The Not-so Secret MOU to Dubai

PAL Cries Foul Over Emirates Refusal to Code Share 3rd Flight

November 12, 2012

Flag carrier Philippine Airlines (PAL) has asked the Civil Aeronautics Board (CAB) to reject the petition of Emirates Airlines (UAE) to add third daily flight starting January 1, 2013 between Dubai and Manila stating that the additional schedule was "counterproductive and unjustified."

The reason, UAE already fly 14 times a week, the agreement with them say so. PAL cannot fly to the gulf state because of previous secret agreement with UAE set to expire in 2014.

Negotiations between the two airlines failed after Emirates refused to code-share the third flight saying that it doesn't owned the additional frequencies granted to the Philippines.

Earlier, Cebu Pacific (CEB) filed a complaint against PAL for forfeiture of its rights  to fly the United Arab Emirates arising from non-use of bilateral air traffic rights. CEB wants to fly to the middle east starting winter season next year but their plans to expand to the region was hampered by lack or inadequate flight entitlements which were all taken by PAL and its codeshare partners. CAB rules that PAL was actively flying the route. Consequently, the government of the Philippines and the Arab Emirates expanded their Air Treaty to cover 28 weekly frequencies between Dubai, Abu Dhabi and Manila.

According to PAL in its Opposition letter to Emirates Petition (CAB CASE No. EP-59079/HED102012-261) for additional third daily flight, the airline intends to introduce its own-operated flights to the United Arab Emirates by 2012 and 2014, “given the assurance that no more than 28 weekly frequencies are to be operated by each side on the agreed routes between the UAE and Manila.” 

PAL codeshared the routes to Dubai and Abu Dhabi via partners UAE and Etihad Airways (ETD) for a total of 28 flights between the two countries.

“As code share partner, PAL honors its existing code share arrangement which remains in effect until 2014. Our objection is to the proposed unjustified and counterproductive excess of seven frequencies, or for that matter any formulation that results in an EK operation in excess of 14 frequencies per week on the Dubai-Manila route,” PAL said. 

Further, PAL said that the new PAL-UAE Confidential Memorandum Of Understanding (CMOU) already provided for a maximum entitlement of 14 weekly frequencies for UAE as the exclusive designated UAE carrier under Category 1 Route 1. Category 1 Route 2 covers Abu Dhabi-Manila sector.

PAL also said that UAEs proposed petition would undermine the earlier negotiation of a new CMOU in September that was intended to usher in a new development era where the airlines of both the Philippines and the UAE would offer their own self-operated services in an environment of fair and healthy competition.

“As the board will noted, EK’s proposed 21 times weekly service will result in a total UAE carrier operation of 36 weekly frequencies when added to the existing 14 times weekly Abu Dhabi-Manila services of Etihad Airways, the UAE’s designated carrier for Category 1 Route 2 under the CMOU,” PAL said.

UAE argued however that PAL's interpretation is flawed.

Gigie V. Baroa, UAE Philippine manager explained that while both of them are entitled to fly 7 times a week for a total of 14 flights between Dubai and Manila which they are now doing, another 7 entitlements was granted by both Arab Emirates and Philippine government last September 11, expanding bilateral services between these two points.

"The United Arab Emirates awarded this additional entitlement to Emirates Airlines" says Baroa.

“It was in the fact the agreement of the aeronautical authorities of the two governments that the pre-existing borrowing of unused entitlements could continue alongside the additional daily services granted under the new confidential memorandum of understanding of Sept. 6,” Baroa said.

PAL did not get the new entitlements nor applied for the same. The seven additional frequencies are still to be divided between Cebu Pacific and Zest Air which applied to service the routes.(Air Philippines applied for this route after blog posting)

"The requested additional frequencies will not just benefit Emirates but the Philippine carriers as well" Baroa adds citing growth demands on the market.

The other 7 entitlements on the Philippines side is yet to be awarded by CAB. The applicants for the route were Zest Airways (EZD), and CEB and they were both asking for seven flights says a CAB insider.