Adrian Tumang ID No.

2013-78626

Plan 201A

30 July 2013 Homework 2

Philippine Aerotropolis: A Future-Proof Region for the Darling of Asia The final decades of the 20th century was an exciting era for my generation who were born at a time when man's first landing on the moon was still fresh in the minds of people and there was much euphoria over what can be accomplished henceforth as mankind fulfills the final phase of its biblical destiny to subdue the earth and establish dominion over the land, seas, and skies. Although the flying machine was invented years ahead, it was only after World War II when this technology was made widely accessible to civilian population. Fresh from the ruins of war, peoples excitement about air and space travel conjured fantasies of dissolving national boundaries and creating a universe under one flag. As a product of the Jet Age and the Space Age, it comes to no surprise that when asked about my childhood ambition, the first thing that comes to mind which has been my ready reply is to become a pilot or an astronaut. The visual translation of this newfound optimism filtered down to our urban fabric, not only giving birth to a new building type that is the airport, but also inspiring the design of some of our well-known landmarks today including the Philippines first international air terminal, the airplane-shaped Nielson Tower, which simultaneously was also the first commercial airport in Southeast Asia. It may be hard to imagine now, but there was a time in our history when the Philippines was the envy of Asia, having the best-equipped air terminal and jet fleet in this side of the world. When the airport transferred to its present site in Nichols field, now known as Villamor, this vast parcel of land served as the cradle of what is now the financial district of Makati, its former runways becoming the present Wall Street of the Philippines. However, as decades passed by, the once world-class facilities of the new airport in Nichols, the Ninoy Aquino International Airport (NAIA), could no longer cope with the increasing demand for air travel specifically in the national capital. For many years, there has been no clear direction as to what the government intends to do to upgrade its services. Our airlines are also lagging behind foreign carriers in terms of safety and this is why both the United States and the European Union have banned our planes from flying to their continents. The reason why it is necessary to begin with a recollection of Philippine aviation history and its present condition is that these events leading to the 21st century presaged a phenomenon that is
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starting to shape our cities and regions today. The uncontrolled sprawl of Metro Manila banished its only airport to the periphery of the metropolis carrying with it a stigma for noise, congestion, and pollution, not to mention the apparent risk of accidents and the perceived hazard posed by fuel leaks and falling debris. However, because of its remote location, both arriving and departing passengers had to pass through the busiest districts of the city and endure the terrible traffic to get to and from the air terminals. Similarly, high value product enterprises dependent on aviation are incurring losses in their investments due to productivity disruption. From an economic point of view, this causes tremendous loss of opportunities especially for a country reliant to tourism and trade. Realizing this problem, the more clever capitalists started to speculate and invest in the areas around our airport. A massive development effort was started by SM Group which developed a tract of land within short distance from the airport. In just a short period, this development began hosting one of the largest shopping malls in Asia, a modern convention center, and a series of corporate offices for IT locator companies. Other similar developments came in later like Alphalands Bay City, Aseana Holdings Aseana City, Megaworlds Newport City, and PAGCORs Entertainment City. Without necessarily following a masterplan, the area around NAIA is spontaneously becoming an organic airport city and slowly transforming the whole of Metro Manila into what can be qualified as an aerotropolis. This trend is something that has been brought up by American economist John Kasarda in his book, Aerotropolis: The Way Well Live Next, released in 2011. In his paper, Kasarda defines aerotropolis as an urban form where the physical layout, infrastructure, and economy are centered on an airport existing as a city. He claims that the rise of air transport is one of the preconditions of the often misunderstood concept of globalization, a big word we used to hear only in business circles, but one which has tremendous impact in our livesfrom the products we use, the food we consume, even up to the culture we espouse. This trend depends upon the connection of people, products, and enterprises worldwide in response to a number of factors such as the emergence of new supply chain processes where spare parts are manufactured and assembled in different countries and an economy shifting to products that are smaller and lighter such as pharmaceuticals and microelectronics. Another driver of this movement is the expansion of aviation-intensive consultancy services like finance and engineering. Although the internet has changed the way we do things, in corporate environments, business remains a contact sport where face-to-face negotiations are valued. In Kasardas view, the aerotropolis is the physical manifestation of globalization. He further argues that while local sustainable cities beyond a commune is a nice concept, the fact remains that this set up attracts few people while the majority prefers the benefits brought by a globalized city.

