It's all about Unfair Competition
September 23, 2011
THE country’s two biggest air carriers are asking the government to modify Executive Order (EO) 29, which adopted an “open skies” policy for the country, to include reciprocity in any air rights negotiations.
Airline officials said they need reciprocity to compete fairly with international carriers.
“The initiative of the open skies policy is good as it opens secondary gateways to air carriers but apart from allowing foreign air carriers to enter the Philippines, the government should also increase the air access rights of Philippine carriers, country by country,” said Philippine Airlines assistant vice president for government affairs Jose Perez de Tagle at the sidelines of the Department of Tourism’s Open Skies Policy roadshow last Monday at the Cebu Grand Hotel.
De Tagle said that while EO 29 grants unlimited rights to foreign air carriers to fly in and out of the country, it left Philippine air carriers limited flights specified in existing air agreements with other countries. He said this threatens their existence.
“Let the foreign carriers fly but give us the same opportunity,” he said, adding that a two-way open skies policy will help the country attract a large number of tourists.
“All we want is for the government to set fair rules for all players,” he said.
De Tagle said fair rules should be imposed on air carriers, especially that they have been pouring investments into the country and have remained strong and competitive in the industry.
“In fact, we are building airlines and not asking for government subsidies,” he said.
EO 29 was signed by President Benigno Aquino III in March this year. It authorizes Philippine aviation panels to offer and promote “third, fourth, and fifth freedom rights to the country’s airports other than the Ninoy Aquino International Airport (NAIA) without restriction as to frequency, capacity and type of aircraft, and other arrangements” that will serve the national interest as may be determined by the Civil Aeronautics Board (CAB). It said that the CAB can grant any foreign air carriers increases in frequencies and capacities in the country’s airports other than NAIA.
It also noted that the CAB cannot grant any foreign air carrier “cabotage” traffic rights or the right to transport passengers and goods between two or more points within the Philippines. This means, that if foreign carriers fly people to Cebu, it can’t fly passengers from Cebu to anywhere in the country. Domestic aviation will still be primarily handled by local carriers.
But de Tagle said that such a condition is like telling the local airline firms to kill the international business.
EO 29 was signed together with EO 28, which ordered the reorganization of the air negotiating and consultation panels.
Cebu Pacific, on the other hand, said they will continue to push for two-way open skies.
“Since the beginning, we have made it clear that we will never support one-way open skies, which is what EO 29 represents. With one-way skies, the Philippines gives foreign carriers unlimited access to our airports, while our own carriers get nothing in return,” Cebu Pacific in a statement said.
Hong Kong carriers, for example, can now mount as many flights as they like to Cebu, while Philippine carriers are limited to 2,500 seats per week. The airline added they are confident to compete with any carrier, domestic or foreign, so long as there is a “true open skies policy,” where there is reciprocity and level playing field.
“Cebu Pacific is investing billions of dollars in the country and employs thousands of Filipino workers and professionals. We help guarantee increased tourists because whenever we enter a route, we lower air fares in the market. Tourists benefit from the year-round low fares that we provide. But if we can’t compete, we can’t lower air fares,” the airline said.
The DOT is holding an open skies policy roadshow nationwide to inform the public on the benefits and advantages of EO 28 and 29.
Laywer Jose Claro Tesoro, the resource speaker during the roadshow, told industry stakeholders that the recently signed EO 29 is “just the beginning” of an improved tourism industry in the country. He said that opening the secondary gateways would boost tourism in regional destinations.