Senate urged to probe non-use of air rights

Philippine Airlines today asked the Senate to examine why foreign carriers failed to utilize or are under-utilizing their passenger air rights to fly to the Philippines, to the detriment of the local tourism industry.

“Data show that foreign airlines do not take full advantage of the Philippines’ grant of valuable passenger rights and the opportunity to bring tourist traffic to the country through the non-use and under-utilization of their seat entitlements,” PAL president Avelino L. Zapanta told a joint public hearing of the Senate Committees on Public Services, Ways and Means, and Finance.

He said that free market forces, rather than the state’s alleged protection of PAL, was the major reason behind these carriers’ decision to pass up their rights to fly to the Philippines.

“The aversion of foreign carriers to use their air rights is not due to an alleged protectionist policy of the Philippine government. Rather, it is driven by the law of supply and demand.”

Zapanta explained that Philippine aviation authorities have already opened the doors to the entry of foreign carriers. But being business entities, airlines will naturally serve only markets where they see the best prospects of making a profit.

Citing data from the Civil Aeronautics Board, Zapanta said that the Philippine government has entered into bilateral air treaties with 49 countries, resulting in a total entitlement of nearly 5.9 million seats yearly becoming available to foreign carriers.

However, on the aggregate, these airlines use up only 3.66 million or 62% of their entitlements and many have opted not to fly to the country at all. Examples include Italian carrier Alitalia, Sabena of Belgium, United Airlines of the U.S., Ansett Airlines of Australia, Indonesian flag carrier Garuda and All Nippon Airways of Japan.On the other hand, a number of carriers have been under-utilizing their seat entitlements, thus failing to meet the terms of their governments’ air treaties with the Philippines.

This includes European airlines British Airways, Air France, Iberia, Alitalia, KLM Royal Dutch Airlines, Austrian Air and Swissair, among others.

Out of a total entitlement of 13,600 seats yearly, European carriers use only 7,445 seats or 55% of their rights.

North American carriers have fared even worse, operating only 7,524 seats or 47% of their total yearly entitlement of 16,000 seats, said Zapanta.

U.S. carriers Northwest Airlines, Continental Micronesia and United Airlines, as well as Air Canada, have not lived up to the terms of the air treaties. The last two have stopped operating to the Philippines altogether.

An even longer list of Asia-Pacific airlines has likewise fallen short of their treaty obligations.

Cathay Pacific Airways, China Southern Airlines, Qantas, Japan Airlines, Thai International, Malaysia Airlines and Vietnam Airlines, among others, all failed to fully meet the terms of their countries’ air pacts with Manila.

In all, Asian carriers use up only 45,231 seats or 67% of their total entitlement of 67,905 seats yearly, said Zapanta.

To boost the feeble utilization of air-seat rights by foreign carriers, Zapanta suggested that Congress pass measures aimed at encouraging such exercise.

“Congress, through legislation, can provide the needed incentives for foreign carriers to mount more flights to the Philippines. This will benefit not only travel and tourism, but other industries as well,” he said.

Zapanta called for improvements to the country’s airport infrastructure as a practical first step to lure foreign carriers to serve new Philippine gateways.

He singled out two internationally known local destinations, Boracay and Palawan, where building international air terminals would have immediate direct tourism impact.