This should not come as a surprise. If one goes down the annals of history, one may notice that commerce which triggers urban growth has a historic reliance to the presence of transportation systems. This is so in the case of port cities where the silk and spice routes thrived, the railway cities or what we used to call industrial towns until the 1980s, and later the suburbia where the middle class lived during the age of the automobile. Today, in the era of globalization, it is the airport that is fast becoming the growth node of many regions across the world. More than a thousand multinational firms have relocated near Amsterdam Schiphol Airport, while in DallasFt Worth, five Fortune 500 companies set up their corporate headquarters within 10-minute drive from the terminal. The same transformation is seen in Memphis, Chicago OHare, and Washington Dulles Airport which now houses the second largest retail market in the United States just behind Manhattan. Outside the western world, Hong Kong International Airport attracts Asia-wide tourists with Hong Kong Disneyland just a short train ride away on the same island of Lantau. In South Korea, the New Songdo City, an international business district the size of downtown Boston, is being developed near Incheon International Airport. Meanwhile, a fullfledged aerotropolis with all the amenities of a first class city is rising around Dubai International Airport in the Middle East. If Kasarda is to be believed and this emerging urban form is to be tolerated or even encouraged, then the Philippines has to put the right conditions in place if only to prevent opening a can of worms. Although were seeing huge investments in private developments around our airports particularly in NAIA, the solutions to the problems of our aviation infrastructure itself remain elusive. To continually expand NAIA the way it is being done today is counterproductive. There is a need to focus on improving its facilities and bring down the airports operating level to its designed capacity. To shoulder the excess requires diversion of huge volumes of passengers to other airports in the metropolis. There are currently two viable strategies which, if pursued correctly, may also open opportunities to develop Metro Manila and its extended metropolitan region into a thriving aerotropolis. The first is to develop Clark International Airport in Pampanga while the other is to develop Sangley Point Air Base in Cavite. Of the two options, it is the Clark project that is gaining momentum following the recently concluded Clark Aviation Conference 2013. As far back as 1995, Clark was already tagged as the future primary international gateway of the country to complement NAIA. This twin airport concept will help ease air traffic congestion in NAIA by having Clark accommodate part of the passenger volume in Metro Manila. To its credit, Clark is living up to its potential as it rapidly gains reputation as an emerging budget airport hub particularly because of its cut-rate landing fees. Currently, eight low-cost Asian airlines have located their stables in the complex and
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launched local flights to key tourism destinations in the Philippines. It must be noted that during the Martial Law years, Philippine Airlines (PAL) practically monopolized domestic air travel after President Marcos, by virtue of the powers vested in him by himself, ordered the merger of all local airlines into one company. Such policy ended when he was toppled in a popular uprising. This allows Cebu Pacific (CEB) to enter the arena and overtake PAL with its no-frills budget fares. The success of CEB proves that there is a market especially for young professionals and even students who are willing to give up a free meal (which is rarely edible anyway) and extra legroom to save in travel expenses. However, in order to attract passengers especially those from NCR to fly via Clark, a mass transit system should connect the former air base to the urban center of Metro Manila. A north railway system from Manila to Clark is already being eyed since 2003. The downside of this proposal is that building a railway system is a risky venture since it may take years before Clark Airport will have sufficient passenger volume to earn a return of investment, hence, begging the classic chicken or egg question. In the interim, the alternative is to establish a City Air Terminal, utilizing Trinoma Mall in Quezon City as a satellite station where passengers can already undergo security clearance, check-in, and drop their baggage before boarding a service bus that will take them to Clark Airport via Mindanao Avenue and the Subic-Clark-Tarlac Expressway. This frees passengers residing in the southern part of Metro Manila from the stress of running late to catch their flights by going all the way on their own to Clark. Aside from these, Clark is also attracting business and aviation industries that avail of the tax-free and other duty-free privileges offered in the Freeport Zone. Within the year, Singapore Airlines is set to complete construction of two hangars for wide-body aircrafts like Airbus A380 in Clark. Canadas CAE Incorporated recently partnered with CEB to establish the Philippine Academy for Aviation Training within the airport vicinity. This proves that, with continued investments by the private sector balanced with transparent regulation of the government, Clark is on its way to becoming an urban growth center and attract key industries that will trigger the development of a true regional aerotropolis in the Philippines. The second proposal is to develop Sangley Point Air Base into an international airport and seaport complex. Sangley Point played an important role in the Battle of Manila Bay and since the expulsion of American forces, it has served as an air base and naval base of the Philippine military. Plans for Sangley Points development have been put forward a decade ago. However, both the government and the private sector were not bullish about the idea until recently when Solar Group, backed by a consortium of foreign partners including Flugfahen Munich, the operator of Munich Airport, showed interest in pursuing the project. The group proposes to relocate the existing military bases to Ternate in Cavite and develop Sangley Point into an international logistics hub with an airport and seaport aiming to position the Philippines at the
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forefront of international trade. Like the Clark proposal, the Sangley Point project aims to complement and decongest NAIA and accommodate domestic market traffic. However, the consortium believes that Sangley Point is a more practicable option over Clark because its immediate vicinity and approaches to the airport are all waters which will allow it to operate round the clock. The site is also bigger which opens opportunities for future expansion and the prospect of opening a third runway which is no longer possible in Clark. The additional provision for seaport would also contain a bulk liquid port to augment existing activities in Pandacan Depot in Manila. Like the Clark proposal, the viability of Sangley Point as an international gateway depends on the construction of a light rail transit system that will connect it to NAIA and other existing rail lines like the MRT. But unlike Clark, the Sangley Point proposal is met with loud criticisms, chief among them are the possible environmental degradation brought about by reclamation and fear of accidents due to the fact that the proposed airport will operate simultaneously within a restricted airspace with NAIA. Though these claims remain uncorroborated by objective study, the lobbying effort of advocacy groups already hampers the projects implementation and sends a wrong signal to residents who are anxious that this project may send their fishing villages, their only source of livelihood, to Davy Jones locker. Apparently, both Clark and Sangley Point proposals work under the assumption that demand for air travel will remain high until the next generation and so another challenge is to find ways to keep that demand. Although we may take comfort in the statistical fact that air travel has proved to be resilient to external shocks like the 1997 Asian Financial Crisis, the 9/11 Terrorist Attack, the SARS epidemic, and the recent Global Financial Crisis, the Philippines cannot rely solely on the demand for office and factory spaces for multinational locator companies. It had to capitalize on other growth industries. The easy answer, which is what weve been seeing lately, would be to bank on the country's tourism estates to attract both locals and foreigners to travel around or settle in the country. To a keen observer of trends in real estate, it is evident that property developers are actively riding on the concept of integrated resorts, a type of development which combines all the amenities of a mixed-use community with the added value of hotel and resort facilities, and full tourist services. In the Philippines, this trend was pioneered by Resorts World Manila, a casino resort by Alliance Global, the holding company of top real estate giant, Megaworld Corporation. The same corporation also recently acquired FilEstate Land and rebranded it into Global-Estate Resorts, a subsidiary that handles the companys integrated resorts projects. Other property giants followed suit with Ayala Land beefing up its hotels and resorts arm as it launches its first integrated resort in El Nido and its new line of affordable (at least by Ayalas standards of affordability) business hotels, the Seda.

