phase I project, DOTC-ATO developed a long-term
modernization program. In 1986, after reviewing its modernization program, DOTC-ATO
implemented the Nationwide Air Navigation Facilities Modernization Project – Phase II. As partof the Phase II project, DOTC-ATO developed the Financial and Technical Management Study,a plan for years 1990 to 2000. Based on the criteria established in the study, the projectreviewed the implementation of development projects for air navigation facilities that werebeing carried out with assistance from other donor countries and prepared the demand forecast
for the Civil Aviation Master Plan (CAMP). DOTC-ATO then prepared the implementation plan(I/P) for this Phase III project and concluded an ODA yen loan contract for the project in 1995
to develop air navigation equipment.
Ex-post evaluation of this project recognized the high effectiveness because of expansion of
the coverage of air-ground radio communication (areas where pilots and air traffic controllers
can talk using radios) and better guidance control through improved sensitivity withintroduction of state-of-the-art high-precision equipment. However, the project period greatly
exceeded the planned period (220% of planned period); therefore the evaluation for efficiency
was low. Despite some problems including lack of spare parts and an insufficient operation andmaintenance budget, sustainability of this project was judged as moderate. Consequently, thetotal evaluation rating was satisfactory. In addition, ex-post evaluation recommended to the
executing agency to secure sufficient budgets, develop a system for the provision of spare partsand enhance the equipment repair system.
Consequently, the project became subject to Ex-post Monitoring in order to review and verify
the current conditions from the ex-post evaluation onward. The project was reviewed with
distinct evaluation criteria, especially focused on sustainability, based on the results of the fieldsurvey and others and a conclusion was derived.
2. Outline of Survey
2.1 Survey Schedule
Monitoring Period: January 2012 - October 2012-2-

Field Survey Period: April 7 - April 19, 2012
2.2 Constraints of Monitoring
None
3. Monitoring Results
3.1 Effectiveness3.1.1 Quantitative Effects
3.1.1.1 Indicators of Operation and Effects(1) Expansion of Coverage by Air-ground Radio Communication
Figure 1 shows the Manila Flight Information Region (Manila FIR) and coverage by
air-ground radio communication by Very High Frequency (VHF) radios. Manila FIR covers an
area of approximately 3 million km2 and VHF radio covered an area around 1.2 million km2
before the project. The introduction of highprecision state-of-the-art equipment 1 with
VHF

radiosimprovedcommunication

sensitivity and reduced errors. In addition,communication facilities in Palawan (PLWin Figure 1) and Davao (DVO in Figure 1)
developed by this project expanded thecoverage by 430 thousand km2.
Total air-ground radio communication
coverage area did not change from the timeof ex-post evaluation in 2006.
effectiveness

of

this

Thus, theproject

wascontinuously sustained.
Source: Prepared based on CAAP data

Figure 1 Manila FIR and Air-ground Radio Communication Coverage(2) Improvement of Safety and Reliability (Aircraft Accident Count)
There has not been an accident involving large aircraft with more than 100 fatalities since2000 and air transport safety has been improved.
Specifically, most recent accidents in these ten years are caused by general aviation2 andthere has not been an accident due to miss-operation of air traffic control.

1

These facilities are mainly (1) En-Route Air Traffic Control Facilities and (4) Terrestrial
Communication Facilities on the attached Table in the last page.
2 General Aviation is flight operations by small sized aircraft for non-business air transportation.

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Table 1 Transition of Aircraft Accident Count
Year

1980

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

Accident

1

0

2

1

2

0

1

3

0

3

4

0

0

1

0

1

Fatalities

2

0

4

0

4

0

4

67

0

8

40

0

0

0

0

0

1996

97

98

99

2000

01

02

03

04

05

06

07

08

09

10

Accident

3

1

2

4

1

0

2

1

2

2

2

2

1

5

1

Fatalities

0

2

107

18

131

0

19

3

2

0

0

0

0

11

3

Year

Source: Aviation Safety Network; (http://aviation-safety.net)
Note: Excluding criminal act such as hijacking and military operations.

3.1.1.2 Internal Rate of Return (IRR)
Ex-post evaluation did not calculate the internal rate of return and this monitoring survey
does not as well.
3.1.2 Qualitative Effects
Because the ex-post evaluation did not measure qualitative effects, this Ex-Post Monitoring
Survey does not compare them.
Based on these facts, the effectiveness of this project appears in the coverage of VHF radio
and improvement of safety and reliability at the same level as the ex-post evaluation.
3.2 Impact
3.2.1 Intended Impact
3.2.1.1 Increase in Air Transport Volume
By introduction of new air navigation facilities3 of this project, existing airways can be
operated more efficiently and new airways were prepared. Therefore, airway capacity expanded
and air transport volume increased.
Figure 2 shows the air transport volumes of passengers (PAX), aircraft movement (AC) andcargo (Cargo) from 2001 through 2010 by setting the value of year 2001 as 100. Comparing thevalues in 2010 to those in 2001 (value of 2010 / value of 2001), number of passengers, aircraft
departures and arrivals and cargo transport values are 321%, 181% and 111% respectively.

