The UAE Science

25 August 2015

What fuels the United Arab Emirates Market?

Emirates Airlines said Thursday last week the revival of third daily flights between Manila and Dubai will  be beneficial to overseas Filipino workers and tourists.

“Since the removal of the third daily flight, Emirates’ two daily flights on the Dubai-Manila route have been operating at 100 percent capacity in economy class on most  of the flights – with no seats left for international tourists and overseas Filipino workers,” Emirates said in a statement.

Emirates Philippines Country Manager Abdalla Al Zamani said that there is a “significant gap between the supply and demand for seats” in the Manila-Dubai route.

“Taking this into consideration, we are confident that the  restoration of Emirates’ third daily flight to Manila will ensure widespread and sustained benefits to all stakeholders,” Zamnani said.

Emirates’ said its commitment to the Dubai-Manila route has been a catalyst for growth in the UAE-Philippine bilateral trade and tourism to the Philippines for the last 25 years.

The UAE airline has lobbied the Tourism Department and has been successful to asked President Aquino to authorize Philippine panel to meet their counterparts to start air-services talks with the aim of expanding the capacity and meet the demand to the objection of local carriers.

But does Emirates really cater to Dubai-Manila route alone?

Local carriers Philippine Airlines (PAL) and Cebu Pacific (CEB) doesn't think so at it opposed new talks expected to be negotiated in August 27-28 in Manila after talks in January was postponed.

This time around though, both the government of the Philippines and the UAE have decided to proceed with air talk negotiations despite protest of the local carriers upon the support of the Tourism Department.

Both Philippine Airlines and Cebu Pacific has argued that the added capacity was not needed as the Philippines hasn't utilized all its entitlement to the UAE. Further, it is only the Dubai-based airline that wanted bilateral expansion. Etihad Airways of Abu Dhabi has code share relationships with Philippine Airlines.

“We call on the Philippine panel to the Philippine-UAE air talks to refrain from giving Mid-East carriers undue advantage by granting more capacity and frequency beyond what the market requires,” PAL president Jaime Bautista said.

Cebu Pacific echoed Mr. Bautista's sentiment.

“Given the significant increase in capacity over the past year, Cebu Pacific believes that a new round of air talks with the UAE should not be held until all available Manila-use entitlements are fully utilized by Philippine carriers who are ready, willing and capable of operating routes to UAE,” says Atty. Paterno Mantaring Jr, Officer-in-Charge of Cebu Pacific corporate affairs.

Air Service Agreement (ASA) between the two countries authorized their respective carriers to fly 28 flights a week between Manila and Dubai/ Abu Dhabi and unlimited rights to regional airports.

While UAE-based carriers has flown all allotted slots, the Philippines flew only 21 of said entitlements with 7 slots belonging to PAL Express not utilized.

“We hope our own government will promote fair competition and support our airlines who have invested much in re-establishing air links to the Middle East and Europe,” says Bautista.

"Should the UAE airlines get the additional entitlements they seek during the coming Philippine-UAE air talks, this will undermine the investments PAL and other airlines have made for the country in opening new routes to serve Philippine tourism and overseas Filipino workers," Bautista adds.

PAL's routes to Europe, Middle East and the US are at risk once UAE secures increased frequencies to Manila he said.

Bautista cannot understand why Emirates insists on flying to Manila when it can launch Clark and Cebu instead in growing its Philippine operations as these airports has no restrictions. 

In 2014, Emirates Airlines cancelled its Dubai-Clark route in anticipation of receiving a third entitlements at Ninoy Aquino International Airport, but the agreement with PAL was objected by Cebu Pacific prompting the Civil Aeronautical Board to cancel the deal but Emirates continued selling tickets beyond the summer season that in December 2014 it penalized the airline for selling tickets without prior authorization and it also cancelled the third flights which already exceeded their weekly maximum entitlement

Philippine Airlines was very vocal on the unfair practices employed by Emirates disguising tourism traffic from sixth and seven rights abuses for destinations to Europe.

The Department of Tourism (DOT) has been very vocal about expanding the UAE entitlements for tourism and business reasons.

Tourism Secretary Ramon Jimenez Jr. said the pursuit of air talks is in line with the government’s objective of increasing tourist arrivals from the middle east.

But data from the DOT does not support such claims as most tourism traffic growth are coming from South Korea, United States, Japan, and China. If at all, more entitlements should be negotiated in this countries according to Bautista. 

While International commercial air traffic soared by 28 percent during the first quarter of the year, these are mostly attributed to entries of other airlines Oman Air, Turkish Airlines, as well as Chinese and Korean carriers. Foreign carriers, grew by an unprecedented 47 percent, to 2.8 million passengers from 1.91 million passengers in the first quarter of 2015.

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