May 19, 2011
MANILA, Philippines— The Philippine Civil Aeronautics Board has ordered Singapore-based low-cost airline Tiger Airways to stop selling seats on its website for flights between Manila and two domestic routes for its local partner South East Asian Airlines, or SEAIR.
The board’s Executive Director Carmelo Arcilla said the order was served Thursday to Tiger Airways pending final action on complaints of local airlines against Tiger Airways and SEAIR for allegedly circumventing traffic rights restrictions through an aircraft lease and marketing agreement.
Tiger Airways had been selling SEAIR flights for July between Manila and central Cebu City, and Manila and southern Davao City through its website.
Arcilla said several airlines filed a joint complaint in November on SEAIR’s aircraft lease deal with Tiger Airways and their agreement allowing Tiger Airways to market on its website SEAIR flights using leased Tiger Airways aircraft.
Hearings on those consolidated cases were completed in April. Arcilla said pending the board’s decision, Tiger started offering the Manila-Cebu and Manila-Davao seats on April 19, eliciting a new flurry of complaints from local airlines.
SEAIR President Avelino Zapanta said it has complied with the board’s order but believes its deal with Tiger Airways is legal.
The Civil Aeronautics Board has issued a cease order on domestic Southeast Asian Airlines flights using jets leased by regional giant Tiger Airways.
The order issued on Wednesday will make way for an investigation to determine whether the partnership between Tiger and SEAir violates the constitutional restriction on “cabotage,” or the ban on foreign firms operating domestic transportation services.
“There are strong indications that there may be a violation on the restriction against cabotage,” CAB Executive Director Carmelo Arcilla said in an interview.
SEAir will be barred from mounting its Manila to Cebu and Manila to Davao flights, using aircraft leased from Tiger, while the cease order is in effect. International flights using the same planes, however, would be allowed to continue.
Last year, SEAir and Tiger Airways, a subsidiary of Singapore Airlines, announced a partnership wherein the local airline would lease several jets from Tiger, to be used for the expansion of its domestic and international flights.
The SEAir flights would then be marketed and sold through Tiger website, where the latter gets most of its ticket bookings. Tiger later bought a substantial stake in SEAir.
The deal has been criticized by competing local airlines, saying that SEAir was merely acting as a dummy to allow Tiger to access the country’s booming air travel market.
Aviation authorities said on Thursday they have blocked a marketing deal between budget Singapore carrier Tiger Airways and a small local partner in a fight over the booming domestic aviation market.
Caught up in Fight
The Civil Aeronautics Board said the deal between Tiger and South East Asian Airlines (SEAir) broke a law banning foreign carriers from operating domestic routes.
It also ordered SEAir to stop advertising flights between Manila and the major cities of Cebu and Davao that it was due to start flying on July 2.
'A circumvention of the law on cabotage is against public interest and constitutes an unfair business practice that must be nipped in the bud,' the board said in its written order dated May 18.
The writ is temporary but the board is set to make a final ruling shortly on allegations that Tiger and SEAir broke the law, its hearing officer Wyrlou Zamudio told AFP.
The final ruling should be issued at the board's next meeting, Mr Zamudio said, while adding that no specific date has been set for the meeting.
Cebu Air, Air Philippines Express and Philippine Airlines filed separate complaints earlier this month over the SEAir flights that would use Airbus aircraft leased from Tiger, which would also sell seats on its booking systems.
SEAir president Avelino Zapanta told AFP it would comply with the regulators' interim ban, but rejected allegations the arrangement with Tiger was illegal.
'Definitely not. That's what they've been trying to prove and they haven't proved anything,' Mr Zapanta said.
He said the dispute reflected rising competition in the domestic aviation market, where passenger traffic had risen 22 per cent last year.
Should the government eventually rule against SEAir, the company would consider increasing destinations to other Asian routes, Mr Zapanta added.
SEAir now flies to five small provincial airports from Manila and also serves the Boracay beach resort, the Philippines' top tourist draw, from its hubs at Clark airport near Manila and Cebu.
The company also began flying to Singapore from Clark in December, using leased Tiger aircraft. -- AFP