Seair told to halt flights on 2 routes to Cebu, Davao

BusinessWorld
May 20-21, 2011

SOUTH EAST Asian Airlines (Seair) has been ordered to halt plans for flights from Manila to Davao and Cebu while the government decides whether the carrier’s partnership with a foreign airline for the routes is a violation of the country’s laws.

“The order was issued pending a final resolution of the issue... in order to prevent any injury to the public,” Civil Aeronautics Board (CAB) Executive Director Carmelo L. Arcilla said in a telephone interview yesterday, referring to CAB Resolution No. 1 issued on Wednesday.

CAB has effectively ordered Seair to stop the sale of seats for its Manila-Davao and Manila-Cebu routes which will be operational by July.

The resolution was issued after local carriers Philippine Airlines (PAL), Cebu Air, Inc. and Air Philippines claimed that Seair violated Philippine laws on so-called cabotage rights.

Current measures only allow domestic carriers to enjoy cabotage rights, or the transport of goods and passengers within the Philippines.

Seair is a domestic carrier but it will be flying the routes in partnership with Singapore-based Tiger Airways. Seair will be leasing Tiger Airways aircraft for the routes and will also be tapping the Singaporean carrier’s reservation system.

A hearing commenced between the affected parties last May 13, and a cease and desist order was issued five days later by CAB.

“I don’t think we violated any cabotage rights. It will be Seair flying those routes,” Seair President and Chief Executive Officer Avelino L. Zapanta said in a telephone interview yesterday.

“Even though the aircraft are Tiger Airways’, Seair is the one operating it. It will be Seair carrying those passengers and not the Tiger Airways,” Mr. Zapanta said.

Mr. Arcilla, for his part, noted that the partnership between the two carriers has long been opposed by other local airlines.

The two launched flights to Singapore in December last year, and flights to Hong Kong in March this year.

In November last year, PAL, Cebu Air, Air Philippines, and Zest Air filed a consolidated opposition to the partnership, cautioning the government that this will allow a foreign airline to tap the local market.

The procedural submission of position papers and answer to complaints were completed only in April this year.

In a separate text message to BusinessWorld, PAL Spokesperson Cielo C. Villaluna said “CAB is merely upholding the law when it ruled that foreign carriers can’t fly domestic routes as this will violate cabotage law. Competition must play by the rules.” -- Kathleen A. Martin