Although we have a formidable line up of tourism estates, let us disabuse ourselves of the notion that ours is unparalleled in the region lest we start to believe in our own public relations. Truth is, Indonesia, Thailand, and Macau among others in Southeast Asia, have tourism assets that are equally magnificent as ours and just as unique, and their governments have been doing a better job in promoting and conserving these areas for posterity. There is practically nothing that genuinely sets us apart from our neighbors in terms of tourism except cheap beer. Therefore, more than building up our leisure estates for vacationers and expatriates, we need to tap niche markets, even invent one, where we can compete on a leveled plane and still have advantage. This calls to mind the theory behind Frans Johanssons book The Medici Effect which states that innovation is likely to occur at the intersection of multiple fields of interest. One must be observant of opportunities lying around these intersections to find novelty markets. The late pop icon Steve Jobs, used to emphasize this philosophy in every product launch of Apple where in his final slide, he used to show a picture of a street sign pointing to the crossroad of Technology and Liberal Arts. If applied in the context of urban planning, one might observe that apart from vacationers there is a new breed of tourists flocking the country whose agenda go beyond sightseeing. These are foreigners who travel to the Philippines for health care. Medical Tourism, or the travel to other countries to obtain affordable but quality healthcare, has been around for years, combining the two distinct fields of medicine and tourism. Its demand is triggered by the high costs of health care and long waiting lines in developed countries, and the availability of comparable health care at lower cost in developing countries. Recently, to support the medical tourism market, upscale developer Century Properties launched Centuria Medical Makati, an out-patient medical facility within its new Century City along Kalayaan Avenue. Similarly, Ayala followed suit with an announcement of a partnership with Metro Pacific to eye investments in the health care business located in Iloilo, Bulacan, and Laguna. However, the potential of medical tourism as an emerging industry remains unsatisfied due to a number of reasons and many of them can be addressed with the development of an aerotropolis. But physical infrastructure should also be coupled with policies such as pushing for open skies agreements with the United States and major European countries that comprise a huge percentage of the medical tourism market. This would alleviate the high cost of travel in the Philippines significantly and allow us to compete with our neighbor countries. One of the strategic benefits of the aerotropolis to the medical tourism industry is the clustering of health service providers like hospitals, dental clinics, cosmetic centers, and rehabilitation clinics around the airport vicinity. The integration of medical treatment and travel will allow the aviation industry to attract this health service cluster which in turn will attract other supporting
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clusters such as the tourism sector that offers venues like hotels, spas, and resorts for patients light recreation while recovering. Business Process Outsourcing (BPO) clusters may also come in with its call centers and medical transcription centers that run information channels for the medical tourism value chain. This linkage among the healthcare industry, the tourism sector, and supporting industries such as BPOs should be encouraged together with the institutes for collaboration like government agencies, business associations, and medical schools to maintain the quality of the cluster. Of course, all these effort and expenditure in building up the medical tourism industry which primarily caters to the well-heeled society are not without prejudice to the interests of public health facilities which receive relatively low investments. If unaddressed, this disparity may potentially undermine the credibility of the new urban region and defeat the purpose of medical tourism in boosting the economy and uplifting the standards of living. The arrival of the medical tourism sector as a key industry in the emerging aerotropolis is just one of many ideas worth exploring. We could also build a regional educational and training zone with students flying in for study and cultural immersion. Theres a huge body of literature on emerging knowledge regions and university districts which are larger versions of the American phenomenon of college town. What makes discovery-driven universities attractive as economic players is its potential to complement and collaborate with the innovation-driven industries. Partnerships between the academe and the corporate world will ensure that practice is always up to date with the latest in theory, thus sustaining the competitiveness of our work force and providing training and job opportunities for our graduates. Again, these proposals are rough ideas based on observation and reading, thus the need for a more in-depth and objective study. If anything, the goal is to showcase the prospects of what can be realized if the Philippines succeeded in developing its metropolitan regions into a thriving aerotropolis. It is hoped that this new urban form will usher in a promising era that will wash away our social pessimism the same way that jets and spaceships did in the previous century. The Philippines has seen better days as the center of aviation in Southeast Asia and by creating the right conditions with sound policies and infrastructure, it is not impossible to once again see our flag carriers take off and soar among those of the more developed countries of the world. To borrow the words of Leonardo, once you have tasted flight you will walk the earth with your eyes turned skywards, for there you have been and there you will long to return.

