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Philippine Civil Aviation Board Rejects Qatar Airways Bid For Additional Flights


Qatar_Airways_Boeing_777-300ER_A7-BAC
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

OPINION: Flaunting In The Air


QR
  Flaunting in the air.

 The Civil Aeronautics Board, the policeman of air transport here, seems to be under attack in media for its rejection of the bid of this foreign airline to add more flights in and out of Manila. Hmmm.

The foreign airline is none other than Qatar Airways, which is the 19-year-old state-owned flag carrier of the Middle East monarchy called Qatar, and based on recent media reports, the airline is accusing the CAB of “protectionism.” In particular the reports flaunt for their targets none other than the CAB executive director, a lawyer named Carmelo Arcilla, who must be stupid or whatever, because Qatar Airways supposedly only has the best interest of the Philippines at heart. Fine!

But it is not as if air rights are just things floating in the air, and any Tom, Dick and Harry named Qatar Airways can just grab them. In fact, all the countries in Asia are now quite determined in getting “reciprocity” when they give away air rights. At present, Qatar already has authority in the Philippines for some eight flights a week, or roughly one flight a day, and it wants the CAB to increase its frequencies, well, to about three flights a day—or almost triple the present frequency.

Not too long ago, however, the same Qatar Airways that is only after the welfare of the Philippines, well, already canceled its flights between Cebu and Doha, citing as reason the “high costs of operating in the Philippines”—i.e. it was not making money. And so the guys down here in my barangay can quickly doubt the noble selfless motive of Qatar Airways in wanting the additional frequencies in the Philippines. After all, as shown by its cancellation of the Cebu flights, the airline is also after profits.

From what I gathered, the noise in media against the CAB misses out on one important issue in the bid of Qatar Airways, and that is, the airline wants the so-called 6th freedom right. That is a rarity in the international airline business since it basically steals the market of the flag carriers of the host country. In fact, the issue over 5th and 6th freedom rights of huge dominating foreign airlines has become explosive in Asia. In the case of Qatar Airways, it wants the CAB to give it the “right” to add 13 more flights a week on its Manila-Qatar-Europe routes at the expense of the country’s flag carrier Philippine Airlines.

By establishing the Manila–Qatar–Europe route, Qatar Airways in effect can offer Europe-bound passengers from Manila some ridiculously cheap rates, cutting a bit of its profit to corner the market, since the Manila-Qatar leg is already lucrative enough. In fact, the 6th freedom rights of Middle East airlines such as Qatar Airways has been blamed by Europe-based airlines for their cancellation of direct flights between Manila and European cities, which ultimately would have a dampening effect on the country’s tourism market in Europe.

The question is this: If the CAB grants Qatar Airways its simple wish, with the Philippine government sacrificing its own flag carriers like PAL and Cebu Pacific, what is the upside for the Philippine side? From what I gathered, the Aquino (Part II) administration from the start has been mindful of “bilateral” benefits in its decision to give additional frequencies here to foreign airlines. It seems that the CAB has other considerations in denying the application of Qatar Airways, such as the all-important “potential” for developing a two-way (as against one-sided) arrangements between two countries, particularly in tourism.

The last time I checked, the population of Qatar remains at less than 2 million and based on official figures, less than 4,000 of them actually visit the Philippines every year, which does not exactly make the Department of Tourism jump for joy.

In the airline business, they think that the 6th freedom rights of Middle East airlines like Qatar Airways may even tend to discourage the resumption of “direct” (i.e. fast and convenient) flights between Manila and Europe. As it is, PAL, which last year boldly resumed direct flights between Manila and London, is seen to face an uphill climb in reestablishing itself in Europe because Middle Eastern carriers—somehow—can mysteriously offer ridiculously low rates.

Media reports also missed out on another crucial point: Air rights are always a matter of reciprocity. In the case of Philippine carriers, they claim to face impossible odds in getting air rights in Qatar. The reports also note that the Philippine government looks more kindly to the airline of Saudi Arabia, known as Saudia Airlines. Well, they forget that the air agreement between the Philippines and Saudi Arabia has been in existence for the past 30 years or so. At one time, in fact, Saudi Arabia was the only country in the Middle East that allowed PAL to serve its market. There are also 1.3 million OFWs in Saudi Arabia, plus more than 600,000 in the United Arab Emirates, compared to 175,000 OFWs in Qatar.

