PHL-UAE Air Agreement: Filipino Consumers Win; Poses Threat To Local Airlines (1 of 3)


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Rolando R. Zamora, 51, thinks about his family often. His work in Dubai as a site engineer is quite taxing, but it’s the only thing he can do to provide for his family.

He still remembers how hard it was to pack his bags that fateful Tuesday of July in 1992, when his youngest, then 9-month-old Nicole, was crying nonstop.

Zamora kept telling himself that leaving his family behind to seek greener pastures will allow his children to avoid the hardships he had to endure.

“It will be better,” he recalled saying to himself. “It will be better for all of us.”

“I didn’t want my kids to work behind counters at night just so they could finance their studies. I want them to have a good life,” the father of four said.

Despite his hesitation, Zamora left Manila for Dubai and has worked there ever since. He goes home to his family every year, bringing with him several boxes of gifts for his loved ones.

In 2003 he brought his family to Dubai and lived there for several years. But raising his kids in a foreign land—where his seemingly handsome salary according to Philippine standards was meager in the Middle East—proved to be harder than he thought.

So, after five years, Zamora and his family decided to go back to their home in Marikina City.

“It was a hard decision, but buying a plane ticket back to the Philippines and to Dubai is much cheaper than raising my family in the Middle East,” he said.

Zamora is just one of the thousands of overseas Filipino workers (OFWs) currently based in the Middle East who rely on cheap airline tickets to be with their loved ones in the Philippines as frequently as they want to.

Data from the Philippine Overseas Employment Administration showed that the Middle East remains as the top destination for OFWs in 2014. A total of 885,541 land-based workers were deployed to the Gulf last year. The figure is more than half of the 1.43 million overseas workers registered with the government.

“I get to save a lot of money from cheaper airline tickets. The few hundred riyals or so that I save from the fare, I use to buy more gifts for my family,” Zamora said.

Airline-ticket prices to the Middle East are expected to go down this year, thanks to the growing competition in the aviation market in the Philippines. Today, there are about seven local and international carriers flying directly to the Arab gulf.

Last month Manila and the United Arab Emirates (UAE) signed a new memorandum of agreement expanding the air-traffic rights between the two nations.

The parties agreed to increase the maximum number of flights per week for each country from the current 28 flights to 35, subject to the condition that the UAE carrier operating additional flights to Manila is bound to also operate separately to Clark or Cebu within one year from signing of the memorandum.

The conditional agreement, described by Civil Aeronautics Board Executive Director Carmelo L. Arcilla as “more or less fair” to both parties, aims to stimulate the traffic in developmental gateways outside Manila.

With the signing of the agreement, Filipino and Arab carriers may now expand their operations in the Gulf, intensifying the already-stiff competition in the said market. This will effectively lower the cost of fares to Gulf destinations.

Currently, a roundtrip ticket from Manila to Dubai costs about P53,130 in Philippine Airlines, P54,630 in Emirates and P31,029 in Cebu Pacific.

These rates could go down before the year ends, when Emirates and Etihad Airways are expected to mount more flights during the holidays.

“When you open the competition, it means that you will have more flights. The more flights you have, the more options you get, and the more choices you have, fares tend to go lower,” Arcilla said.

Lower fares are expected to be welcomed by both tourists and OFWs.

Tourism Secretary Ramon R. Jimenez Jr. said the increased capacity between the Philippines and the Arab gulf ultimately is “good news” for the country’s tourism sector.

“When you hear news that there are new seats, this is always good news. It just simply means that new people will come,” he said.

Jimenez characterized the Middle Eastern market as a huge market that is highly untapped by the Philippines.

“It is a gigantic market, yet few tourists visit the country. We’re marketing very heavily in these markets. We’re doing promotions and we are trying to encourage more seats,” Jimenez said.

During the first six months of the year, only 38,144 tourists from the Middle East visited the Philippines, contributing less than 2 percent to total visitor arrivals.

Also, the additional seat entitlements would mean better access to the Philippines for tourists from European markets, which go through Abu Dhabi and Dubai.

Emirates and Etihad are airlines that generally make use of the hub-and-spoke system, which is essentially a system of connections in which traffic moves along spokes connected to the hub at the center.

In the case of Emirates, the hub is the main airport in Dubai, and the spokes are scattered around the world like a chariot wheel.

Such a system has an exponential effect. It can connect Manila to more than 200 destinations around the world without having to have a direct connection to, say, a secluded city.

Tourism Promotions Board (TPB) Chief Operating Officer Domingo Ramon C. Enerio said his group expects to see development from the Scandinavian bloc and the Benelux countries, as well as traditional top visitor sources—the United Kingdom, Germany and France—thanks to the expanded seat capacity.

The European bloc contributed only 105,330 visitors to the 2.6 million tourist arrivals in the Philippines as of end-June. This means that the market contributed only 4.02 percent of total arrivals for the first six months of the year, way below the tourism department’s 10-percent to 15-percent target.

“It would be good to have this percentage grow exponentially in the next couple of years because they are a long-stay market, and they spend more. They’re a high-yield market,” Enerio said.

The tourism body expects to net P350 billion in tourism receipts this year.

Experts said, however, that while the tourism sector would benefit from the expansion of air-traffic rights between the Philippines and the UAE, this could pose a threat to Filipino carriers.

“The increase in frequency for UAE carriers generally favors tourism. It means more seats for foreign tourists no matter which airlines operate the capacity. That is why the travel and tour agencies, in contrast with the Philippine carriers, are rejoicing. The dilemma for the country is it might help improve tourism but at the expense of weakening its airlines,” Avelino L. Zapanta, an aviation expert, said.

Source: Lorenz Marasigan, http://www.businessmirror.com.ph/

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