3 These facilities are mainly (1) En-Route Air Traffic Control Facilities (3) Air Navigation

Facilities and (4) Terrestrial Communication Facilities on the attached Table in the last page.

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Source: CAAP

Figure 2 Transition of Air Transport Volume
Thus, the total number of passengers using airports in 2011 increased to 40.86 million, which
is more than three times the number in 2001. The number of aircraft departures and arrivals
increased gradually and passengers per aircraft seemed to increase. Looking at the numbers by
airport, especially Kalibo Airport was used by 5.2 times as many passengers in 2011 as in 2001.
This is due to the increase in visitors attracted by tourism development in the surrounding area.
3.2.1.2 Conformance to International Standards (Consistency with ICAO standards, etc.)
The Civil Aviation Authority of the Philippines (CAAP) is working to conform to theInternational Civil Aviation Organization (ICAO) standards. However, ICAO does not certify
the conformance and does not rank airports and air traffic control. According to CAAP, CAAP
prioritizes the budget allocation and participates in international conferences to meet ICAO
standards, but they have yet to achieve the needed results.
In 2008, Federal Aviation Authority (FAA) of the United States of America downgraded theoverall aviation sector of the Philippines from Category I to Category II. It means that the FAA
recognized some deviation from ICAO standards.
On the other hand, the European Union (EU) has banned all Philippine airlines from flying to
the European region for safety reason. It is effective as of April 2012.
According to CAAP, all FIRs adjacent to Manila FIR introduced ADS/CPDLC4 and only
Manila FIR has been left behind5.
By these reasons, the Philippine airline companies have limitations to expand their businessin the international market and air traffic control in Manila FIR lagged behind even in
4
5

Automatic Dependent Surveillance and Controller- Pilot Data- Link Communications
Introduction of ADS/CPDLC is beyond the scope of this project.

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comparison with adjacent FIRs.
3.2.2 Other Impacts
3.2.2.1 Impact on Natural Environment
CAAP recognized no special impact on natural environment.
3.2.2.2 Resettlement and Land Acquisition
The project acquired new land for construction of control towers and communication
facilities. This land had been used for agricultural use and no resettlement took place. Although
it took some time to acquire land in Baguio, Laoag and Kalibo, this has been resolved not bycompulsory acquisition but by negotiation and there is no problem currently.
Therefore, this project has had certain impact on expansion of the air transport industry in thePhilippines by improvement of air transportation safety and expansion of airway capacity.
3.3. Sustainability
3.3.1 Structural Aspect of Operation and Maintenance
In March 2008, the Air Transportation Office of Department of Transportation andCommunication (DOTC-ATO or ATO) was transformed into the Civil Aviation Authority of thePhilippines. This meant the organization changed from a government department to anindependent authority. The difference from the ATO was assumed that CAAP had “fiscal
independency,” which enabled CAAP to allocate their revenue for their operations by theirdecisions. After the reorganization, there was no change in the department names and divisionof duties and Airways Navigation Service (ANS) has been operating and maintaining the air
traffic control system. Air traffic controllers belong to Air Traffic Service (ATS).
In 2012, ANS requires 760 regular staff but employs only 528. Staff shortage is covered bycontinuous shift duty and overtime. At the time of transformation, the new CAAP management
promoted voluntary early retirement with a retirement package which caused staff shortages. On
the other hand, CAAP is recruiting new graduates, but it is difficult to fulfil the regular staff
requirements quickly because of strict qualification standards and longer initial training. Staff
shortage, however, does not influence the operation.
Based on ICAO standards, ANS operates and manages the air navigation aid system, radar,meteorological and communications equipment. ANS maintains airport air traffic control
facilities based on operational hours of each airport, and air navigation aid systems such as VHF
Omni-directional Range (VOR) and Distance Measuring Equipment (DME) by threeround-the-clock shifts on the ground.
Although ICAO standard requires calibration of VOR and DME from the air, the calibration
has not been conducted since October 2010 because of aircraft failure for aerial inspection.
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CAAP will try to outsource the inspection within the year 2012 to a private air charter.