References:
Corpuz, D. (2013). Philippine tourism statistics and industry opportunities [Powerpoint Slides]. Retrieved from http://clarkaviationconference.com De Vera, M., et al. (2008). Medical tourism in the Philippines, microeconomics of competitiveness: firms, clusters and economic development. Unpublished paper, Institute for Strategy and Competitiveness, Harvard Business School. Retrieved from http://www.isc.hbs.edu/ Esplanada, J.E. (2013). Consortium bullish on PH, Cavite airport. Philippine Daily Inquirer. Retrieved from http://business.inquirer.net/127357/consortium-bullish-on-ph-cavite-airport Forbes, J. (2013). Philippine aviation industry - current state and future prospects of Clark [Powerpoint Slides]. Retrieved from http://clarkaviationconference.com Hans, E. & Yin, M. (n.d.). Aerotropolis: the way well live next, interview with John Kasarda. Retrieved from http://edwinhans.net Johansson, F. (2006). The Medici effect: what elephants and epidemics can teach us about innovation . Boston, Mass.: Harvard Business School Press. Kasarda, J. D. (2011). The aerotropolis and global competitiveness. Diplomatic Courier, 16-19. Retrieved from http://www.aerotropolis.com Kasarda, J.D. & Lindsay, G. (2012). Aerotropolis: the way we'll live next. New York: Farrar, Straus and Giroux. Lim, N. (2013). Seamless travel - some best practices [Powerpoint Slides]. Retrieved from http://clarkaviationconference.com Limlingan, V.S. (2013). Role of Philippine aviation in globalization [Powerpoint Slides]. Retrieved from http://clarkaviationconference.com Lindsay, G. (2013). Clark aviation conference 2013 presentation [Powerpoint Slides]. Retrieved from http://clarkaviationconference.com Manila Standard Today. (2013). Century Properties eyes medical tourism. Retrieved from http://manilastandardtoday.com Philippine Flight Network. (2013). Sangley point international airport proposal receives mixed reviews. Retrieved from http://www.philippineflightnetwork.com Pradhan, J. (2013). Private sector wishlist: Clark international airport [Powerpoint Slides]. Retrieved from http://clarkaviationconference.com Reichert, S. (2006). The rise of knowledge regions: emerging opportunities and challenges for universities. Brussels, Belgium: European University Association. Retrieved from http://www.eua.be Rivera, D.O. (2013). Metro Pacific, Ayala Land eye investments to grow healthcare business . Retrieved from http://www.gmanetwork.com Science Business Innovation Board AISBL. (2012). Making industry-university partnerships work: lessons from successful collaborations. Retrieved from http://www.sciencebusiness.net Solis, B. (2013). Clark today: setting the record straight [Powerpoint Slides]. Retrieved from http://clarkaviationconference.com
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