Despite opposition from local carriers, air talks between the Philippine and the United Arab Emirates (UAE) will proceed and will be held on August 27 and 28 in Manila, the Civil Aeronautics Board (CAB) said.
“Air talks with UAE, tuloy siya, on 27 and 28 in Manila. Kasi matagal nang hinihingi ng UAE yun [Air talks with UAE will proceed on August 27 and 28 in Manila. The UAE has long been requesting for it],” Maria Elben Moro, CAB Legal Division chief and hearing officer, told reporters.
“Kasi sobrang laki din ng UAE. More than the competition among the air carriers, kailangan i-promote din yung thirst ng riding public kasi you offer air service din talaga that benefits the riding public [UAE is big. More than the competition among the air carriers, we also need to promote the welfare of the riding public because you offer service that benefits the riding public],” she added.
When asked if the requests of the local carriers did not have any bearing on the decision to go ahead with the air talks, Moro replied: “Of course, syempre meron, yung panel considered naman yung position ng lahat, and siguro they arrived at a decision to push through with it. [Of course it has, the panel considered the position of all, and maybe they arrived at a decision to push through with it].”
“Sa ngayon, ang alam ko, lahat ng entitlements fully utilized, so siguro sufficiently served [Right now, what I know is that all the entitlements are fully utilized, so maybe it is sufficiently served,” Moro added.
Philippine Airlines (PAL) and Cebu Pacific (CebuPac) strongly urged the Philippine panel in the air talks with the UAE not to yield to pressure and grant unfair advantage to UAE carriers.
In a joint statement issued August 25, PAL and CebuPac urged “the Philippine Government to resist any and all pressure to grant unfair advantage to the airlines of the United Arab Emirates in the form of unjustified and unnecessary disruptive additional rights to serve Manila.”
The two carriers appealed to the Philippine panel to “increase its vigilance against anti-competitive practices and any attempts to distort competition” and to “challenge UAE and other Middle Eastern airlines to put up direct flights to emerging new gateways in Luzon, Visayas and Mindanao”, instead of further saturating the already congested Ninoy Aquino International Airport (NAIA).
Any request from the UAE for additional entitlements to Manila should be deemed unnecessary because the supply of airline seats is well in excess of actual demand for the Philippine-UAE market, according to the joint statement signed by PAL president Jaime J. Bautista and Cebu Pacific president Lance Gokongwei.
The grant of more flights will provide undue advantage to the government-owned and state-subsidized UAE carriers, the two local airlines said.
They cited a 2015 US aviation industry report saying that UAE airlines enjoyed as much as $23 billion in subsidies from their government.
PAL and CebuPac also said the air talks should not even be held until all available entitlements to the UAE are utilized by Philippine carriers. Entitlements for carriers of the two countries were recently increased significantly.
Not afraid of competition
The two local carriers also pointed out that when Turkish Airlines, Ethiopian Airlines and Oman Air started flying to Manila, they did not pose any objection “as we are not afraid of competition.”
The Philippine negotiating panel should understand that granting UAE carriers additional entitlements would “deepen their significant unfair advantage in the marketplace which
would result to distorted competition.”
The current valid bilateral air pact with the UAE already allows Emirates and Etihad a maximum of 28 weekly flights to Manila and unlimited flights to Clark, Cebu and other airports in the Philippines.
In 2014, Emirates cancelled its Dubai-Clark route in anticipation of receiving permanent additional entitlements to the congested Ninoy Aquino International Airport.
Also, Emirates was penalized by the Civil Aeronautical Board in December 2014 for selling without prior authorization flights that exceeded their weekly maximum entitlement.
Emirates and other Middle East carriers have been lobbying for more flights into Manila to be able to carry passengers to destinations beyond the UAE.
The Middle East carriers that are being investigated by the US and European governments for receiving over $23 billion in government subsidies can use their unfair financial advantages to drive out the competition if they manage to secure new entitlements in the forthcoming bilateral air talks with the Philippines, PAL’s Bautista said.
For his part, Abdalla Al Zamani, Emirates Philippines country manager, has said, “Emirates has been and continues to be consistently transparent and open about our financials. The allegations of subsidy and unfair competition leveled by the ‘big three’ US legacy carriers–Delta, United and American Airlines–is completely false and we have recently released a point-by-point, fact-based response that systematically disproves these allegations.”
The carrier said that for the last 25 years, Emirates’ commitment to the Dubai-Manila route has been a catalyst for growth in inbound tourism and bilateral trade to the Philippines.
Since the removal of the third daily flight, Emirates’ two daily flights on the Dubai-Manila route have been operating at 100 percent capacity in Economy Class on most of the flights—with no seats left for international tourists and overseas Filipino workers (OFWs), he said.
This represents a significant gap between supply and demand for seats. In light of the proclamation of “Visit the Philippines in Year 2015,” limiting Emirates from fully contributing to increased tourism and economic development simply seems counterintuitive, he said.
“We are confident that the restoration of Emirates’ third daily flight to Manila will ensure widespread and sustained benefits to all stakeholders,” Al Zamani said.