Reform Cab Policies; Support SSS Move

The Journal

Tuesday, December 29, 1998

Opinion – Die Hard

By BOBBY TUAZON

In our Sunday column last week, we raised the issue of the Ramos’ regimes deliberate demolition of the Philippine flag carrier PAL. It was made in connection with our exposé of the West’s mercenary economist Bernardo Villegas of the Center of Research and Communication. Villegas in a disguised warning on “cronyism,” is trying to use that black propaganda line against any attempt of the State to revive the national flag carrier PAL.

Today we focus on this effort during the Ramos administration to scuttle the national flag carrier, through the policy of “liberalization” of the Philippine Airline industry. This liberalization consisted of indiscriminate granting of temporary operating permits, passenger capacity entitlements and “fifth freedom” rights to foreign carriers. The demolition job was carried out by the previous Civil Aeronautics Board, particularly Board member Vic Limlingan (who is still campaigning in behalf of foreign airlines for “open skies” for the Philippines).

Foreign Affairs Assistant Secretary Franklin Ebdalin, a current member of the CAB has this to say about former CAB policies: “The previous CAB administration gave away our air traffic rights to foreign carriers without regard for our own interests… That was wrong. Philippines air rights are national assets. We should not be giving them away for nothing in return. Why should we side with foreign interests in the name of liberalization.” Obviously, Ramos and the globalist clique (including Villegas, of course) that ruled the country during the last administration thought differently, and gave foreign interests greater and greater free rein of our skies.

An alarming evidence of this pro-foreign attitude of Ramos and the clique was the 500,000 seats per year in “fifth freedom” rights, or the right to pick up passengers in intermediate points (away from the carriers’ home country) to bring them to Manila. This diverted Filipino OCWs, businessmen, tourists, and “balikbayans” that should have gone to the Philippine carriers. A list of the T.O.P.s, temporary operating permits, issued by the previous CAB also shows the great disadvantage Philippine carriers have been put to due to increased operating frequencies of foreign airlines. These airlines getting T.O.P.s range from Saudia to Air Nauru, from Nippon Cargo to Fedex, from Silk air to KLM Royal Dutch, the list goes on and on.

Speaking of Philippine carriers, we take this opportunity to assess the wisdom of allowing the proliferation of domestic airline companies. Has it been beneficial? There are lower rates, in fact, cut throat rates, but at what cost.This past week, operational disruptions caused Grand Air passengers to be stranded in Manila for days. Months ago, Grand Air planes were impounded in Hong Kong and Taipei for failure to pay its obligations. Cebu Pacific suffered a tragic crash that raised the question of deteriorating safety standards due to cut throat competition. Air Philippines seems to be flying well due to infusions of sale of other assets, but can it keep it up? Has the policy of promoting proliferation of local airline companies been a success? We have always expressed doubt about it. Airlines need economies of scale, and the recent consolidation of international airlines attest to this.

Few people are aware of these adverse policy antecedents of the current situation of PAL. They constitute one horn of the PAL dilemma.The Erap administration, being unhampered by globalist vested interests, can take steps to help PAL through reform of these anti-PAL policies.It will be an even more fundamental factor in the rehabilitation of PAL, something the SEC’s task force administering the airline should consider seriously.

Reform of these policies will immediately brighten the national flag carrier’s prospects. The other horn, the severe overstaffing, is apparent even to the PAL labor unions by now and should not pose further problems – streamlining must and will be imposed. With these two horns firmly taken into hand, nothing can hinder PAL from spreading its wings again anymore.

With these moves, PAL can and will become a profitable business enterprise again. It is, therefore, imperative that we start viewing the rehabilitation plan from a position of growing strength. It is treasonous for any Filipino to preach or commit any act that will weaken the country and PAL’s bargaining position – as Bernie Villegas has been doing. The correct position to take now, especially for the Philippine government, is to support PAL. It must dare to do the right thing for once – start infusing new money for the airline that is soon to be on its flight back to profitability. On this score, the SSS under Administrator “Chucky” Arellano is doing a signal service to the country, the government and the national flag carrier by being the first to raise the new ante for new PAL.

Yesterday, newspapers reported that the SSS is willing to invest P1 billion in PAL. Administrator Arellano is making a very wise business decision. Knowing what PAL has gone through, the sober attitude of labor after the wrenching strikes, the review of adverse CAB policies and reorganization of PAL, and the thousand eyes watching its every twist and turn, the revival of PAL’s viability and profitability is assured.

The other government GFIs who have already invested in the past should pick up the cue from SSS, this is the moment to redeem themselves. It is the only chance left to recoup from past losses. With the GFIs committed to resorting PAL again, the foreign investors and probably “strategic partners” will be put in their place. We can save ourselves from a “raw” deal.