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


MNL
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