Philippines, Most Liberalized Air Access

2011 WEF Report debunks call for more liberalized air policy

September 30, 2011

The Philippines is listed as one of the most liberalized air access in the world according to the fourth Travel & Tourism (T&T) Competitiveness Report 2011 of the World Economic Forum (WEF) at the Global Tourism Forum 2011 (GTF) held in Andorra. 

Competitiveness Report hidden by Tourism Department

The Competitiveness Report ranked the Philippines at number 29 out of 139 countries in terms of “Openness of bilateral Air Service Agreements.”

“Open skies advocates have been harping on the need for full open skies to attract more tourists but in reality we have already a very liberalized air policy” says Robert Lim Joseph, founder of TourismWatch Philippines.

" If the Philippines is number 29 in terms of openness, why do tourists still not come in droves like Thailand, Malaysia or Indonesia? "quips Joseph.

It said proponents of Open Skies for the Philippines needs to look at the data provided by Geneva based Non-Profit Organization to know the real score of what the country already offers in terms of air access by foreign carriers.

The Travel & Tourism Competitiveness Report 2011 measures and analyzes the drivers of T&T competitiveness in economies around the world. Its main goal is to provide a useful tool for governments and business leaders in overcoming the obstacles to T&T competitiveness, in order to benefit fully from the sector’s development.  

“This all proves that the poor performance of our tourism sector is not about accessibility to Philippine air market and availability of airline seats but other factors,” Joseph said.

The Philippines ranks number 30 out of 139 countries in terms of “Available seat kilometers, international.”

For ticket taxes and airport charges, the Philippines ranked 20 in the world out of 139 countries “so we cannot understand the rantings of the lobbyists to cancel our taxes on foreign carriers when this is not the issue.”

According to the report, tourists hesitate to visit the Philippines based on the following findings:

-The Philippines ranks 112 in terms of quality of air transport infrastructure; 

-The Philippines ranks 99 in terms of effectiveness of marketing and branding; 

-The Philippines ranks 132 in terms of hotel rooms; 

-The Philippines ranks 123 in terms of transparency of government policymaking;

-The Philippines ranks 105 in terms of reliability of police services; 

-The Philippines ranks 109 in terms of safety and security; 

-The Philippines ranks 114 in terms of quality of roads (specially to tourist destinations), and 

-The Philippines ranks 70 in terms of government prioritization of the travel and tourism industry.

"These are the factors that the government should look into and address to boost tourism and not the lousy open skies argument as other would like us to believe." says Joseph about the transparent report.

In this year's report findings, Switzerland, Germany and France have the most attractive environments for developing the travel and tourism industry, followed by Austria, Sweden, the United Kingdom, the United States, Canada, Spain and Singapore completing the top 10.

Save PAL, Save Jobs

Retaining 5,000 is better than losing them all

By: Conrado R. Banal III
First published in PDI



September 29, 2011

Nobody wanted to call it a “wildcat strike,” that work stoppage last Tuesday done by ground workers of the country’s flag carrier, PAL, which left thousands of passengers stranded at the airport.

Restructuring PAL help save those 5,000 remaining jobs.

Our contacts in the labor sector did not term it as a “sit-down strike,” which—being illegal and all—is usually just a spontaneous protest action.

Technically, what happened at the Naia last Tuesday was neither a wildcat strike, a measure without any authorization from the union officials, nor a spontaneous protest.

Make no mistake, the action taken by PAL workers at the Naia was so well organized, it seemed to be premeditated.

According to our sources at the MIAA [Manila International Airport Authority], as a result of the “strike,” a number of ground equipment of PAL was even destroyed. In other places, such an action would have been termed as “sabotage.”

The equipment would still not work by the time MIAA had cleared the airport of the protesting PAL workers well into the night.

MIAA chief Jose Angel Honrado, who served as military spokesman during the cute administration of Gloriaetta, perhaps deserves a pat on the back. He went to the airport to talk to the protesting group. Supposedly, he told them to vacate the area, or he would be forced to take action within the confines of the law. Our contacts at the Naia took his words to mean that the former general would remove the protesters out of the airport, physically.

