PAL bids to delay US entry

Cargonews Asia
September 22, 1997
E.P. Patanne

Philippine Airlines (PAL) executives have petitioned the Civil Aeronautics Board (CAB) to withhold Northwest Airlines application to operate a new all-cargo service to the Philippines (RP).

In addition, PAL is opposing the entry of Polar Air Cargo, which has also applied to fly unlimited cargo flights to the country.

Northwest, which operates 14 weekly passenger services between the US and the Philippines, wants to add two additional cargo frequencies as of October 1 in accordance with the 1995 RP-US Memorandum of Consultation.

PAL's objection stems from what it sees as unfair competitive practices against Philippine carriers by the US Federal Aviation Authority (FAA), which has ruled that PAL is a Category 2 airline.

The FAA rating has forced PAL to freeze all existing operations in North America. The airline has recently had to cancel its Vancouver-Newark and Seoul-Los Angeles flights due to mounting losses incurred under the Category 2 ruling.

PAL is only allowed to service these and other North American destinations if it wet leases aircraft from Category 1 countries.

According to the wet-lease arrangement, PAL must pay for the aircraft and its foreign crew in US dollars, in addition to absorbing maintenance and insurance costs.

“The CAB must not abet such a glaringly lopsided situation where, on the one hand, US carriers are allowed in the Philippine government to fully mount new services, while Philippine carriers are denied the same opportunity based solely on a unilateral declaration by the US government," PAL stated in its petition to the CAB.

PAL and other local airlines have pointed out that in imposing a Category 2 rating on Philippine aviation, it has – unilaterally, maliciously and capriciously -- branded the Philippines as lacking in aviation management skills and that its commercial aviation sector lacked the expertise, qualifications or manpower to supervise Philippine airlines.

In 1993, the FAA declared the Ninoy Aquino International Airport (NAIA) unsafe, requiring all airlines serving Manila to advise their passengers about the risks of flying to the Philippines. This FAA directive, however, was eventually withdrawn.

The government's Air Transportation Office has begun dialogue with the FAA in a bid to discern how the Philippine aviation system rating could be elevated from Category 2 to Category 1, according to Transportation and Communications Ministry secretary Arturo Enrile.

Enrile expressed the view that the issues ruling Philippine-US aviation relations could he threshed out soon.
US airlines promoting the idea of open skies to the Philippines are motivated by their desire to better access the Philippine cargo market without reciprocating, PAL sources say.

PAL does not operate a dedicated freighter but is considering doing so after 1998, when its fleet expansion and modernization programme has been completed.@