Lower Airfares Seen As CAB Lifts Fuel Surcharge


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Lower Airfares Expected

MANILA, Philippines – Lower fares await airline passengers as the Civil Aeronautics Board (CAB) ordered the lifting of the fuel surcharge imposed by foreign and domestic airlines.

Per Resolution No. 79 (BM 10-12-22-2014) dated December 22 and published Tuesday, January 6, CAB ordered lifting the authority of domestic and foreign airlines to impose fuel surcharge on domestic and international flights.

“Whereas, with the substantial and continuous decrease of fuel prices in the world market, the Board has deemed it appropriate to compel airlines to discontinue their imposition of fuel surcharge,” CAB stated in the 4-page resolution.

Transportation Undersecretaries Jose Perpetuo Lotilla and Benito Bengzon J., together with Civil Aviation Authority of the Philippines (CAAP) director-general William Hotchkiss III and former Clark International Airport Corporation (CIAC) president Victor Jose Luciano, signed the resolution.

Airline passengers could expect lower air fares starting the end of the week with the removal of the fuel surcharge on domestic and international flights, CAB executive director Carmelo Arcilla said in a telephone interview.

The fuel surcharge depend on the flight’s distance, Arcilla said.

The surcharge ranges from P200 ($4.44*) to P500 ($11.10) for domestic flights, but could go as high as P15,000 ($332.88) for international destinations.

Fuel cost accounts for over 50% of airlines’ total operating costs.

Slash fuel surcharge

The CAB allows airlines to impose such surcharge to help them recover fuel costs and stem losses caused by the sudden upward spikes in fuel prices.

Per prevailing international practice, fuel surcharge may be reduced or removed as it is not part of the basic fare, depending on the price of jet fuel in the world market.

Citing data from the Department of Energy (DOE), the CAB said fuel prices have declined by more or less 25.51% from January to November last year.

As of December 26, jet fuel price in the world market plunged 42% to $75 per barrel, data from the International Air Transport Association (IATA) showed.

On December 5, CAB summoned domestic and foreign airlines to explain why they have not reduced or lifted the fuel surcharge imposed on airline passengers.

Malaysian Airlines lifted its fuel surcharge as early as July 2013.

Asiana, Etihad Airways, Jin Air, Korean Air, and Qantas argued though that jet fuel remains relatively high, and it is not the only factor considered in imposing fuel surcharge.

Cathay Pacific and Hong Kong Dragon Airlines reported a slash in fuel surcharge by 33.44% to $18.30 last October from $27.90.

All Nippon Airways and Japan Airlines reduced their fuel surcharge by 6.9% to $80 in January 2014 from $86.

Gulf Air fixed its fuel surcharge of $90 as early as 2010, followed by Jeju Air at $40 and Qatar Airways at $120 in 2012.

Source: Rappler.com

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Lawmakers Hit CAB For Failing To Protect Airline Passengers


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Lawmakers on Monday criticized the Civil Aeronautics Board (CAB) for failing to protect passengers from excessive fares and dismal service of airlines following the holiday flight fiasco involving Cebu Pacific Air which left thousands of passengers stranded in airports.
In House Resolution 1780, Bayan Muna party-list Reps. Neri Colmenares and Carlos Isagani said Cebu Pacific’s holiday flight fiasco has become a common occurrence, with other airlines guilty of causing inconvenience to passengers by cancelling flights, delaying arrivals and departures, and charging them excessive penalties and rebooking fees.
Colmenares and Zarate noted passengers never get refunds when airlines cancel or change flight schedules.
Despite such violations committed by airlines, the lawmakers said CAB “has failed to protect the interest of airline passengers up till now.”