Under RA 9497, the law that created the CAAP, or the Civil Aviation Authority of the Philippines, those who cause disruption at the airports are liable criminally—meaning, they can go to jail. Thanks to threats of terrorism, airports are sensitive areas all over the world. In this country, the airports serve about 10 million OFWs. I am afraid that the government will not do anything. Again.

*   *   *

Today, PAL has a work force of about 7,500 people. By world standards, it is just too big for an airline its size. And so PAL wants to trim down its work force by farming out its in-flight catering, call center and airport ground services. This would result in the removal of about 2,600 employees.

PAL was willing to set aside money for their severance pay of about P2.5 billion, including a “gratuity pay” of P50,000 for each of the workers.

As if to show us that we are actually a rich country, the Aquino (Part II) administration is also giving each of the workers P50,000, or a total of P130 million of our tax money. Just how many taxpayers the BIR will have to harass to raise that amount is hard to say.

Perhaps Malacañang wants to appease the PAL workers who are constantly getting favorable media coverage, and never mind that in other places, “gratuity pay” is known simply as “tip.”

It is just that, if you recall all the troubles at the Naia in the past, affecting thousands of passengers, the cause of the problems—i.e. the protesting PAL employees and pilots—have always been getting their way.

Last year, PAL cancelled several flights because some foreign airlines pirated PAL-trained pilots, who were under contract to remain with PAL for at least six years. Our leader Benigno Simeon (aka BS) did not lift a finger then, even in the name of public interest and to protect the rights of all the people using the airports.

In fact, from what I gathered, BS even convinced PAL management to delay the restructuring, which the company wanted to do as early the middle of 2010, and in this country, nobody could really say “no” to the president.

To our contacts in business, such stories were bad for the image of BS. They showed a certain weakness, sometimes called indecisiveness.

*   *   *

For more than 10 years now, PAL wanted to follow what the airline industry has been doing worldwide: outsource certain services to save on costs.

PAL has been bleeding. Taipan Lucio Tan already injected $2 billion in cash into the airline. The investment is almost wiped out by now, after years of heavy losses.

PAL is, perhaps, the only airline in the world that still has in-house call center with its own employees. American firm US Airways has a call center in Makati City, run by another company. Another American firm, Hawaiian Airline, has its call center in Baguio City.

According to news reports, PAL expected to shave off as much as $15 million a year from its expenses with the farmed-out services.

Such an amount may help PAL reduce its losses, but I am afraid it would not be enough to put the company back to profitability. My info is that, in the first quarter of this year alone, PAL already lost P500 million.

PAL must do other things—refurbishing the fleet or doing more effective marketing campaigns. These also cost a lot of money. Thus, PAL needs fresh capital.

The problem is, nobody wants to invest in a losing proposition such as PAL, due mainly to its huge labor cost. Potential investors are well aware of its internal problems that have been causing PAL’s bleeding.

Look, the airline industry worldwide was able to recover this year, with the IATA [International Air Transport Association] expecting industry profits to hit about $7 billion, which means the industry could now expect to recover from the heavy losses.

In the Asia-Pacific region, where PAL belongs, airline profits are expected to hit $2.5 billion this year. The profitable airlines, of course, exclude PAL.

As I said, PAL has about 7,500 workers. The restructuring would retain at least 5,000 for now.

If those striking PAL workers would have their way, and PAL management and the Aquino (Part II) administration would give in to their demands, those 5,000 workers are also in danger of losing their jobs.

Without the restructuring, as the bleeding continues, PAL would eventually have to close down permanently. In other words, the restructuring that can save PAL will also help save those 5,000 jobs.

PALEA Paralyses PAL

Terminal 2 in Chaos

September 28, 2011

Flag carrier Philippine Airlines (PAL) was forced to suspend almost all flights yesterday after the airline employees went on wild-cat strike starting at 7:00 AM to protest the impending termination of 2,600 workers effective Friday, September 30, to implement the outsourcing program design to save the company  $15 million in annual operating costs.

PAL sent termination notices to its in-flight catering, ground airport services and call center reservations last month, providing them with alternate plan to join the outsourcing operation of third party service providers. PALEA said the conditions of the new jobs are far inferior to what the airline offered.

