PAL seeks 10-pt aid measures from government

Manila Standard
Thursday, December 10, 1998
Jay-Anne E. Dancel

Beleaguered Philippine Airlines (PAL) is seeking a number of special privileges from the government to improve its viability, including the deregulation of air fare and other charges, confidential documents showed.

In a paper submitted to Malacañang, PAL sought at least 10 “assistance measures” which include the following:

•    Special mandate to be sole air carrier of all government personnel and overseas contract workers;
•    Being the sole carrier in all routes subject of the air services agreements with the country;

•    Lifting of the temporary operating permits (TOR) granted to other airlines PAL-service routes in the Middle East , Hong Kong, Taipei and Singapore; and

•    Mandating that all government and overseas workers’ travel will be on PAL.

An industry observer said these measures would mean the “return of monopoly” in the local airline industry. PAL is majority–owned by Taipan Lucio Tan, whom the Department of Justice has charged in court with a P25.2-billion tax fraud case.

However, PAL senior vice president Avelino Zapanta said in an interview PAL would just like to see equity in the country’s dealings with other countries, particularly in the proposed lifting of the TORs granted to foreign airlines.

“We are not asking for monopoly but the trading of our natural resources such as our skies -- in mutually beneficial arrangements between two countries,” he pointed out.

Zapanta said these TORs should be removed so that the Philippine government could formalize them through a bilateral treaty with concerned government which would be “on the basis of reciprocal rights.”

“Traffic rights historically given away by government agencies have cost PAL a substantial reduction in load factors and yields and revenue from commercial arrangements,” PAL said in its rehabilitation plan submitted to the Securities and Exchange Commission (SEC).

As of end September, total losses of PAL already piled up to P6 billion, brought on mainly by lower passenger traffic following the regional financial crisis. This was aggravated by labor strikes which paralyzed operations until the national flag carrier was forced to shut down in September 23.

PAL reopened two weeks later following an agreement between labor and management for a 10-year moratorium on collective bargaining in exchange for 20-percent equity share of employees in the company.

Also among the “assistance measures” being sought by PAL from government are:

•    Confirmation of PAL’s exemption from landing fees and other charges by the Air Transportation Office, Manila International Airport Authority, Mactan Cebu International Airport Authority, and other airport authorities in the Philippines;

•    Confirmation of PAL’s tax privileges by the Bureau of Internal Revenue;

•    Immediate payment of PAL’s receivables from the Philippine government and its agencies;

•    Enforcing equivalent safety standards for all domestic airline operators;

•    Providing landing and obstacle as well as necessary infrastructure at lending provincial airports in order to allow night operations;

•    Investing in overseas tourism promotional expenditures to the level of regional competitors in PAL’s core markets; and

•    Support from the Civil Aeronautics Board that new frequencies or capacities by foreign carriers be approved by the President and granting or renewal of TORs should be pursued after the release of a well-defined set of guidelines.@