Neha Jain: http://philippinesaviationnews.blogspot.com/ 29

1. Philippine leader vows to open up aviation sector

SINGAPORE — Philippine President Benigno Aquino has vowed to open up his country's aviation sector to foreign competition in a bid to boost tourism, and appealed for greater Singaporean investment.
Speaking to business leaders in Singapore, Aquino said his government was finalising a decree that will allow foreign airlines to fly to major destinations in the country.
The executive order "will liberalise the entry of foreign carriers in a way that will not decimate our local carriers," said Aquino, who was elected nearly a year ago on promises to reform the economy and tackle corruption.
"Under this order, we will allow foreign carriers to fly into key destinations in the Philippines."
The Philippines has lagged behind Southeast Asian neighbours in the race to attract tourists despite boasting white-sand beaches, exotic diving spots and other natural wonders, partly because of poor transport across the archipelago of more than 7,000 islands.
Aquino also said he had given aviation officials one year to resolve issues that led Europe to ban Philippine carriers from flying to the continent and prompted a downgrade by the US Federal Aviation Administration (FAA).
"We are also addressing technical and regulatory issues that have been allowed to worsen in the previous decade. This led to the banning of Philippine aviation into Europe and the downgrading of Philippine carriers to category 2 under US FAA regulations," said Aquino.
"Once these bottlenecks have been resolved we will embark on an aggressive marketing campaign that will brand and sell the Philippines as a key tourist destination in the outside world."
Philippine carriers were stopped from expanding services to the United States in 2008 and banned from Europe in March 2010 over concerns airline safety was not in line with international standards.
Aquino also urged Singaporean businesses to take part in the Philippines' growth story.
"We invite all of you to be part of our own reconstruction. Your government has already signified its willingness to help a brother nation reach the same heights that you have reached," he said, noting that his country grew 7.3 percent last year.
Aquino is the son of Philippine democracy champion and former president Corazon Aquino. He won the May 2010 elections on a platform to fight corruption, which has plagued the Southeast Asian nation for decades.

2. Aviation proposes P15 surcharge on local airfares
by Eric Apolonio

A P15 surcharge will be imposed on domestic plane tickets to equip major airports with a bird-avoidance technology under a plan drawn up by the Civil Aviation Authority of the Philippines.

The proposed surcharge may go even higher depending on the cost of the technology, according to CAAP director-general Ramon Gutierrez.

“The P15 fee is about 35 cents, which we think is reasonable enough,” Gutierrez said.

The total cost of the project is under evaluation and it will be based on the results of a public bidding, he said.

An electronic bird-avoidance system is being offered by a foreign manufacturer for P200 million per piece, he said. It could either be rented or paid in tranches. To be effective, two units should be installed in each of the eight major airports. Thus, it will cost at least P3.2 billion to install these units in each of the 8 airports—Diosdado Macapagal (Clark), Subic, Bacolod, General Santos, Laoag, Cebu-Mactan, Zamboanga and Davao—which are also covered by the pocket open-skies policy.

“Those are very expensive equipment which we could not afford at the moment,” |Gutierrez said after viewing a presentation.

The technology harnesses a radar system, independent of those used by air traffic controllers, to detect and track hazardous bird activity at commercial airports, military airfields and bombing ranges. The information gathered by these units is relayed by air controllers to pilots.

Stressing the need to acquire the early warning system, Gutierrez said that bird-strike incidents have become a concern because they cause damage to airplanes and endanger passengers.

An airliner usually spends a minimum of $500,ooo to repair an engine damaged by bird strike, according to airline source.

3. PHL 'pocket' open skies policy excludes NAIA
The “pocket" open skies policy excludes the Ninoy Aquino International Airport (NAIA), with the Philippine aviation panels to declare which secondary airports are liberalized in favor of foreign airlines, Malacañang said Thursday.

President Benigno Aquino III signed Executive Orders 28 and 29 on March 14, liberalizing the entry of foreign airlines with a view to increasing air traffic into the country, Ricky Carandang, head of the Presidential Communications Strategic Planning and Development Office, told reporters in a press briefing.

“The intent of the orders was to liberalize the entry into secondary airports right now," Carandang said. It is up to the panel to determine which secondary airports will be part of the policy, he added.

“We hope it will bring in more tourists, more investments, and spur a competition in the Philippine aviation industry and to allow it to be competitive internationally," he said, noting that the Aquino administration is looking forward “to increasing air traffic coming into the Philippines.

The twin EOs should be taken together because EO 28 defines who is in charge of the liberalization process and EO 29 explains the policy, according to the Malacañang official.

EO 28 is for reorganizing the Philippine Air Negotiating Panel (PNAP) and the Philippine Air Consultation Panel (PACP), and EO 29 authorizes the Civil Aeronautics Board (CAB) and the Philippine Air Panels to pursue more aggressively the international civil aviation liberalization policy, he explained.

A concept of reciprocity

A vital feature of the pocket open skies policy is the concept of reciprocity, Carandang said. “Domestic aviation would still be primarily in the hands of local carriers. So we believe that with those actions, the local aviation industry will have the ability to continue to compete," he said.

The Palace official delved into the issues hounding such a policy, and referred to the reciprocity concept as a possible but not an absolute solution to problems that may crop up when a country open is skies to foreign airlines.