At least 172 departing domestic and international flights were paralyzed on the ground. Earlier arrivals from Guam via PR111 which arrived at 7:15 a.m. yesterday were disgusted after learning that they could not retrieve their luggage at the carousel area due to the absence of baggage retrievers and loaders. Consequently, PAL flights arriving from Seoul (PR 467) and Tokyo (PR 431) were transferred to NAIA Terminal 1 in coordination with the Manila International Airport Authority (MIAA).

“We apologize for the actions of our employees. Those who would like to rebook or refund their tickets can proceed to PAL ticket offices free of charge,” PAL President Jaime Bautista said yesterday.

Bautista said some 14,000 passengers were affected by the sudden cancellation of the flights Tuesday morning. This includes 8,500 passengers on domestic flights and 5,500 on international flights.

“This morning, about 300 PAL ground workers on duty at the airport suddenly refused to perform their official functions in the ramp, check-in counters and catering areas. Our lawyers are preparing the appropriate charges to be filed against these erring workers,” Bautista said.

PAL officials said the employees of the new service providers would take over the posts vacated by the PALEA members and normal operations are expected to resume today at NAIA Terminal 2.

PALEA members were given up to 4:30 p.m. to leave their post by PAL and security officials but the workers continued with the protest action prompting the Philippine National Police Aviation Security Group (PNP-ASG) with the support of NAIA Airport security guards to pull out one by one members of the protesting PALEA union who refused to vacate their post at the Ninoy Aquino International Airport (NAIA) Terminal 2.

PAL spokesperson Cielo Villaluna said the company’s management cancelled the flights after members of the PAL Employees Association (PALEA) refused to work.

“Our workers walked out of their jobs and these include the airport services staff in charge of checking in and boarding passengers, as well as those in the catering services,” Villaluna said.

Villaluna said the work stoppage started at 6:50 a.m. when load controllers at the Ninoy Aquino International Airport Terminal 2 walked out of their posts.

The load controllers are in charge of determining a plane's weight and balance, she said.

At 7:15 a.m., the personnel at the counter area stopped their work, she said.

PAL intended to resume flight beginning at 6 p.m. for PR145 bound for Iloilo but was eventually cancelled due to some technical problems on the ground.

The airline was able to deploy two (2) US-bound flights, three (3) regional and two (2) domestic flights late last night up to early Wednesday morning.

The flights mounted last night were:
Manila-Davao (PR821)
Manila-Kalibo (PR239)
Manila-Hong Kong (PR310)
Manila-Bangkok (PR732)
Manila-Los Angeles (PR102)
Manila-San Francisco (PR104)
Manila-Jakarta (PR535).  

Labor Secretary Rosalinda Baldoz immediately sent a team to initiate a conciliation meeting and resolve the labor dispute but the conciliation talks failed to reach any agreement during a DOLE-initiated conciliation meeting .

“It has been determined during the conciliation meeting that the issue between the two parties was the spin off program, which has already been decided upon by DOLE and is now pending before the Court of Appeals,” Baldoz disclosed.

“This means that the case is already beyond DOLE, thus we can no longer assume jurisdiction over the case nor intervene over the dispute,” Baldoz added.

Baldoz said that at this time, the strike is now under the supervision of the Civil Aviation Authority of the Philippines (CAAP) and that new personnel could be deployed to take over the functions of those who went on strike.

Unless the striking employees could secure a restraining order, Baldoz said, PAL management can legally start the implementation of the outsourcing program by Friday.

Gerry Rivera, PALEA president, said they opted to go on strike after getting information that PAL management has started hiring new workers to replace those to be affected by the outsourcing or spin-off program.

“Starting last week, even before the effectivity date of the termination on Friday, PAL has been employing scabs and displacing regular employees. PAL has pushed us to the wall. We are left with no choice but to hold this protest action,” Rivera said.

On Tuesday morning, PAL issued a memo to all employees affected by the outsourcing, stating that they will be considered "official off-duty" with pay until September 30. This means the affected employees no longer need to report to work, but will still get their salary.

"PALEA has decided to act now instead of waiting for the onslaught of the outsourcing typhoon on Friday. This is the mother of all protests against layoff and contractualization.  Nobody will go home and we will not back down until our demand for job security is met," added Rivera.

Rivera said the workers decided to stage the protest action earlier than the scheduled start of the outsourcing program on Friday.

PALEA maintained that PAL could not yet implement the spin-off program because the union has a pending motion for reconsideration at the Court of Appeals.