You know—that kind of reciprocity! Mutual benefits, in short!

Now according to the International Air Transport Association, or Iata, which groups some 240 international airlines, the airline business is becoming a major factor in the expansion of the global market. Air cargo now accounts for 35 percent of world trade. In fact, the data on air cargo are always linked to the level of business confidence in any country. They are now economic indicators.

Based on the Iata forecast, the rapid growth in both passenger and cargo will mostly like come from the emerging markets. You know—countries like the Philippines. The association also foresees an increase in international passengers of some 215 million international passengers this year, and about about half of the increase will be in the Asia-Pacific region, which by the way includes the Philippines.

To the guys down here in my barangay, it seems that those are the things that Qatar wants, with the help of certain media reports, of course. In the end, contrary to claims of selfless and undying devotion to the host country, foreign airlines want more and more flights to the Philippines, giving nothing in return, in order to raid the Philippine market.


Source: Conrado R. Banal III, Philippine Daily Inquirer

Philippines-Singapore Air Talks Yield New Seat Entitlements


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The Philippines and Singapore inked a new air service agreement, expanding the current seat entitlements by almost a fifth.

Civil Aeronautics Board (CAB) Executive Director Carmelo L. Arcilla said via text message that the two nations agreed to expand flight frequencies to 17,600 seats weekly from 13,800 per week on the Manila-Singapore route.

“The parties signed a new memorandum of understanding (MOU) on air services expanding the exchange of traffic rights between the two countries,” Mr. Arcilla said.

The countries concluded the two-day air service meeting on Feb. 6 in Singapore.

Points outside Manila will continue to be unlimited in accordance with current Philippine policy and the Association of Southeast Asian Nations multilateral agreements on air liberalization, the regulator added.

“We also expanded fifth freedom traffic rights by adding China for them (on top of Osaka and Seoul); and India for us on top of Kuala Lumpur and Bangkok,” Mr. Arcilla said.

According to the International Civil Aviation Organisation’s (ICAO) Web site, fifth freedom rights are granted by state to another, “to put down and to take on, in the territory of the first state, traffic coming from and destined to a third state.”

Singapore is a major market for the Philippines and is one of the countries with a large number of seat allocations, according to Mr. Arcilla.

However, local airlines have already fully utilized the current entitlements, thus the need for the air service agreement to be expanded.

In 2012, the Philippine air panel failed to secure additional seat entitlements from Singapore due to unresolved “substantive and operational issues.”

Tigerair Philippines President Olive C. Ramos said that the airline will apply for some of the new allocations for the Manila-Singapore route.

Cebu Pacific Spokesperson Jorenz T. Tanada said: “Yes, Cebu Pacific is interested in applying for more seats for our Manila-Singapore route. This is aligned with our expansion plans in the region.”

AirAsia Zest President Alfredo M. Yao said that the airline will also be seeking additional seat entitlements for the route.

Officials of Philippine Airlines were not available for comment.

Air service negotiations with New Zealand’s air service panel, meanwhile, are set for March 5 and 6. A meeting between Russia and the Philippines is also expected sometime this month.

AFP Troops Given PAL 20% Discount


Source: Manila Standard Today

ImageFrom September 27, 2013, Philippine Airlines is extending to all active  personnel of the Armed Forces a 20 percent special discount off the base fare on all domestic flights of both PAL and PAL Express, the flag carrier announced Friday.

“This is our own simple way of extending assistance to, and honoring our soldiers, sailors and airmen for their service, hard work and sacrifice,” PAL said in a statement.

The military discount, which was approved by the Civil Aeronautics Board recently, applies to all classes of PAL’s recently introduced customized domestic fares, except Budget Economy.

Covered by the markdown are base fares for Regular Economy, Premium Economy and Business Class on all PAL and PAL Express tickets sold in the Philippines for domestic routes.

Taxes, surcharges and other government fees are not covered by the discount.