Carlo's Think Pieces

Reflections of a Filipino in the Netherlands

Open Skies?

Posted by butalidnl on 29 April 2011

Lance Gokongwei (president and CEO of Cebu Pacific): Open skies without reciprocity is like Pacquiao with one hand tied.[ Gokongwei: Open Skies without Reciprocity is like Pacquiao Boxing with Left Hand]  This was in response to President Aquino’s signing an Executive Order 29 on “Pocket Open Skies” [Aquino signs ‘open-skies’ orders, finally].  Gokongwei expressed the view of local airlines; but President Noynoy should act on the basis of the advantage such a policy would have for the Philippines as a whole, and not only for the airline industry.

I think that an open skies policy is good for the country, even when it is not reciprocated. Though  it would be probably be better if it was reciprocal. Why will this be good, even if done unilaterally?

Advantages
Increased inbound travelers. Tourists, businessmen etc would come in if a foreign airline opens a line between one of their cities and a provincial destination in the Philippines. The foreign airline is the one who needs to work in order to generate the traffic; after all, it is its own investment. This traffic is new for the most part. For example, imagine a line from Singapore to Caticlan (Boracay). This will generate more passengers for a direct route; at the same time, it may divert some from going to Manila first, and then transferring to a local airline to go to Caticlan. Because many of the new arrivals may not have come without the new direct line, there will be a net gain in tourist arrivals. A reciprocal line from Caticlan to Singapore will not really add too much.

Cheaper Airfares for Filipinos. Increased number of direct flights will mean cheaper airfares – either because of competition, or because shorter routes will be available.

Improved Air Travel Infrastructure. When foreign airlines open routes to provincial destinations, they will most probably use local resources and personnel for passenger processing, cargo handling, even catering. This will help to improve facilities and services at those provincial airports. It can also result in cheaper air transport costs.

Improved transport costs do not only affect passenger travel. Businesses could also benefit from the increased air routes into provincial destinations. Business travel to those places will be cheaper, and transport of goods by air is also facilitated.

Increased Local Travel. A provision in the Open Skies policy states that foreign airlines are not allowed to transport passengers between destinations in the Philippines. The foreign passenger, once in the Philippines, would need to take local transportation to travel within the country. This means that local airlines stand to gain from the increased number of tourists, etc. in the country, since some of them also want to go elsewhere in the country.

Thus, even if unreciprocated, the Philippines stands to gain from Open Skies. If other countries don’t reciprocate, those countries’ nationals would not benefit from the lower airfares, better access, improved airport facilities, higher passenger traffic, etc. that the Philippines will. It would be their loss.

Subsidies
Gokongwei also talked about unfair competition by foreign airlines because these receive subsidies from the government. True, some foreign airlines may receive subsidies. But this would mean that the other country is subsidizing their airline to fly a route into the Philippines. That  country’s taxpayers are thus paying for something which benefits the Philippines. To this, I would say: Thank You.

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