“We don’t understand why the management still insists on implementing the spin-off despite our pending case at the CA. We will continue with this demonstration until the PAL management agrees to withdraw the spin-off,” PALEA said in a statement.

Thousands of departing passengers bound for Beijing, Singapore, Kuala Lumpur, General Santos City, Cagayan, Tacloban, Cebu and Davao were stranded after PAL employees at the airline counters were made empty by the striking workers.

PALEA said its members reported for work as early as 6 a.m. but they refused to refuel airplanes or unload cargo and luggage of arriving and departing passengers.

Passengers from PR111 from Guam that arrived at 7:15 a.m. yesterday were disgusted after learning that they could not retrieve their luggage at the carousel area due to the absence of baggage retrievers and loaders.

PAL transferred their 90 Hong Kong bound passengers to Cathay Pacific flight CX900 while another 100 passengers were booked on the next available flight.

PAL also announced yesterday that all passengers of flights going to and coming from Melbourne and Sydney in Australia would temporarily depart and arrive at the NAIA Terminal 1 (old terminal) starting Sept. 28 to Oct. 15, 2011 on board PR209/210 and PR211/212.

Two other PAL flights to the US would also move to terminal 1 but company officials are still looking for possible counters and boarding gates for their Los Angeles and San Francisco flights.

PAL already set up remote city check-in counters for their passengers with connecting domestic flights who arrive at NAIA l.

Passengers checking in at these remote counters shall be issued boarding passes and shuttled to NAIA Terminal 2 in air-conditioned buses. Priority will be given to those with no check-in luggage.

 *   *   *

Flights Schedule for 28 September 2011

PAL will operate selected domestic and international flights listed below. For passengers with cancelled flights, please call PAL reservations at (632) 855-8888 for rebookings, flight changes and refunds.

DOMESTIC FLIGHTS

FLIGHT NUMBER	ESTIMATED TIME OF DEPARTURE	ROUTE
PR847 PR848	0600H 0805H	MNL CEB CEB MNL
PR291 PR292	0700H 0845H	MNL DGT DGT MNL
PR321 PR322	0855H 1025H	MNL KLO KLO MNL
PR811 PR812	0900H 1150H	MNL DVO DVO MNL
PR853 PR854	0900H 1110H	MNL CEB CEB MNL
PR323 PR324	1330H 1500H	MNL KLO KLO MNL
PR293 PR294	1340H 1530H	MNL DGT DGT MNL
PR849 PR850	1530H 1740H	MNL CEB CEB MNL
PR813 PR814	1530H 1820H	MNL DVO DVO MNL

INTERNATIONAL FLIGHTS

FLIGHT NUMBER	ESTIMATED TIME OF DEPARTURE	ROUTE
PR896 PR897	0720H 1100H	MNL TPE TPE MNL
PR300 PR301	0800H 1100H	MNL HKG HKG MNL
PR438 PR437	1330H 0930H (+1 day)	MNL NGO NGO MNL
PR408 PR407	1425H 0955H	MNL KIX KIX MNL
PR432 PR431	1430H 0930H (+1 day)	MNL NRT NRT MNL
PR306 PR307	1450H 1800H	MNL HKG HKG MNL
PR116 PR117	1850H 2340H (+1 day)	MNL YVR YVR MNL
PR102 PR103	2200H 2235H	MNL LAX LAX MNL
PR104 PR105	2230H 2230H	MNL SFO SFO MNL

*   *    *

Flights Schedule for 29 September 2011

TERMINAL 3

Domestic
- PR189 Manila-Roxas ETD 0530H
- PR190 Roxas-Manila ETA 0800H
- PR281 Manila-Cagayan de Oro ETD 0600H
- PR282 Cagayan de Oro-Manila ETA 0920H
- PR175 Manila-Tagbilaran ETD 0850H
- PR176 Tagbilaran-Manila ETA 1200H
- PR141 Manila-Iloilo ETD 1250H
- PR142 Iloilo-Manila ETA 1435H
- PR391 Manila-Tacloban  ETD 1010H
- PR392 Tacloban-Manila  ETA 1315H
- PR197 Manila-Puerto Princesa ETD 1600H
- PR198 Puerto Princesa-Manila ETA 1905H

Passengers are advised to look for PAL-designated counters / PAL signages at Terminal 3. Free shuttle buses are stationed at Terminal 2 to ferry passengers Terminal 3.

