Gokongwei urges reciprocity in 'open skies'

Philippine Star
Business
Updated April 06, 2011 12:00 AM
By Mary Ann Ll. Reyes

MANILA, Philippines -  One of the leaders of the Philippine aviation industry called on government yesterday to ensure that its recently announced “open skies” policy will equally benefit foreign and local air carriers.

At the regular weekly breakfast meeting of the Tuesday Club at the Edsa Shangri-La Manila, Cebu Pacific (CEB) president and CEO Lance Gokongwei recommended in a speech that reciprocity should be an integral requirement under the rules and regulations that will be prepared to implement Executive Order 29, which declared an open skies policy for all Philippine airports, except Manila.

Gokongwei emphasized that they have always been supportive of aviation liberalization, including open skies agreements, since Cebu Pacific was a major beneficiary of domestic aviation deregulation.

He pointed out that while they agree with EO 29’s objective of bringing in tourists by allowing increased competition and unlimited access to Philippine skies by foreign carriers, an equal right should be given by their host countries to Philippine carriers in the name of 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 stressed.

Gokongwei explained that reciprocity will keep all airlines on their toes and allow Filipino carriers like CEB to compete with foreign carriers and that ultimately, more competition leads to lower fares, benefiting not only CEB but the whole tourism industry, here and abroad.

To explain how lack of reciprocity will adversely affect the local aviation industry, he noted that while the existing air agreement between the Philippines and Hong Kong limits local carriers to only 2,500 seats per week on the Hong Kong-Cebu route and Hong Kong carriers getting the same number, under EO 29, Philippine carriers will still be limited to 2,500 per week but all Hong Kong carriers can now fly this route without any limit.

Gokongwei also pointed out that while CEB flies to Osaka, Japan three times weekly, the company has been asking for additional flights to Osaka which the Philippines is entitled to under the current Philippine-Japan Air Services Agreement but the 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,” he said.

With reciprocity, CEB’s top executive said the open skies policy can be beneficial to the country. He cited as example the new air services agreement with South Korea negotiated in 2007 which raised the capacity limit for each country to 19,000 seats a week, almost a three-fold 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 number one source of tourists,” he said.

In order for the Philippines to realize “quick wins,” Gokongwei suggested that the Philippine government push at least three initiatives. These include the Philippines signing an open skies agreement with Japan similar to what it signed with Singapore, Malaysia and South Korea; the Philippines joining the ASEAN open skies regime which will make the region open to each country’s carriers on an equal footing; and reciprocal open skies agreement with regions like the Middle East and Europe where Philippine carriers do not fly to today.

 “We welcome and support EO 29. However, we would like to also be given the opportunity to compete with these foreign carriers on those same routes, and offer our trademark low fares not only to their nationals/tourists but to our own OFWs as well who live or work there. This is reciprocity and is most fair,” he said.



He added that while they do not argue against EO 29 offering to foreign carriers unlimited ‘fifth freedom rights’, or the right to carry passengers from one’s own country to a second country, and from that country to a third country, their governments should also allow Philippine carriers the same opportunity.

Asked who would be the biggest beneficiary of an open skies policy, he said this would be the fifth freedom carriers like Air Asia X and Middle East carriers.

“We are not asking for special favors. We became the Philippines’ largest national flag carrier without any. We have invested heavily in the country, employ over 4,000 Filipinos and we have given every Juan the opportunity to fly with our low fares. All we ask for is the opportunity to compete on a level playing field. Let us have open skies for all, not open skies for foreign airlines and closed skies for Filipino carriers,” Gokongwei emphasized.