PAL opposes entry of Malaysian carrier

Manila Standard Today
December 13, 2010
by Jeremiah F. de Guzman and Joyce Pangco Pañares

FLAG carrier Philippine Airlines said Friday the country no longer needed another airline as the existing capacity was enough to serve the market.

A new airline formed by Malaysian carrier Air Asia and telecoms heir Antonio Cojuangco would only introduce overcapacity here and result in a price war, PAL president Jaime Bautista said.
“If there will be overcapacity, there will be a price war which will result [in] possible losses [to] the airlines,” Bautista said.

“But as an airline, we should welcome competition because we cannot prevent it.”
The Board of Investments earlier said Air Asia was forming a local subsidiary with Cojuangco to fly to select domestic routes. The planned Philippine subsidiary should start commercial operations next year.

Cojuangco was chairman and chief executive of Philippine Airlines during the early Cory Aquino years, and after his group won the bidding for the carrier’s privatization.

The Malaysian carrier began offering regional flights to and from the Philippines out of Clark in April 2005.

Air Asia chief executive Tony Fernandes earlier told Bloomberg that Air Asia, Asia’s largest budget airline with 100 planes in its fleet, planned to acquire as many as 12 planes a year and was seeking opportunities in the Philippines, Vietnam, China and India.

PAL had earlier said there were over 47.4 million total seats available last year but only 23 percent or 10.97 million were used.

The flag carrier has also opposed an open-skies policy, saying the number of available seats on foreign and local carriers still exceeded the tourist count in the country.
Five airlines now fly to domestic routes: Philippine Airlines, its Psister airline AirPhil Express, the Gokongwei-led Cebu Air Inc., Southeast Asian Airline and Zest Air.

Meanwhile, an official said Friday local airlines would still have the exclusive right to fly to domestic routes despite a draft executive order championing a pocket open-skies policy.

He said the draft was with President Benigno Aquino III and would likely be released in the first quarter next year.

“There will be no cabotage [the transport of goods or passengers between two points in the same country by a vessel or an aircraft registered in another country],” said the official who asked not to be named because he was not authorized to release the details of the draft executive order.
“Domestic flights will still be exclusively for local airlines. The pocket open-skies will not be as bad as what local airlines have feared.”

Mr. Aquino last month said the country would start liberalizing its civil aviation industry.
“Our national development requires promoting an open and competitive international aviation sector that enables Philippine and foreign air carriers to expand their operations ….” he said
Executive Order 219 provided the framework for liberalizing the country’s air policy as early as 1995, Mr. Aquino said.

Tourism Secretary Alberto Lim had earlier submitted a memo to Finance chief Cesar Purisima citing the recommendations for a pocket open-skies policy by an inter-agency task force composed of the Transport, Trade and Justice Departments and the National Economic and Development Authority.
A separate memo to Mr. Aquino from the Cabinet underscored the importance of liberalizing the country’s air services to “give substance to the administration’s message that the Philippines is open for business.”