 TERMINAL 2

International - PR466 Manila-Incheon ETD 0300H
- PR467 Incheon-Manila ETA                                                    
- PR358 Manila-Beijing ETD 0720H
- PR359 Beijing-Manila ETA 1740H
- PR896 Manila-Taipei ETD 0720H
- PR899 Taipei-Manila ETA 1930H
- PR334 Manila-Xiamen ETD 0740H
- PR335 Xiamen-Manila ETA 1325H
- PR300 Manila-Hong Kong ETD 0800H
- PR301 Hong Kong-Manila ETA 1315H
- PR426 Manila-Fukuoka ETD 1020H
- PR425 Fukuoka-Manila ETA 1830H
- PR730 Manila-Bangkok ETD 1025H
- PR731 Bangkok-Manila ETA 1820H
- PR336 Manila-Shanghai ETD 1130H
- PR337 Shanghai-Manila ETA 1930H
- PR438 Manila-Nagoya ETD 1330H
- PR437 Nagoya-Manila ETA 1245H (next day)
- PR408 Manila-Osaka ETD 1425H
- PR407 Osaka-Manila ETA 1305H (next day)
- PR432 Manila-Narita ETD 1430H
- PR431 Narita-Manila ETA 1310H (next day)
- PR468 Manila-Incheon ETD 1430H
- PR469 Incheon-Manila ETA 2340H
- PR306 Manila-Hong Kong ETD 1450H
- PR307 Hong Kong-Manila ETA 2005H
- PR100 Manila-Honolulu ETD 1520H
- PR101 Honolulu-Manila ETA 1435H (next day)
- PR106 Manila-Vancouver-Las Vegas ETD 1640H
- PR107 Las Vegas-Vancouver-Manila ETA 0430H (01Oct)
- PR209 Manila-Melbourne-Sydney ETD 2100H
- PR210 Sydney-Manila ETA 1720H (next day)
- PR102 Manila-Los Angeles ETD 2200H
- PR103 Los Angeles-Manila ETA 0605H (01Oct)
- PR104 Manila-San Francisco ETD 2230H
- PR105 San Francisco-Manila ETA 0540H (01 Oct)

Domestic
- PR811 Manila-Davao ETD 0900H
- PR812 Davao-Manila ETA 1340H
- PR853 Manila-Cebu ETD 0900H
- PR854 Cebu-Manila ETA 1230H
- PR226 Manila-Laoag ETD 0950H
- PR227 Laoag-Manila ETA 1230H
- PR861 Manila-Cebu ETD 1245H
- PR849 Manila-Cebu ETD 1530H
- PR850 Cebu-Manila ETA 1900H
- PR813 Manila-Davao ETD 1530H
- PR814 Davao-Manila ETA 2010H

All other PAL flights not included in the list are CANCELLED until further notice.

Sky Pasada back on the Air

September 25, 2011

Ilocandia Rural Airline SKY Pasada is back in the air after one year hiatus when its aircraft, a LET 410 UVP-E, was brought back to Czechoslovakia for door upgrade, passed and conformed cabin requirements imposed by the Philippines Civil Aviation Authority.

Sky Pasada flies back Baguio on 22 September 2011

It recommences it scheduled flight to Baguio from Manila on Thursday arriving at Loakan Airport in the morning.

“We hope the people of Baguio will patronize Sky Pasada as a more convenient and safe mode of transport to Manila,” Captain Ramon Guico, Sky Pasada president and CEO said.

The airline which is operated by the WCC Aviation Corporation intends to connects Tuguegarao, Laoag, Batanes and Baguio from Manila's Terminal 4 (Domestic Terminal). Zest Air and SEAIR also operates out of Terminal 4.

Resumption of flights came as blessing for Baguio commuters as road repairs at the MacArthur Highway (Manila North Road) in Tarlac and Pangasinan and along Marcos Highway and Kennon Road drag to eight- to ten-hour trip to Baguio from Manila.

Sky Pasada flights cut travel time to mere 45 minutes, from NAIA Terminal 4 at less than 2,000 pesos. 

