United Parcel Service signed a letter of intent with the Philippine government

United Parcel Service signed a letter of intent with the Philippine government Thursday to establish an intra-Asia hub in the island nation.

The company also signed a memorandum of understanding to evaluate the possibility of basing the hub at the former Clark Air Force Base,

Once the largest U.S. Air Force base outside the United States, Clark has been run by the Philippine government since U.S. forces vacated in 1992.

Clark offers more than 267 acres of airport facilities and includes a pair of two-mile long runways, four parallel and nine connecting taxiways, and a ramp that can accommodate large aircraft.

Federal Express opened an intra-Asia hub at the former U.S. naval base at Subic Bay in the Philippines in September 1995. Clark is located in Pampanga, about 85 miles north of Manila.

The announcement comes the same week that UPS began direct flights to China – a key to the development of the carrier’s Asia network.

“As we continue to grow our international operations, the hub will further strengthen our network’s reach within Asia as well as improve time-in- transit and reliability in the region,” said Ron Wallace, president of UPS International

“The Philippines’ centralized location makes it possible for cargo aircraft to reach all major Asian cities in less than four hours,” he added.

With the letter of intent signed, UPS said it will set up teams to examine next steps, including air routes, aircraft and facilities. Further terms of the deal have not been finalized.

The cost of constructing the facility, the length of the lease and the number of flights per week are among the issues under study, along with the relationship between the intra-Asia hub at Clark and UPS’s existing trans-Pacific hub in Taiwan, which was established in the mid-1990s.

Glenn Libbrecht, vice president of international air and cargo sales for UPS Airlines, said recently that the carrier hoped to establish the hub by the third or fourth quarter of this year. That would enable it to utilize Clark in time for the peak fall shipping season.

In order to strengthen its intra-Asia network, UPS is applying for the right to operate three weekly “fifth-freedom” all-cargo flights to Hong Kong. Those rights were formerly exercised by Air Micronesia. FedEx, Polar Air Cargo, Evergreen International Airlines, Northwest Airlines and Gemini Air Cargo are also seeking the coveted Hong Kong rights, which became all the more important with the cancellation last week of scheduled bilateral talks between the U.S. and Hong Kong to open its restricted aviation market.

UPS began its Asia Pacific operations in 1988 by acquiring Hong Kong-based Asian Courier System. It also began operating in the Philippines in 1988 when it appointed Delbros Inc. as its service agent there. In April 1997, UPS and Delbros Inc. established a joint venture called UPS-Delbros International Express Ltd., Inc.