Accountable For Dismal Service

In an earlier interview, Colmenares said CAB is also accountable for the airlines’ dismal service.
“While it is good that the CAB will already start their investigation to get to some of the details of the continued inconvenience of airline passengers, I think that the CAB should also be probed for not doing its duty to regulate these airlines and protect airline passengers,” he said.
CAB last week summoned Cebu Pacific officials to explain the cancellation of 20 flights and the delays of 720 others from Dec. 24 to 26, which caused inconvenience to thousands of passengers.
CAB officials dismissed as “unacceptable” the argument that fiasco was caused by air traffic congestion, weather condition, and sudden leave of absence of ground crews.
It will release its recommendation for the airline, including the sanctions it may face, by mid-January.
‘Deceptively Low’ Fares
Other problems which the lawmakers said should be investigated by Congress the practice of airlines offering “deceptively low” initial base fares, but charging them prohibitive taxes and surcharges, and the policy of making passengers pay for the use of the passenger tube even though it should be a service.
In addition, Colmenares and Zarate said airlines should offer lower fares by now as fuel prices have decreased significantly in recent weeks.
Also on Monday, Eastern Samar Rep. Ben Evardone filed House Resolution 1782 asking the House committees on transportation and legislative franchises to probe Cebu Pacific in particular for possible violations of Republic Act 7151 and other related laws over the widespread flight delays and cancellations during the peak holiday season.
The lawmaker noted the airline had no excuse to cancel as well as delay the arrivals and departures since there was no reported weather disturbance in Metro Manila during those three days.
“There have been complaints by paying passengers on Cebu Pacific’s poor services, resulting in long queues, flight delays and cancellations without due notice, overbooking, among others, even on Christmas holidays, on December 24, 25, and 26, 2014, in particular,” he said.
Franchise Duties
Section 3 of Republic Act 7151, which granted Cebu Pacific’s franchise to operate an airline in 1991, states: “Excepting cases of force majeure and whenever weather conditions permit, the grantee shall maintain scheduled/ non-scheduled/ chartered air transport services between and all points throughout the Philippines.”
Citing news reports, Evardone attributed the disenfranchisement of Cebu Pacific’s passengers during the holiday travel season to the airline’s apparent lack of a contingency plan to address the deluge of passengers, especially at the Ninoy Aquino International Airport (NAIA).
Evardone warned the airline could lose its franchise if Congress finds it remiss in fulfilling the duties stated in its franchise.
“[A]s grantors of the franchise, it is incumbent upon this august body to check on the conduct of Cebu Air Inc., as grantee and terminate the franchise for the common good,” he said.
Source:VS, GMA News

AirAsia PH, AirAsia Zest Eye Myanmar Flights


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MANILA, Philippines – AirAsia Philippines, as well as its unit AirAsia Zest, are looking to start flights to Myanmar as part of route expansions.

AirAsia Philippines is seeking entitlements of 1,260 seats between Manila and Yangon, according to its application with the Civil Aeronautics Board (CAB). AirAsia Zest is seeking allocation of entitlements for 7 weekly fights between Manila and Yangon.

Earlier, budget airline Cebu Pacific and unit Tiger Airways Philippines sought the approval of CAB to mount flights to Myanmar. Cebu Pacific’s application seeks 1,260 weekly seats for flights between Manila and Yangon, while Tigerair Philippines also filed a separate application with the CAB seeking 1,260 weekly seats for the Manila-Yangon route.

CAB executive director Carmelo Arcilla earlier said the Philippines and Myanmar signed a new air pact, updating an older agreement from 1979.

The agreement would allow the designated airlines of each country a total of 3,780 seats per week – about 3 flights per day – for each country between Manila and points in Myanmar. The Philippines and Myanmar also agreed on unlimited traffic rights between all points in the Philippines, except Manila, and all points in Myanmar.

“Myanmar is a rapidly growing economy of about 60 million people, with a potential for the development of direct connectivity with the Philippines,” Arcilla said. – Rappler.com

Foreign Firms Eye NAIA Runway Consultancy Deal


MANILA, Philippines – Three foreign companies expressed interest in the P91.4-million consultancy contract to increase the runway capacity of the Ninoy Aquino International Airport (NAIA).

The Department of Transportation and Communications (DOTC) said the 3 firms included Mitre Corporation of the United States, NATS Ltd of the United Kingdom, and Copenhagen Airport of Germany.

DOTC Secretary Joseph Emilio Abaya said the agency would still pursue the runway optimization project despite two failed biddings.

“The likes of Mitre, NATS, and Copenhagen Airport have expressed interest. NATS in particular did a consultancy in Hong Kong and Singapore and they have increased movements by 20%,” Abaya said.

According to representatives from the UK-based NATS Ltd., it is possible to increase the capacity of the existing NAIA runway to between 50 and 60 movements per hour from the current 40 movements per hour, the transportation chief said.

“We need that kind of expertise to tell us what so we improve our movements per hour,” Abaya added.

Improving the airside capacity of the country’s main international gateway involves increasing runway movements, improving slot schedules, adding infrastructure, and upgrading technology.

Civil Aviation Authority of the Philippines (CAAP) deputy director general Capt John Andrews earlier said airlines lose at least P7 billion a year because of congestion in NAIA.

Passenger Volume

To better accommodate an increasing number of passengers, the DOTC is also planning to push through with the construction of a 2.1-kilometer parallel runway, to be constructed south of the existing primary runway 06/24.

