The Demise of the Philippine Aerospace Development Corporation

The Demise of the Philippine Aerospace Development Corporation March 14, 2014

The Philippine Aerospace Development Corporation (PADC) was founded on the vision of then Executive Secretary Alejandro Melchor of President Ferdinand E. Marcos. Secretary Melchor convinced President Marcos to pursue a development program for the country’s aviation industry. By Virtue of Presidential Decree no.: 286 signed by President Marcos on September 5, 1973, the creation of a Philippine Aerospace Development Corporation and appropriating funds thereof was authorized. The PADC was tasked by itself or through its subsidiaries to undertake all manner of activities, businesses or development of a reliable aviation and aerospace industry that shall include but not limited to: (a) The design, assembly, manufacture, and sale of all forms of aircraft and aviation/aerospace devices, equipment or contraptions, and studies or researches for innovations and improvements thereon. (b) The development of local capabilities in the maintenance, repair/overhaul, and modification of aerospace and associated flight and ground equipment and components thereof in order to provide technical services and overhaul support to government agencies owning aerospace equipment, the Philippine Air Force, the national airline, foreign airline companies, foreign air forces and to the aviation industry in general. (c) The operation and provision of air transport services, whether for cargo or passengers on a scheduled, or charter basis on domestic and/or international scale. JOJO BANZON PROPRIETARY & CONFIDENTIAL INFORMATION The data contained in the pages of this document marked “JOJO BANZON PROPRIETARY/CONFIDENTIAL INFORMATION” have been submitted in confidence, and contain trade secrets and/or privileged or confidential commercial or financial information. Public disclosure of any information marked as indicated above is prohibited by the Trade Secrets Act (18 U.S.C. § 1905) and the Economic Espionage Act of 1996 (18 U.S.C. § 1831 et. seq.) and is not to be made available without the prior written permission of JOJO BANZON

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PADC received a total amount of ₱257,667,400.00 as an initial investment. The Development Bank of the Philippines (DBP) and Government Service Insurance Service (GSIS) contributed ₱20,000,000.00 each and the rest in the amount of ₱217,667,400.00 comes from the National (Treasury) Government fund. According to the Philippine Consumer Price Index between 1974 and 2013, the total initial investment received by PADC in 1974 is equivalent to more than five (5) billion pesos in today’s money. Immediately after PADCs incorporation, a licensing agreement with Messerschmitt-Bolkow-Blohm of Germany was signed for the assembly and manufacture of BO-105C light utility helicopter. PADC completed eight (8) units of BO-105C, assembled from a knocked down kits by the end of 1974. While PADC was busy assembling the BO-105C a new license agreement was signed with Fairey BrittenNorman (FB-N) of Bembridge, United Kingdom thru their licensed Far Eastern Distributor Brian Woodford, Managing Director of Helio-Orient of Singapore for the progressive production of 100 units of the BN-2A Islander aircraft in the Philippines with FB-N buying back the 25 units. These same BN-2A Islander aircraft were used by PADC’s subsidiary Philippine Aerotransport Inc (PATI) that runs Rural Air Service, providing air links to remote communities and islands. PATI ceases operations though by mid 1978 when the Philippine Air Lines absorbed their operations. In 1988, the Philippine Air Force/Philippine Government signed an agreement with Agusta S.p.A of Italy for the delivery of 18 units of SF260 TP Military Trainer aircraft and 24 units of S211 Military Jet Trainer/Light Attack Aircraft. PADC, being the government arm for aviation was able to secure the assembly of these aircraft plus additional manhours of works as a countertrade agreement with Agusta. The PADC also received Lancair aircraft kits in 1995 for assembly into flyable condition. These Lancairs belongs to the newly reorganized Philippine National Police for its anti-crime operations. Late 1995, the Department of Science and Technology (DOST) partnered with the Department of Transportation and Communications (DOTC)/PADC (PADC was an attached agency of DOTC) for the design and manufacture of a light utility aircraft. A budget of ₱50 million was earned mark for this R&D project – a first in the 19 years of PADCs existence. The project was considered gargantuan that the most talented and select aeronautical engineers (this author included) and aviation professionals of the land were summoned by then PADC President Prudencio Reyes to participate in such undertaking. A special committee was formed and countless meetings and brainstorming were held. By mid 1996, Prudencio Reyes was replaced by Capt. Panfilo Villaruel as the new PADC president. It was then that the committee was disbanded and the project was shelved in favor of another. Meanwhile, due to the good working relationship of PADC with Agusta S.p.A., an agreement was entered for the co-production of the SF.600 Canguro feederliner, a ten seater twin engine, high wing aircraft.

