The Philippine aerospace industry aims to make the country a major hub for manufacturing of original equipment manufacturing (OEM) parts and allied services, such as maintenance, repair and overhauling (MRO), for the global commercial aircraft industry.
Aerospace manufacturing is a high-technology industry that produces aircraft, guided missiles, space vehicles, aircraft engines, propulsion units, and related parts. The industry is comprised of government and private industries that perform the institutional roles of end-users, suppliers and manufacturers. The value chain consists of the government and airline companies as primary customers; OEM companies, a tiered chain of suppliers and manufacturers; companies that perform MRO of equipment and parts; and the consuming public as aircraft passengers.
Currently, the domestic aerospace industry has an estimated .15% share of 2013 GDP, and a projected 0.57% share of 2022 GDP projection given a positive program intervention spearheaded by the government. There are currently three tier 1 suppliers in the country located in economic zones. The industry is under the supervision of Aerospace Industries Association of the Philippines.
Among the industry’s strengths are:
Labor Force and Strategic Location. A pool of young, relatively cost-competitive, English-proficient, highly trainable and fairly knowledgeable manpower that makes up the aerospace-specific labor force, which is in turn supported by a chain of aerospace and aviation schools. At the same time, Philippines is located in a strategic location and could make the country serve as a potential vital link in the aerospace industry value chain.
Growing Commercial Airlines. The growth and expansion of domestic airlines such as Philippine Airlines (PAL), Cebu Pacific (CEB), and ZestAir are contributing to the development of the industry. PAL entered into a $7-billion contract with EADS (Airbus) in 2011 to acquire 34 units of A321ceo, 10 units of A321neo, and 10 units of A330-300s, and $2.5-billion to exercise an option to acquire 10 more units of A330 aircraft. On the other hand, CEB in 2011 announced that it was purchasing 30 units of Airbus A320neo and 7 units of Airbus 320 for $3.8-billion to more than double its fleet by 2021 and expand its international routes.
Presence of Suppliers and Linkages. Presently, three major original equipment manufacturing (OEM) are located in the country: Moog, which manufacture actuators; B/E Aerospace, which manufactures galleys; and JAMCO, which manufactures airframes and sub-assemblies. At the same time, the creation of the Association of Aerospace Industries of the Philippines (AIAP) is a positive factor in solidifying the initiatives for the growth and development of the aerospace industry because it presents a collective voice in helping shape the government policies and incentives affecting this sector.
Growth in Business Aircraft. Although the country lagged behind its regional neighbors in the growth of business aircraft (65% growth rate in the Asia-Pacific region), it grew by 45% over a ten-year period with 63 business aircraft in 2012 compared to 46 in 2002. The region increased from 947 units in 2002 to 1,566 units in 2012. Business aircraft are corporate jets that are not engaged in public transportation services. The country can capitalize on this trend by capturing more market-share in the overall demand in the region.
The Philippine Aerospace Development Corporation (PADC) operates under the supervision of the Department of Transportation and Communications (DOTC), and is mandated under P.D. 286 (as amended by P.D. 696), to undertake all development projects for the establishment of a reliable aviation and aerospace industry, including but not limited to the following:
The manufacture of aerospace parts and components, and support activities (e.g., R&D activities, research/testing laboratories, and technical vocational education and training institutions) is among the preferred activities listed in the IPP.
The maintenance, repair and overhaul (MRO) of aircraft is also among the preferred activities listed in the IPP. This covers R&D activities and the establishment of research/testing laboratories, Centers of Excellence and technical vocational education and training institutions in support of the manufacturing of aerospace parts and components (or maintenance, repair and overhaul of aircraft).
Project CREAMM aims to improve the productivity and competitiveness of the metals and engineering MSMEs in the Cordillera Administrative Region (CAR) by organizing them into clusters and raising their competency level. This enables them to cater to the equipment and parts requirements of the Moog Controls Corporation, which has determined that tapping a local supply chain would improve its overhead costs and facilitate the company’s expansion plans.
Started in 2012, the project runs for a three-year period to support high precision manufacturing and equip and assist MSMEs to acquire aerospace standards and certification through trainings.
The aerospace industry Technical Working Group (TWG) conducts meetings to discuss and address industry concerns and issues. Among its recent activities are:
Industry and Investments Building,
385 Senator Gil Puyat Ave.,
Makati City, Philippines
Tel. No. (+632) 897-6682
Email: [email protected]