The Civil Aeronautics Board (CAB) said that passenger volume in the Philippines increased in the first quarter of 2014 to 9.65 million, up from 9.55 million in the same period last year.

International passenger traffic reached 4.50 million while domestic air traffic increased by 1.5% to 5.13 million.

“Growth has been slow but positive and we hope to improve it this year. The CAB will continue to support Philippine tourism and business travels through strategic and key bilateral aviation partnerships,” CAB Executive Director Carmelo Arcilla said.

A study by the Japan International Cooperation Agency (JICA) showed that the number of passengers in Greater Capital Region would hit 106.7 million by 2040 – more than triple the 31.88 million recorded in 2012.

To address this, the DOTC is eyeing a new international airport by 2027 with the joint development of NAIA in Manila and the Clark International Airport in Pampanga.

Diversified conglomerate San Miguel Corporation also plans to put up an international airport in a 1,600-hectare property along the Manila-Cavite expressway coastal road. – Rappler.com

Philippine Air Traffic Slips 2.6% in Q1


MANILA, Philippines – Air traffic in the Philippines slipped close to three percent in the first quarter of the year amid the slight decline in international passengers with budget airline Cebu Air Inc. (Cebu Pacific) emerging as the preferred airline of passengers.

Data released by the Civil Aeronautics Board (CAB) yesterday showed that air traffic in the Philippines reached 9.32 million from January to March this year or about 254,000 lower compared to 9.576 million in the same period last year.

Volume of domestic passengers inched up 1.5 percent to 5.137 million in the first quarter from 5.062 million in the same period last year while volume of international passengers slipped by 7.1 percent to 4.18 million from 4.5 million.

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Gokongwei-led Cebu Pacific dominated the domestic market as it flew 2.65 million passengers followed by national flag carrier Philippine Airlines Inc. and PAL Express with 1.658 million, AirAsia Zest with 514,761; Tiger Airways Philippines with 216,169; AirAsia with 74,739; Island Voyager with 17,841; and Magnum Air with 3,768.

In terms of traffic of international passengers, Philippine carriers flew 2.27 million passengers while foreign airlines carried 1.91 million passengers.

PAL, jointly owned by taipan Lucio Tan and diversified conglomerate San Miguel Corp. (SMC) flew 1.23 million passengers in the first quarter while its unit PAL Express carried 36,898 passengers.

Source: Lawrence Agcaoili, philstar.com

 

 

Philippines & Canada Agree To Double Flights


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MANILA – The Philippines and Canada agreed to double the number of flights between the two countries.

Carmelo Arcilla, Civil Aeronautics Board (CAB) executive director, told Interaksyon.com that the Philippines and Canadian air panels signed today an amendment to the existing Philippine-Canada Air Services Agreement, which was last amended in December 2008.

“The new agreement increased the frequency entitlement for each side from seven flights a week to 14. Fifth freedom was also increased from four to five per week,” Arcilla said.
 Fifth freedom flights refer to those originating from one of the contracting parties but terminating in a third party.

Arcilla said both countries also agreed to allow the airlines of both sides to enter into third-country code-sharing.

The two-day air talks were held in Manila. At present, only Philippine Airlines (PAL) flies to and from Canada, with a frequency of seven times per week.

The amendment to the Philippine-Canada air agreement comes after last week’s deal to open flights between the Philippines and Myanmar. The Philippines also concluded air negotiations with New Zealand, Singapore and France.

The Aquino administration is pursuing air talks as part of its open skies policy. Under Executive Order No. 29, airports other than the Ninoy Aquino International Airport would be opened to more foreign traffic. Tourist arrivals are expected to double to 10 million by 2016.

In 2013, the Philippine air panel concluded air negotiations with Macau, Brazil, Israel, Italy and Japan.

Source: Darwin G. Amojelar, Interaksyon

Cebu Pacific Eyes New Zealand Flights


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Image Source: Nikki Pili

Cebu Air Inc. is asking the Civil Aeronautics Board (CAB) to designate Cebu Pacific as an official Philippine carrier to New Zealand.


The budget airline wants entitlements to operate seven weekly flights under the  confidential memorandum of understanding signed by Manila and Wellington.

The Philippines and New Zealand concluded a new air agreement last month, increasing the number of seats and expanding the the freed traffic rights.

Manila and Wellington also expanded the frequency entitlements to 21 flights a week from three.

Under the new air pact, the Philippines and New Zealand agreed to strengthen the fifth freedom exchange by allowing Philippine carriers to operate fifth freedom flights to Australia while New Zealand  carriers get to operate fifth freedom flights to China. 

