Business Mirror
Tuesday, 05 April 2011 23:44
Recto Mercene / Reporter
Low-cost carrier Cebu Pacific fully agrees with the administration’s “open skies” policy, made official under President Aquino’s Executive Order (EO) 29, but suggests that it should be accompanied by reciprocity if the Philippine carriers were to engage in an equal playing field with foreign carriers.
“We have always been supportive of aviation liberalization, including open-skies agreements with other countries, and we have never been shy telling media about our support for a liberalized aviation industry,” says Cebu Pacific (CEB) president Lance Gokongwei at a Kapihan media forum in Pasig City.
However, he added that about three weeks ago, the airline broke corporate tradition and went public with its concern over the lack of reciprocity under EO 29.
“It was a first in CEB’s 15-year history. My appearance before you today or any Kapihan for that matter is also a first,” he said, adding that they have decided to go in the open and “engage the issue constructively so there would be a better understanding of why reciprocity based on equal opportunity is extremely important not just to Cebu Pacific but also to the public in general.”
The CEB headman said EO 29’s objective is to bring in more tourists, since the policy allows foreign carriers to compete and freely fly to the Philippines.
However, he said there are two key aspects in EO 29 that has to be clarified—increased competition and unlimited access by foreign carriers.
Although CEB said they do not question these assumptions, they would like to add another dimension—reciprocity.
“We would like to be part of this competition. If foreign carriers are given unlimited access on routes to and from the Philippines, we believe it is only fair, that CEB and other local airlines be given unlimited access to and from the Philippines to these carriers’ home countries, on an equal opportunity of access on a level playing field.”
He said reciprocity will keep all airlines on their toes and allow Filipino carriers like CEB to compete with foreign carriers.
“Ultimately, more competition leads to lower fares, benefiting not only CEB but the whole tourism industry, here and abroad.”
Acccording to Gokongwei, CEB is very proud to say that their low fares played a major role in spurring growth in tourism as shown by the 127-percent growth in domestic tourism in the last five years—from 7.3 million in 2006 to 16.6 million passengers in 2010.
He added that international tourism from the markets they serve has grown much faster than from the markets the carrier does not fly to. “Last year alone we grew our international traffic to 39 percent. That’s 2.2 million passengers in 2010 alone.”
To prove his claims, he said in 2005, a year before CEB started flying to Singapore, tourist arrivals were estimated at 69,435. Since CEB introduced lower fares to Singapore in 2006, that rate has grown 74 percent, resulting in 121,083 tourist arrivals from Singapore last year.
“At the risk of sounding immodest, these facts show that CEB have championed tourism and will continue to do so wherever we are allowed to fly and compete,” he said.
Citing examples of the consequences of nonreciprocity, Gokongwei pointed to the agreement with Hong Kong limits carriers to only 2,500 seats per week on the Hong Kong–Cebu route for every one, but under the open skies the Philippine carriers “will still be limited to 2,500 per week but all Hong Kong carriers can now fly this route without any limit.”
“We have been asking for additional flights to Osaka, which the Philippines is entitled to under the current Philippine-Japan Air Services Agreement. However, our request, to this day, has not been approved. In the meantime, All Nippon Airways (ANA) was recently allowed to come in and operate flights from Tokyo to Manila under the very same Air Services Agreement. This is another example of the lack of reciprocity,” said Gokongwei.
Citing Korea as a notable success story, CEB suggested that it should be built on and used as a model. He said South Korea, raising the capacity limit for each country to 19,000 seats a week, almost a threefold jump from the previous limit of 6,800.
“As a result, today, we compete with Korean carriers on Incheon and Busan routes, and airlines such as Korean Air, Asiana, Air Busan and Jeju Air are adding flights into the Philippines. Korea today is the country’s No. 1 source of tourists.”
CEB also pointed out that Japan had signed open-skies agreements this year with Singapore, Malaysia and South Korea; and with the US late last year.
He said it took their respective governments an average of just more than a month to finalize these agreements. Japan is open to more such agreements with Asean and this presents an opportunity the Philippines must grab quickly.
According to CEB, there are currently efforts to have an Asean open-skies regime but the Philippines and Indonesia remain as holdouts.
“If we sign this, the region will be open to each country’s carriers on an equal footing. This is a regional effort which I think will work better than a unilateral approach.”
He also said CEB supports reciprocal open-skies agreements with regions like the Middle East and Europe, where Philippine carriers don’t fly to today, “provided of course we can, if and when we are ready.”
“Let us have open-skies for all, not open-skies for foreign airlines and closed skies for Filipino carriers.”
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