Jojo Banzon Proprietary/Confidential Information (see page 1)

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Two (2) SF.600 Canguro were assembled by PADC but the co-production agreement did not move forward. The 2 Canguros were later sold to PNP and the Philippine Coast Guard. PADC unveiled their new RP-X Alpha Hummingbird Helicopter project under the management of Capt. Villaruel by May of 1998. Accordingly, the Hummingbird was the first helicopter designed and manufactured in the Philippines. However, the project was immediately cancelled after it’s launching due to the following reasons: 1. Unable to substantiate the drawings, aerodynamics and structural design/stress analysis requirements of the Air Transportation Office (now Civil Aeronautics Board) to register the Hummingbird. 2. Impending lawsuits by Eurocopter (now Airbus Helicopter Philippines) due to patent infringement should PADC continue with the Hummingbird program. 3. The need to immediately return the borrowed major components of Hummingbird from the airworthy BO-105 (with registration number RP-C163) Although far from being flyable at the time, another aircraft project, dubbed as the Defiant 500 Centennial aircraft, was affected by the Hummingbird controversies and was cancelled as well. Captain Villaruel left PADC by July of 1998. It is interesting to note that PADC spent a total amount of ₱34,352,988.00 for the research and development of the RP-X Alpha Hummingbird Helicopter and the Defiant 500 Centennial aircraft. To date, the PADC has assembled 44 units of BO-105 Helicopter, 67 units of BN Islander aircraft, 18 units of SF 260 TP Military Trainer aircraft, 24 units of S211 Military Jet Trainer/Light Attack Aircraft. 6 units of Lancair ES two seater light aircraft, 2 units of Lancair IV four seater light aircraft and 2 units of Canguro Feederliner aircraft. PADC has also developed capabilities for the installations, inspection, repair and overhaul of the following items including its accessories: 1. 2. 3. 4. 5. 6. 7.

Aircraft piston engines (Textron Lycoming/Continental) Allison Model 250 Turboshaft engine (now Rolls-Royce M250) Various propellers Landing Gears Avionics and Instruments Various airframe Others.

Despite the various activities undertaken by PADC over 40 years of its existence, the establishment of a self reliant aviation industry as first envisioned by Alejandro Melchor is still not established. PADC has failed to truly implement its number one mandate, to design and manufacture aircraft.

Jojo Banzon. Proprietary/Confidential Information (see page 1)

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It even failed to secure most of the local businesses in the field of aircraft repair and maintenance to save foreign exchange reserves and for the utilization of local skilled manpower. Various aircraft, government and privately owned, are sent overseas for Inspections and Repair (IRAN) even though PADC has the in-house capability to do such job. The Presidential Fokker F-27 aircraft operated by the Philippine Air Force was a classic example. This aircraft was sent to Singapore in the 90’s for IRAN, even though PADC had already IRAN two (2) Fokker F-27 the prior years. In 2007, while PADC have the full capability to manufacture BN Islander aircraft, two (2) Philippine Navy BN Islanders were refurbished/upgraded by Hawker Pacific Ltd of Australia According to the Commission on Audit, majority of PADC revenue came from sources like building rental and hangarage fees. Revenues from aircraft related products comprise only a fraction thereof. In 2010 & 2014, Cagayan de Oro Congressman Rufus B. Rodriguez filed House Bill no. 2867 and 3807, respectively, seeking to abolish numerous underperforming Government Owned and Controlled Corporation including PADC. While PADC enjoys an exemption from all national and local taxes, duties, and fees, tariff, compensating tax and all other taxes as per P.D. 1901, the Commission on Audit found out on its 2012 audit that PADC has been losing millions in its operations, and thus recommended that management should consider closing down. Last February 3, 2014, the Governance Commission for GOCCs released a statement stating that they recommended to President Benigno S. Aquino III closing some of the GOCC including again the PADC. Time is clicking, according to Section 1 of P.D. 286, PADC shall have a succession period of 50 years from September 5, 1973 or until September 5, 2023. Without any program to spearhead the local aviation industry, losing money year after year, various government agencies against its existence, PADC is in imminent danger of either (1) closing down before reaching 2023 or (2) the government will let its operation ceases upon reaching its maturity date. And when that PADC dark time comes, PADC will not only fail the great vision that Secretary Melchor once had but also the hope of the whole Filipino nation…..

Jojo Banzon

Inventor: US Patent & Trademark Office # 20110180032A1 US Patent & Trademark Office # 20130206320A1

Insulated Combustion Chamber Carbon on Carbon Manufacturing

Jojo Banzon Proprietary/Confidential Information (see page 1)

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