Source: http://www.gmanetwork.com

Philippine Civil Aviation Board Rejects Qatar Airways Bid For Additional Flights


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Image Source: bangaloreaviation.com

Philippine aviation regulators have rejected an application by Qatar Airways for additional flight entitlements between Doha and Manila, saying the current bilateral market does not yet warrant the opening of new frequencies between both cities.

More importantly, the Civil Aeronautics Board (CAB) showed displeasure at what it believed was the abuse of wealthy Middle Eastern airlines of “sixth freedom” rights under international aviation conventions.

Under this scheme, Middle Eastern carriers like Qatar Airways sidestep prohibitions against directly flying passengers between two foreign cities by making short connecting stops through their home hub airports. Thus, a carrier like Qatar Airways can claim before Philippine regulators that a Paris-Doha-Manila flight, for example, is actually only a Doha-Manila flight even if the vast majority of passengers who land in Manila are from other cities not covered by air agreements with the Philippines.

“The current operations of Qatar Airways between the Philippines and Qatar is actually way above the demand for air travel between the two countries,” CAB executive director Carmelo Arcilla said in a letter to Transportation Secretary Joseph Emilio Abaya. “The reason for this  is because Qatar, as with other Gulf carriers, is a sixth freedom hub airline that relies on the carriage of traffic  between city pairs outside of its territory, in the absence of a significant home market.”

The CAB chief pointed out that, in terms of actual operations, Qatar Airways alone operated more or less 600,000 seats a year to the Philippines even if only 70,000 passengers actually travel between Doha and Manila.

“Another 300,000 passengers, more or less, are carried  by Qatar Airways to and from the Philippines to third countries as sixth freedom traffic, that is, roughly 80 percent of its traffic are bound or originating from third countries (from Europe, Saudi Arabia, US, among others),” Arcilla said.

The CAB chief pointed out that the primary goal of the Philippines’ aviation policy was to promote and develop a vibrant and effective aviation network that efficiently and adequately connected the Philippines to the major trade and tourism markets of the world.

Traffic entitlements between Qatar and the Philippines are set at a maximum of eight flights a week for each side, or a total of 16 between Manila and Doha; 14 flights for each side between Doha and Clark, and 14 flights for each side between Doha and Cebu.

At present, Qatar Airways operates eight flights a week to Manila and seven flights a week to Clark.

The CAB chief pointed out that there was also now a growing backlash from Canada, Germany, France and other Western countries against the growth strategy of the hub carriers from the Middle East. Germany and Canada have since publicly announced their refusal to allow capacity increases to these carriers.

Based on Qatar Airways’ request for additional entitlements, the CAB-led Philippine air panel convened and met thrice before arriving at a consensus that new flights were not warranted at this time.

“[We] deliberated on the proposal of Qatar for additional frequencies. However, the consensus among the members of the air panel is that the current bilateral market does not justify an expansion of traffic rights at this time,” Arcilla said. “A new round of talks with Qatar will be considered at the proper time.”

Source: http://business.inquirer.net

ANALYSIS: Philippines On The Verge Of Tourism Boom After Aviation Upgrades


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Central Business District of Makati City, Philippines

MANILA – With local carriers cleared to expand in the US and Europe, the Philippines is on the verge of a tourism boom.

After more than six years in Category 2, the Federal Aviation Administration earlier today announced the Philippines’ return to Category 1 safety rating, allowing local airlines to mount more flights to the US.

Hours later, the European Union delivered the day’s second good news: Cebu Pacific can now fly to Europe.

Brussels’ decision comes months after it allowed Philippine Airlines (PAL) to resume flights following a three-year absence, and almost a year since the International Civil Aviation Office (ICAO) lifted the significant safety concerns on the Philippines’ main international gateway, the Ninoy Aquino International Airport (NAIA).

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Tourism Secretary Ramon Jimenez Jr. told Interaksyon.com that the latest two certifications are going to have a “massive” impact on Philippine tourism.

“Connectivity and accessibility are crucial to growth. We are ecstatic with these developments.  We are back on track,” Jimenez said.

He said the Department of Tourism (DOT) may revise its targets because of the upgrades even though there’s “not enough data yet to change projections.”

“We shall see how travel operators react and then we will know,” he said.

To be sure, the government hasn’t been waiting on the sidelines for tourists to come.

The DOT has been promoting the country through a campaign dubbed as “More Fun in the Philippines,” which has won international plaudits and allowed tourist arrivals to hit fresh records.