The airline will then connect Baguio to Tugegarao and Batanes at P1,995 for Baguio to Tuguegarao and P5,285 for Baguio-Batanes effectively making Baguio the airlines hub. Sky Pasada will connect Baguio to the Manila, Tuguegarao and Batanes, with twice-a-week flights.

Philippines to overtake Hongkong

As Asia's 8th Biggest Aviation market

September 25, 2011

The Philippines Manila International Airport is set to overtake Hong Kong as Asia's Eight Biggest Aviation Market by 2012.

Ahead of the pack is China, followed by Japan, India, Indonesia, South Korea, Thailand, and Malaysia.
The Indian Subcontinent is leading the Asian charge with the fastest growth rate recorded in 2011, while the Philippines has grown 16.1% of its market according to datum supplied by Innovata.
There are five main competing commercial airlines serving the domestic market which contributed to its tremendous growth: Philippine Airlines and its low cost subsidiary Air Philippines, Cebu Pacific, Zest Airways and South East Asian Airlines.

Capacities to Asia - Seats per week by destination country (includes domestic, where applicable): May-2011 vs May-2010

Country	May-2010	May-2011	% Change	Growth Rank	Ranking by Seats		Variance
					May-2010	May-2011
China	7,060,042	7,428,871	5.2%	18	1	1	-
Japan	3,267,930	3,089,077	-5.5%	24	2	2	-
India	1,763,569	2,087,289	18.4%	3	3	3	-
Indonesia	1,270,038	1,472,175	15.9%	6	4	4	-
South Korea	944,124	1,059,576	12.2%	12	5	5	-
Thailand	790,613	883,825	11.8%	13	6	6	-
Malaysia	783,649	882,637	12.6%	11	7	7	-
Hong Kong	589,419	668,840	13.5%	9	8	8	-
Philippines	547,650	635,781	16.1%	5	9	9	-
Singapore	517,607	587,387	13.5%	8	10	10	-
Taiwan	475,624	528,377	11.1%	14	11	11	-
Vietnam	360,055	415,133	15.3%	7	12	12	-
Pakistan	194,992	206,936	6.1%	17	13	13	-
Bangladesh	96,174	92,053	-4.3%	23	14	14	-
Sri Lanka	62,736	78,992	25.9%	1	15	15	-
Nepal	62,178	63,001	1.3%	22	16	16	-
Macau	50,904	55,385	8.8%	16	18	17	+1
Myanmar	51,813	54,332	4.9%	19	17	18	-1
Cambodia	43,393	49,130	13.2%	10	19	19	-
Maldives	34,334	39,994	16.5%	4	20	20	-
Brunei Darussalam	23,017	23,361	1.5%	21	21	21	-
Laos	17,718	18,214	2.8%	20	22	22	-
Mongolia	8,873	9,745	9.8%	15	23	23	-
Bhutan	1,952	2,440	25.0%	2	24	24	-
GRAND TOTAL	19,018,404	20,432,551	7.4%

Source: Centre for Asia Pacific Aviation & Innovata

PAL reduces flights

September 25, 2011

Philippine Airlines (PAL) is reducing the number of selected domestic and international flights for a limited period as part of a transition period that would eliminate 2,600 jobs for the airline as the flag carrier prepares for the transfer of its catering, ground handling and call center reservations units to third party service providers on October 1, 2011. 

In a statement, PAL disclosed that the number of domestic flights would be temporarily reduced by about 30 percent while international flights would be cut provisionally by 12 percent ahead of its long-awaited spin off/outsourcing program.

PAL spokesperson Cielo Villaluna said domestic routes with reduced flight frequencies on certain days involve 14 stations, namely: Cebu, Davao, Bacolod, Iloilo, Butuan, Cotabato, Cagayan de Oro, Dipolog, Kalibo, Laoag, Legazpi, Tacloban, Tagbilaran and Zamboanga.

On the other hand, the 11 international points to be affected by the flight frequency reduction are Hong Kong, Bangkok, New Delhi, Macau, Singapore, Los Angeles, Vancouver, Guam, Sydney, Melbourne and Incheon (from Cebu). 

All other PAL flights remain as scheduled.

Villaluna assured the public that only select PAL flights would be suspended for a few days, and would resume on varying dates in October and November as operations normalize after the spin off/outsourcing. She said all other PAL flights remain operational albeit on other available schedules. PAL may also merge some flights using bigger aircraft.