Photo 1 VOR/DME(Photo 1 and 2 in Laoag Airport)
Photo 2 VOR/DME Maintenance
ANS staff at each airport conducts regular operation and maintenance of equipment based ondaily, weekly, and monthly routines. If a problem is found, Operations Department of ANS
headquarters deals with it and the defective parts sent to Manila Maintenance Center (MMC) for
repair work. Field survey found there is no serious problem with regular maintenance as routine
logs are kept properly. In addition to communication equipment, ANS is also responsible forfacility management.
3.3.2 Technical Aspects of Operation and Maintenance
ANS has two major fields of engineers: Communications Navigation Systems (CNS) Officers
and Airfield Lighting and Power Technician. The former is classified into five ranks and thelatter into four ranks by each technical level and corresponding training is conducted. Air Traffic
Service has two fields of specialists: Air Traffic Controller, ATS-319, and Airways
Communicator, ATS-205. Air traffic controllers and airways communicators are checked basedon three themes of training and examination for airport and approach as well as medical testing.
“Educational Support for the New CNS/ATM Systems Implementation Project in thePhilippines (JICA Technical Cooperation Project, 2004-2008),” “Capacity Development Projectfor Improvement of Safety and Efficiency for Air Navigation System (JICA TechnicalCooperation Project, 2009-2014 (Scheduled), On-going),” and “New CNS/ATM Systems
Development Project (JICA Loan Project, L/A in 2002, On-going)” are to introduce a moreadvanced air navigation system which requires the use of satellite. However, as of April 2012, it
is not clear when this navigation system will be introduced completely. Even after thecompletion and introduction of New CNS/ATM, the necessity and effectiveness of equipment
introduced by this project will not change. If operation and maintenance of equipment by the
project are not performed properly, the equipment may not function correctly for air traffic
safety.

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3.3.3 Financial Aspect of Operation and Maintenance
After the transition to CAAP, its financial statements are to be released but they have not been
publicized as of April 2012 and the status of account settlement is not clear. At the time of ATO,
ATO budgeted recurrent cost and DOTC bore investment cost. After the establishment of CAAP,
CAAP is supposed to prepare investment and recurrent budget.

These two factors do notchange from the ATO age and financial reform by ATO to CAAP transition has been incomplete.
Currently, CAAP prepares Annual Procurement Plan (APP), budgets it and receives approvalby DOTC. Among APP (2011), budget for Air Navigation Facilities (ANF) was given as 109.07
million Pesos by accumulation of each item.
Implementation process of the budget for operation and maintenance has the following
concerns. For instance, as an issue with the entire procurement process of CAAP, ANS cannot
procure parts in a timely manner and as necessary. The reason is that CAAP adopts government
procurement rules for its procurement of parts and equipment. Parts producers are restricted and
CAAP cannot conclude a discretionary contract, but must adopt competitive bidding through its
procurement committee. This does not fit to the necessity and reality of the situation.
3.3.4 Current Status of Operation and Maintenance
As of April 2012, all equipment is working properly, but the following points are concerns.
3.3.4.1 Repair and Replacement Situation(1) Generic Parts
Sufficient original spare parts were stocked for a 2-5 year supply, and all of the consumableparts (generic parts such as bulbs and fuses) have been utilized. These generic parts are locallyavailable and replaced or repaired.
(2) Important Substrates
Since 2010, main circuit boards, such as substrates of frequency modulator of the equipment
can cause breakdowns and MMC can sometimes repair them and sometimes cannot.

Photo 4 Repairing Transceivers

Photo 3 Manila Maintenance CenterIn some cases, equipment, which is supposed to have main and standby system, is running only-8-

on one system because the other system is defective. Furthermore, in case a main system breaks
down, a parts from other airport equipment with two systems is to be brought in. MMC canrepair the defective substrates but not in all cases. Thus, CAAP tries to procure some substrates
and circuits from original manufacturer such as those in Japan, but this has some problems as
well. For instance, the original VOR manufacturer is no longer producing VORs, but can supply
necessary substrates as required under the fifteen-year warranty for supply of spare parts. The
project contractor, Toyota Tsusho Corporation6 is working as a conduit for the procurement.
Since March 2011, CAAP and Toyota Tsusho have negotiated and Toyota Tsusho issued aquotation. However, CAAP has not officially ordered the parts by discretionary contract base up
to April 2012. Thus, CAAP cannot procure the necessary parts.
(3) Breakdown of Equipment
As Voice Logging Machines breakdown, some airports are operating only on one mainmachine and some are operating without any machines. ICAO requires voice recording
machines. In addition, the original manufacturer of Voice Logging Machines no longer exists
and it is difficult to repair or replace the machines. Uninterrupted Power Supply (UPS) often
breaks down and some equipment is operated without UPS. Without UPS, some equipment
cannot transmit signals due to power interruption or failure and this causes heavy load on
equipment.
3.3.4.2 Removal of Facilities and Change of Facility Usage
Due to expiration of land lease contract, the landowner, Tagaytay City, requested CAAP toreturn the land used for extended range facilities of receivers and transmitters. Tagaytay City isa tourism spot facing Taal Lake and hotels and resort condominiums have been developed
recently. Tagaytay City considered the site suitable for tourism development rather than leasing
to CAAP and did not extend the land lease contract and requested the land be returned. CAAP
negotiated to continue to use the land but was forced to return it. As the next best choice, CAAP
is making efforts to operate the equipment. Then, CAAP moved all equipment to anotherlocation to prepare for re-installation, and demolished the buildings, but some fittings werereused. CAAP is taking care to minimize the impact on the existing facility’s functions (byCAAP). Since 2010, some rooms of MMC have been used as offices of ANS and there has beenno problem with the function of MMC.
3.3.4.3 Management and Repair of Facilities
Facility management of airport control towers had some problems such as an out-of-service

6

TOMEN Corporation, original contractor of this project, was merged with Toyota Tsusho

Corporation.

