Business World
Monday, September 21, 1998
By Shirley L. Flores
A number of local companies which do business with Philippine Airlines, Inc. (PAL) are already anticipating the negative impact of the scheduled closure of the country's flag carrier on their businesses.
"The decision to close down PAL will not only be a blow to the tourism industry, but to our hotel as well since ... a lot of tourists frequenting the hotel (are) brought (in) by PAL. Right now, we still can't quantify the effect but definitely there will be an impact."
Acesite (Phils.) Hotel Corp. project manager Ricky Ricardo said in an interview with Business World last Friday.
Acesite, operator of the Holiday Inn Manila Pavilion Hotel, hosts PAL crew and passengers daily. The hotel is also a favorite "stopover" every time the airline would encounter technical difficulty.
With PAL's closure, Mr. Ricardo said the Acesite will enhance its work¬ing relationships with other airlines in order to maintain and improve on the hotel's occupancy rate. "Whoever will till in the shoes of PAL, we'll have to work with. Whether it would be Grand Air, Air Philippines or Asian Spirit, we plan to work closely with them," he said.
Acesite was among the companies which filed their affidavit of claims with the Securities and Exchange Commission last Aug.17. As of August, PAL owes Acesite P3.34 million in room accommodations and meals.
Grand Plaza Hotel Corp., owner of the Heritage Hotel, is in the same predicament. "The more direct impact would be the less number of people who would be travelling in the Philippines. If there will be lesser tourists then that would have a direct impact on the business of the hotel. Definitely, on a macro basis, with PAL not being able to fly, the number of travellers would be reduced." Grand Plaza Vice-President and General Manager Peter Kan said.
Unlike Acesite, however. Mr. Kan said Grand Plaza has no immediate plans to address the expected decline in hotel occupancy. "We just can't do anything... since (the solution to the problem) is not in our hands. We just hope that somewhere, somehow, the matter would be resolved," he said.
Not only Manila-based hotels and recreation firms stand to be affected by the closure of the flag carrier, but the Cebu hotel industry as well with PAL flying more than 10 times daily to the area.
"Definitely it will hurt especially the whole Cebu hotel industry since PAL flies several times a day to Cebu than in any other area in the country. Cebu is also a prime tourist destination next to Manila. It will affect tourism and it will affect us in turn," Pathfinder Holdings Philippines. Inc. Vice-President for Finance Nestor Encinas said.
Pathfinder operates Cebu Plaza Hotel. Alegre Beach Resort and Park Place Hotel, all based in Cebu.
"Right now, we'll take it as it is and hope that government will intervene. There will still be business but definitely there will be lower number of arrivals. But I think it will normalize also," he added.
Mr. Encinas said there is no certainty that the remaining airlines operating in the country could take the place of PAL.
"I don't know if Cebu Pacific and Air Philippines can fill the gap. I don't know how long it will take them to fill in the gap. But I think they should. If the two airlines take up the slack, then things will eventually stabilize. The hotel industry as a whole should also make a statement," he said.
Mobil PhiIs., Inc., one of PAL's suppliers of petroleum products, likewise expressed concern, particularly because of its outstanding receivables from the airline. "We're concerned, of course, with this difficulty that we're facing. Any exposure ending into something like non-collection would be a big concern for everybody," an official at the company said. The official, however, refused to further comment on the matter.
Officials of Petron Corp., another fuel supplier, also declined comment. Business World also tried to contact Caltex Phils., Inc. and Macroasia Corp. but officials were not available.
Meanwhile, the Department of Tourism (DoT) also expressed fears the closure of the official flag carrier might paint a negative image of the country and, hence, reduce its potential as a leisure and business destination.
Tourism Secretary Gemma Cruz-Araneta recently called on the government to extend help to other domestic airlines for them to develop fleet capabilities and services in order to achieve flag carrier status.
"The tourism industry stands to be the hardest hit once PAL closes shop. In a sector that depends largely on air carriers to ferry visiting tourists from a gateway point to any point in the country, PAL's closure will drastically reduce the tourist traffic to the Philippines and to its outlying island destinations. Jobs and other livelihood opportunities generated by tourism are also on the line," Ms. Araneta said in a press statement.
DoT data showed the economy stands to lose some P259 million daily in tourism revenues which include projected tourist expenditures for accommodation, shopping, food/beverage, transport, guided tour and recreation/entertainment because of PAL's closure.
Private sector representatives aired their support for the government's plan of allowing other airlines to fill up the slack left by PAL through joint partnerships and other feasible projects.
"They also urged that additional incentives be granted to domestic carriers to allow them to acquire or lease additional or new equipment to upgrade their fleet as well as to ensure safety and quality services for passengers. The use of air charter services, inter-island vessels and other alternative modes of transportation must also be encouraged to ensure the continued flow of domestic and international visitors," Tourism Undersecretary Roberto Antonio said.
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