She stressed that the flight suspension on selected routes seeks to prevent sudden, unplanned cancellations and avoid passenger inconvenience. She said it would be easier for the flag carrier and its service providers to handle reduced number of flights as they adjust and transfer the functions of its three non-core units.

EO 29 and Open Skies

It's all about Unfair Competition

September 23, 2011

By Katlene O. Cacho 

Sunstar

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. 

Fair rules

“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.

Low fares

“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.

PLDT Not Buying PAL

Stays with MVP Group Aviation Needs

September 23, 2011

By Lenie Lectura
Business Mirror

As rumors soared over the reason behind the formation of a new aviation company by Philippine Long Distance Telephone Co. (PLDT) and Metro Pacific Investments Corp., the telco giant on Monday doused speculations it is looking to invest in flag carrier Philippine Airlines (PAL) or that it plans to go into the commercial airline business.

Shares of PAL Holdings Inc. took off on Monday, gaining 3.6% to close at P6.32, on speculations that PLDT Chairman Manuel V. Pangilinan may be the “white knight” for Philippine Airlines Inc., a unit of PAL Holdings.

But in a chance interview on Monday afternoon, PLDT President Napoleon Nazareno quickly dismissed talks that PLDT may invest in PAL, owned by beer and tobacco tycoon Lucio Tan.

“We are not putting up an airline business like PAL, nor are we acquiring PAL. That is so wrong. We are just centralizing the business or, rather, rationalizing the resources we have,” Nazareno said.

He said the new company, Pacific Global One Aviation Inc., is a “legal entity put up to rationalize the PLDT group’s aviation requirements,” likening the newly created firm to conglomerate Ayala Corp.’s Ayala Aviation Corp.

Pacific Global One Aviation Inc. currently has three helicopters and one fixed-wing aircraft.

“We’ve put up another company so that other companies within the group, say, Meralco [Manila Electric Co.], Philex [Mining Corp.], etc., can participate and not just PLDT shouldering the entire cost,” Nazareno said. “For now, PLDT is just the one managing it while other companies in the group are using it but do not have equity sharing. So now, it’s going to be a contribution of other companies.”

He acknowledged, though, that there are plans to acquire more aircraft as the need arises. “We may buy one to two more, depending on the need of the entire group,” he said.

For his part, PAL President Jaime Bautista on Monday said he is not aware of any talks involving new investors, including Pangilinan or his rival Ramon Ang, president and chief operating officer of San Miguel Corp.

“If there are, I am not involved in those discussions. If there are, the ongoing talks are happening upstairs,” Bautista said.

PLDT is already working with PAL. SPi Global, a wholly owned subsidiary of the telco giant, is among the three service providers of PAL—handling call-center reservations—in the airline’s controversial outsourcing plan that has led to the retrenchment of 2,600 employees.

Pangilinan has also openly mentioned that he is interested in supporting the development of Diosdado Macapagal International Airport’s Terminal 2 and a modern railway system. Pangilinan had already met with the Clark International Airport Corp. President and CEO Victor Jose Luciano on the development plans.

But when reporters asked on September 12 if he was interested in PAL, Pangilinan simply said, “Mahirap na negosyo ‘yan.”

Pacific Global One has an authorized capital stock of P430 million, with common shares worth P400 million and P30 million worth of preferred shares.

Documents filed with the Securities and Exchange Commission, which were approved on Thursday, stated that the primary purpose of the new company is “to carry on, by means of aircraft of every kind or description, the general business of common and/or private carrier, air taxi or charter engaged in the transportation for itself and for others, of passengers, mail, merchandise and freight, and in this connection, to acquire, purchase, lease, construct, own, maintain, operate and dispose of aircraft of every kind and description, for scheduled and nonscheduled flights, for domestic and foreign travel, and also to own, purchase, construct, lease, operate and dispose of hangars, transportation depots, lounge facilities, aircraft service stations and agencies and other objects and services of similar nature which may be necessary, convenient or useful as an auxiliary to aircraft transportation, including the service and repair of aircraft, ground handling, and buying, selling and generally dealing in oils, gasoline, fuel, aircraft accessories and equipment and goods, wares and relate merchandise of every name and description.”