Last year, the country attracted 4.68 million foreign visitors, up 9.56 percent year-on-year.

For this year and next, the government is aiming for 6.8 million and 8.2 million, respectively, so that by the end of President Benigno Aquino III’s term,  arrivals would have reached 10 million, with receipts of P455 billion.

The top visitors so far have been the Koreans, Chinese and Japanese – the result of the Philippines’ efforts to liberalize the country’s airspace, allowing local carriers to fly across Asia and Asian airlines to enter more points in the country.

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Optimal connectivity

The aviation safety upgrades from the US and EU would further open these markets. Data from DOT show that visitors from the US reached 674,564 in 2013, up by 3.36 percent year-on-year, while those from European markets like the United Kingdom and Germany reaching 122,759 and 70,949 arrivals, respectively.

Rosanna Tuason-Fores, president of the Tourism Congress of the Philippines, said the country’s Category 1 status and the removal from the EU blacklist would provide more optimal connectivity in the trans-Pacific region.

“This will also allow us to be competitive as a route not just in the Philippines but also in the whole Asian region. We believe that with this new development, there will be a marked increase in the number of tourist arrivals both from the USA and Europe,” Fores said.

Carmelo Arcilla, executive director of Civil Aeronautics Board (CAB) said the FAA upgrade and the removal from the EU blacklist would benefit the riding public, who will have improved options for air travel that are world class.

“It will also be a boost to our tourism efforts, because it will open up foreign markets for new and expanded services by Philippine carriers, not only in terms of direct services, but also for other cooperative arrangements like code sharing and interline,” Arcilla said.

Apart from ushering a new era in its trans-Pacific service, the upgrade will also allow PAL to explore possible airline partnerships with foreign carriers in order to maximize its growth potential, said the flag carrier’s president Ramon S. Ang.

“This latest development allows us to deploy our modern and fuel-efficient Boeing 777-300ER fleet to the US, and enables us to explore new destination opportunities in one of the Philippines’ largest passenger markets,” Ang said.

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“Back on global aviation map”

Transport Secretary Joseph Emilio Abaya said the upgrade will have significant economic dividends, as carriers mount more direct flights, boosting not only tourism, but also trade and business relations between the Philippines on the one hand, and the US and the EU on the other.

For example, “Philippine air carriers can now open more flights to the United States and have additional routes such as flying to the East Coast,” he added.

Henry J. Schumacher, vice president for external affairs of the European Chamber of Commerce of the Philippines, agreed.

“Tourism will definitely benefit creating more direct connections. Business travel will also gain with more direct flights – that will lead to more business activities between Europe and the Philippines,” Schumacher said.

“This is a great day for Philippine tourism,” he added.

Ang said the FAA upgrade means the Philippines has joined an elite group of only 79 countries that meet the US safety standards.

“This country is definitely back on the global aviation map,” he said.

Following the re-classification, the flag carrier would deploy six Boeing 777-300ERs, acquired at a cost of $1.2 billion, for US flights within a month’s time.

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More infrastructure needed 

But while increasing connectivity is important, the Philippines still has its work cut out in terms of improving infrastructure.

“Building better airports for those flights to arrive at and many other improvements are needed before the full potential of tourism in the Philippines is realized,” John D. Forbes, American Chamber of Commerce of the Philippines (AmCham) senior adviser told Interaksyon.com.

He said “latent demand” stands at 12 million, thus “continued improvements in policies, infrastructure, and promotion are essential.”

Tourism Congress of the Philippines’ Fores agrees: “Infrastructure development must be accelerated.”

“More airports must be made available to international flights; more hotel rooms must be on hand to accommodate the increase in tourist arrivals,” she added.

To date, the NAIA has already exceeded it maximum annual capacity of 30 million passengers.

The government is well aware of this challenge.

It is looking at building a new international airport either in Sangley Point or Laguna de Bay. PAL also plans to put up a $10 billion airport near Manila – albeit the Department of Transportation and Communications (DOTC) said it won’t entertain unsolicited proposals.

Big-ticket projects are being pursued under the Aquino administration’s Public-Private Partnership (PPP) scheme, but this has been slow to take off amid technical and other difficulties.

The government last week awarded its largest PPP airport project to date: the P17.2-billion upgrade of the Mactan Cebu International Airport, which next to NAIA is the country’s second biggest international gateway.

Already delayed, the project is now faced with a legal challenge, after a senator asked the Supreme Court to void its award. Whether the High Tribunal would oblige, remains to be seen.

Source: Darwin G. Amojelar, InterAksyon.com