MANILA: The Philippine aviation industry needs another 10 years to prepare for an open skies scenario, according to national carrier Philippine Airlines (PAL). PAL vice-president for corporate communications Rolando Estabillo further affirms the airline is not against open Philippine skies but believes airspace liberalisation should be gradual. “We’re not against open skies but we need around 10 more years to be able to compete with the big airlines,” says Estabillo.
Among others, the United States has been pressing the Philippines to agree to an open skies arrangement. The Philippines will be renegotiating its air transport agreement (ATA) with the United States as its present memorandum of understanding expires in September 2003. If an agreement is not reached by then, open skies will automatically take effect between both countries on 1 October 2003.
Under the ATA, both sides have agreed to adopt measures against “predatory pricing”, “uneconomic or discriminatory pricing”, and “abuse of dominant position”. Each side is also allowed to designate three airlines each for passenger transport and cargo.
RP carriers will also be able to land in 33 points in the US, 25 via direct service and eight through codeshares with a US carrier. In return, US carriers can land in six points in the Philippines. Both the Philippines and the United States will also allow designated carriers to fly to points beyond their chosen landing point. RP carriers have the right to go up to five points beyond, effectively giving them up to 125 routes.
With regards stopover traffic, US carriers are not allowed to carry such traffic from the Philippines to Singapore, Abu Dhabi, Dubai, Bahrain, Kuwait, Karachi, Saudi Arabia, Iraq, Egypt, Italy, Greece, France, Germany, Switzerland and England. On the other hand, RP carriers have no restrictions on their stopover traffic between the points they service in the US and to the points beyond.
According to a legal expert on air services agreements and former member of the Civil Aeronautics Board (CAB), Jose Claro Tesoro, the agreement is both bilateral and reciprocal, with both countries standing to gain equal access to each other’s markets. “The RP-US ATA is not a total declaration of open skies between the Philippines and US,” Tesoro said in a statement. “While it grants unlimited frequencies and capacity to both sides – the basis for it being called an ‘open skies agreement’ – the agreement on the other hand sets clear guidelines and limits on pricing, designation, landing points and points beyond.”
PAL, on the resumption of its flights to Guam, had called for the US to open its domestic markets to PAL flights. “If the US is adamant about open skies then we will insist on open skies in the real sense of the term,” sys PAL president Avelino Zapanta. “Right now, the playing field is lopsided in favour of giant American carriers that received US$15 billion in direct state aid and $32 million in insurance coverage, and are being shielded by their government. What did the Philippine aviation industry get? Nothing.”
PAL has announced plans to fly from Guam to Honolulu and the West Coast if the US allows foreign carriers on domestic routes. “Everything must be reciprocal,” says Zapanta. “If we must go into open skies, everybody, including the big and powerful, should open their markets.”
The Arroyo administration has stated that open skies is essential to tourism development although the issue has given birth to intense lobbying for and against open skies in the Philippines.
The Freedom To Fly coalition believes the country’s international air carriers will benefit from the opening of new markets, while domestic airlines will get a boost from additional traffic generated by more international arrivals. In a statement, the coalition says: “Only the inefficiently run and heavily indebted air carriers, which dread competition, have something to fear. The efficiently run Filipino carriers will flourish under such a regime.” The statement adds the huge travelling Filipino public, particularly Overseas Filipino Workers (OFWs), will give local carriers a strong base to build on.