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elevator (Kalibo Airport, budget allocated) and roof leakage (Laoag Airport). If ANS staff
reports such problems to headquarters, ANS will take appropriate actions. There seems to besome problems with miscommunication and insufficient budget processing.
Therefore, ANS of CAAP basically secures the operation and maintenance and it is not in asituation to jeopardize the operation of aircraft. CAAP purchases sufficient generic parts and
MMC performs necessary repair work. However, the larger procurable equipment such as UPS
and non-generic parts (such as parts and substrates which can be provided only by the original
maker) are not procured properly, and the recommendations for provision of spare parts supply
and enhancement of equipment repair systems by the ex-post evaluation has not been
sufficiently implemented.
4. Conclusion, Recommendation and Lessons Learned
4.1 Conclusion
Effectiveness to air safety and positive impact on air transport sector by this project has been
continuously sustained. However, deviation from ICAO standards and international airtransportation market trend, the Philippine air sector is lagging behind the international level.
Even after the introduction of a new air traffic control system such as New CNS/ATM, the air
traffic control system by this project will be required for an additional ten years or longer. If
spare parts are not procured properly, it is a concern that the equipment will not be able tomaintain its current functionality.
4.2 Recommendation
DOTC: The reform by the transition from ATO to CAAP has been incomplete and DOTC is
expected to authorize broader discretion of CAAP for budgeting and implementation in order toclarify the financial responsibility of CAAP for operation.
CAAP: This Project procured a wide variety of equipment and appropriate maintenance andnecessary parts supply are essential. First, CAAP should secure the budgeting and its
implementation for generic parts (mostly consumables). Second, if non-consumable parts are
not generic and unable to be repaired, it is difficult to procure them by the general competitive
bidding defined by the national government. Therefore, it is necessary to facilitate theprocurement of these parts by discretionary contract base or long-term maintenance contract
with each original contractor and maker.
4.3 Lessons Learned
A yen loan project featuring a variety of equipment often requires involvement of original
equipment makers at the stage of operation and maintenance. Although the borrower country
bears the recurrent cost, it is desirable to agree with the executing agency how to supply spare-10-parts properly at the stage of implementation.

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Comparison of Planned and Actual Scope
Item

PlannedActual

1.Output(29 airports/facilities)(1) En-Route Air
Traffic Control
Facilities

・Improvement of air traffic control facilities(expansion of VHF wave coverage on the westside and on the south side, improvement ofRemote Center Air Ground Communication[RCAG] at 2 sites)
・Improvement of terminal control facilities (8airports)
・Development of FSS facilities: Cauayan,
Puerto Princesa(2) Aerodrome/
Approach Air Traffic
Control Facilities(3)AirNavigation ・Development of an Automatic Telex Message
Communication
Switching System for securing point-to-point
Facilities
aerial communication network: 14 airports
・Renovation and installation of air navigation
radio facilities for use on air routes and at
airports (VOR/DME)(4) Terrestrial
・Expansion of terrestrial based communication
Communication
facilities (between Davao Airport andFacilities
Tagaytay-Manila Center)(5) Satellite Based・Improvement of satellite communication
Communication
facilities (14 airports, Mt. Majic transmitting/
Facilities
receiving station, Manila AFC)
(6) Maintenance・Development of a maintenance center inside
CenterManila Airport, placement in the center of spareequipment parts of all airports, and provision ofa supply system
Consulting services
International: 184M/M
Local: 182M/M
2. Project Period
August 1995-August 1999 (4 years, 1 month)

3. Project Cost
Foreign Currency
Local Currency
Total
ODA Loan Portion
Exchange Rate

6,386 million yen
738 million yen (179 million pesos)
7,124 million yen
6,386 million yen
1 peso = 4.13 yen(January 1995)-12-(25 airports/facilities)
As planned

Nearly as planned
Nearly as planned
Not implemented

Nearly as planned
Nearly as planned

Not implemented

As planned

As planned
August 1995- June
2004 (8 years, 11months)Completion of
construction work:
March 2004
6,203 million yen
1,419 million yen(354 million pesos)
7,622 million yen
6,203 million yen
1 peso = 4.01yen(Average rate 1995
- 2004)