Arab airlines crowding out Philippine carriers (Business Mirror (Philippines))

COMPETING with Middle Eastern carriers that receive billions of dollars in government subsidies is a losing battle that may force Filipino airlines to abandon their flights to several Arab and European markets, the president of the Philippines’s flag carrier said on Sunday.

Philippine Airlines (PAL) President Jaime J. Bautista said Gulf carriers-which are alleged to have received roughly $23 billion in state subsidies-will drive out competition if they manage to secure new entitlements in the forthcoming bilateral air talks between Middle Eastern countries and the Philippines.

He lamented that, without a level playing field, the gains that the flag carrier booked during the last two years stand to be wiped out due to the unfair advantage that Middle Eastern carriers have.

Most, if not all, Arab carriers operating in and out of Manila fly to the Middle East, using airports in the United Arab Emirates (UAE) as jump-off points to European destinations.

Should the UAE airlines get the additional entitlements they seek during the coming Philippine-UAE air talks, this will undermine the investments PAL and other airlines have made for the country in opening new routes to serve Philippine tourism and overseas Filipino workers, Bautista said.

During the 1990s, the national flag carrier stopped its flights to the UAE and Europe due to the unfair competition against well-funded Middle Eastern carriers that siphon passenger traffic via their hubs in Dubai, Abu Dhabi and other airports in the Gulf region. It also stopped operations to Saudi Arabia in 2006.

Six European airlines also suspended their routes to Manila during the same period, as Arab carriers employed their multimillion-dollar advantage to devastating effects.

Today, the healthy state of competition in the Philippines’s global aviation network is at risk because of the forthcoming air-services talks. Some of the destinations that PAL fears would be negatively affected by the additional frequencies are London, New York, Abu Dhabi, Dubai, Riyadh and Dammam.

Other Philippine and European airlines have opened their own routes to Dubai, Kuwait, Riyadh, Doha and Istanbul, all of which are vulnerable to another ill-timed onslaught by Emirates and Etihad Airways, if the Arab government is able to secure increased frequencies between Manila and the Middle East.

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.

Emirates and other gulf carriers have been lobbying for more flights into Manila to be able to carry passengers to destinations beyond the UAE.

We respectfully call on the Philippine panel to the air talks to promote fair competition and support our airlines, which have invested much in re-opening service to the Middle East and Europe, Bautista said.

Meanwhile, three of the country’s major airlines are battling for the recently bagged frequencies to several cities in Russia, separate filings to Manila’s aviation-services regulator showed.

PAL is seeking to operate five weekly flights to Moscow and thrice weekly to Khabarovsk. It also seeks to serve the Cebu-Khabarovsk route for three times a week. It has been operating flights to Vladivostok out of Manila and Kalibo since 2013.

Sister PAL Express is also seeking to be designated as an official Philippine carrier to Russia. It did not specify which route it would like to operate.

Cebu Pacific, on the other hand, would like to operate a thrice-weekly service out of Manila to Moscow. It also seeks to fly out of Manila to Vladivostok.

Budget carrier AirAsia Zest is also seeking to serve the Russian market via Kalibo, seeking four allocations to operate the Kalibo-Vladivostok route.

The Philippines and Russia signed on July 23 a memorandum of understanding modernizing their bilateral air-services agreement to further enhance the civil-aviation cooperation between the two countries.

Negotiations were held in Moscow.

The new arrangement allows Philippine carriers to conduct operations between any point in the country and three destinations in Russia, including Moscow.

Also, travelers between the Philippines and Europe or North America will benefit from faster and more competitively priced direct flights with the use of Russian airspace.

About 40,000 Russian tourists visit the country every year, while more than 2 million travelers from Russia and the Commonwealth of Independent States visit the other Asean countries.