“There are some questions about how much rights are [going to] be allowed to foreign carriers and how much rights we will be given in exchange. There’s a concept of reciprocity which can be defined in different ways. The EO and the economic team, as I understand, are taking the broadest definition of the reciprocity here," Carandang said.

“We’re not going to say if we’re allowed one flight there, then they must be allowed one flight here. But we recognize the benefits of having flights here on [their] own in terms of tourists that are allowed to come in, the number of investment that is generated." These “can be viewed as reciprocity," according to the Palace official.

SEAir has no objections

In an interview, SEAir president and CEO Avelino Zapanta told GMA News Online he has no objections to foreign airlines operating under an unlimited service policy in the Philippines.

"Open skies policy would help the domestic economy. It will increase jobs, boost businesses, and lift the tourism of the Philippines," said Zapanta, a proponent of the open skies policy.

He said liberal air policies would allow the Philippine aviation industry to catch up with other members of the Association of Southeast Asian Nations.

Now that the Philippines in going open skies, "the country is closing up to the idea of being a laggard in the industry," Zapanta said.

With the policy in place, it is high time for the government to help improve all airports in the country, according to the SEAir CEO. "That way, we're showing to the world how we keep up in a modernized way," he said.

PANP responsibilities

EO 28 designates the PANP, after it has been reconstituted and reorganized, to hold initial negotiations of relevant air service agreements with foreign airlines.

While the new panel will have the Foreign Affairs secretary as chair and the departments of Trade and Industry, Transportation and Communications (DOTC), Labor and Employment (DOLE), Tourism, and the CAB as members, the official carries of the Philippines under the policy may join the negotiations as observers.

The PACP, on the other hand, is responsible for succeeding negotiations of air service and similar agreements. The new PACP will have the DOTC secretary as chair, with the CAB executive director as vice chair and the same departments under the PANP as members including Foreign Affairs.

The EO also assigned the CAB as the secretariat to coordinate, set up, and prepare for the negotiations with foreign airlines.

4. Editorial
Reciprocity

Philippine Daily Inquirer
First Posted 23:10:00 03/25/2011

Filed Under: Travel & Commuting
NO QUESTION about it: As with any industry, the airline business needs competition to improve and grow.

We don’t have to look far for an example. For many years when Philippine Airlines lorded it over the skies as the country’s sole air carrier, it posted profits and basked in the glamour of being “Asia’s first airline” while also generating a legendary reputation for waste, sluggishness, inefficiency, unerring tardiness and pricey fares—all the ills of a smug behemoth enjoying the convenience of a competition-free environment.

But when the country’s skies were opened to new carriers, the environment changed—not only for PAL, but, more importantly, for the riding public, which found itself at the receiving end of more value-for-money services and improved performance from a suddenly invigorated industry, now that companies were forced to compete with each other in a more liberal marketplace. The entry of Cebu Pacific and other budget carriers inaugurated a boon in domestic travel and tourism in the country. PAL would soon lose its status as the country’s largest domestic airline as the Gokongwei-led carrier aggressively innovated the flying experience with bargain prices and a fun, youthful vibe aboard its planes.

Given this instructive experience, it’s easy to embrace the new executive order signed by President Aquino that adopts an “open skies” policy in the country, which would open up the airports of Manila, Clark, Cebu and Davao to greater traffic from foreign airlines. Its proponents say fully liberalizing the country’s aviation industry this way would lead to increased tourism, trade and investment. The Joint Foreign Chambers, for one, came out swinging for the executive order, saying it would not only generate more jobs and revenues, but is also a “giant step toward [the administration’s] goal of doubling annual tourist arrivals to more than six million by 2016.”

Well and good. That is, indeed, an outcome devoutly to be wished. It must be asked, however: How fair is the new policy toward local carriers?

Cebu Pacific and PAL, perhaps understandably given the impact it would have on their bottom line, both have come out with reservations against the “open skies” policy. Their statements have not been a categorical rejection of the policy. What they have asked is an assurance of “reciprocity”—that for every right given to foreign airlines to mount flights to every airport in the country (except the Ninoy Aquino International Airport), a corresponding concession would also be granted them in the airline’s home country. “If the Philippine government puts out the welcome mat for a foreign airline, [we] fully support that, as long as the foreign airline’s government grants Philippine carriers the same opportunity,” said Cebu Pacific. That position is shared by PAL, which also called for “fair, reciprocal” arrangements.

And it sounds like a reasonable request. While boosting trade and passenger traffic are laudable aims, the means to achieving them should not involve treating the local carriers shabbily and riding roughshod over their interests. These companies have painstakingly built the infrastructure, cultivated the routes, grown the market, served the local riding public loyally—however much that service could always stand improvement. They deserve, at the very least, to be treated fairly, to be allowed to compete honorably in the expanded arena created by Malacañang’s “open skies” EO.

The rub is that the EO is silent on reciprocity, for now. While it authorizes duly constituted Philippine air agreement negotiating panels to offer transport rights to foreign carriers, it makes no mention of similar rights to be enjoyed from other countries by local carriers. As late as January, a top aviation official had given the assurance that local airlines would not be put at a disadvantage by the upcoming policy. Other countries, he said, would also have to liberalize their own aviation arrangements if they were to enjoy the Philippines’ “open skies.”

By
Neha Jain

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