How fair are the skies?

From the LOWDOWN column of Jojo Robles, published in the Manila Standard TODAY

Fair skies or open skies? The choice looks fairly and openly simple.

How can something as positive-sounding as “open skies” be bad? If you ask the people in the aviation, travel and tourism industries, they will not only tell you how—they will even count the ways.

Last week, stakeholders in the aviation industry met at a forum on the so-called “open skies” policy that was sponsored by the Philippine Chamber of Commerce and Industry. During the various discussions, the government policy promoting “open skies” (or the liberalization of airport landing rights) was roundly criticized as unfair and eventually detrimental to the local industries that the strategy was supposed to protect and help grow.

How so? Hadn’t the government planned to improve tourism, help the aviation industry shape up and eventually stimulate economic growth by making air travel more affordable to every Filipino?

Not necessarily. In recent years, liberalization in the domestic air transport industry has indeed led to greater competition that made air travel more efficient and affordable. Simultaneously, this has spurred greater growth for all players, established or new, and presumably improved the economies of the localities where this increase in air travel has been most marked.

All the domestic airlines that have survived liberalization are posting robust growth rates across the board. Yet fares have been falling consistently even as the bottom lines of local carriers have continued to improve. And more people than ever before seem to be flying the newly-liberalized skies to more destinations around the country.

But that’s as far as the local scene is concerned. The picture looks quite different when “open skies” is taken to mean allowing foreign airlines unlimited access to local airports and when the industries that should benefit from such a liberalized policy start to complain that they don’t get anything in return.

How has “open skies” not worked?

For starters, aviation and tourism industry players told the PCCI forum, they have failed to bring in the tourists. According to Robert Lim Joseph, chairman of the National Association of Independent Travel Agencies, there simply is no great demand for travel to and from the Philippines that would justify an open-skies policy. “Many foreign airlines have been granted landing rights in the Philippines, yet they are not using these entitlements,” Joseph said. “Why? There is no demand. Demand must trigger supply, not the reverse.”

And if promoting tourism in the Philippines is the goal of liberalizing local skies, that hasn’t happened either, Joseph said. “Local carriers are promoting and selling the Philippines abroad as a tourist desitnation,” he explained. “The foreign airlines will promote their countries first before the Philippines.”

In the meantime, according to former Senator Bobby Tanada of the Fair Trade Alliance, there has been no reciprocation of open skies in the countries whose carriers have been granted landing rights in the various airports in the Philippines—a sore point echoed by all the stakeholders in the local aviation scene. “The unfairness is most evident when Macau denied the application of Asian Spirit to fly from Clark to Macau and back, whereas Tiger Air of Singapore has been allowed to fly freely from Clark to Macau and Singapore,” Tanada said. “As the CEO of Cebu Pacific himself was quoted, ‘We might as well register as foreign air carriers.’”

That Philippine skies are open to foreigners while foreign skies are closed to the Philippines is one of the biggest failings of the policy, speakers at the forum seemed one in saying.

***

Speaking of Clark—a.k.a. Diosdado Macapagal International Airport—that is where the biggest fight of the open-skies war is being fought. And the stakes at the envisioned premiere international airport of the country are necessarily, well, sky high.

The country’s biggest local carrier, Philippines Airlines, is staunchly against what it feels is the unfair implementation of the liberalization policy in Clark. With good reason, since PAL intends to put up the billions of pesos to convert the former US Air Force base into the new, improved version of the old, decrepit and pitifully overcrowded Manila airport.

In a paper presented at the forum, PAL detailed its plans to invest $50 million in Clark, where it also intends to employ 5,000 people. That means “more jobs, more business opportunities, more permanent investments to put Clark firmly in the aviation map of the region.”

And yet, PAL said, recent government policy statements on Clark—in particular, two executive orders—not only drastically liberalized the proposed new Philippine hub; they also declare that no reciprocity is required from foreign carriers, that they need not open up their own skies to Philippines airlines as well.

“Foreign airlines can fly to Clark and Subic with a gold-plated guarantee from the Philippine government,” PAL said. “But our own Filipino airlines will have to be totally dependent on the fickle generosity of foreign governments if we want to fly out of Clark and Subic [to go to their countries].”

In the end, the forum was told, open skies can have become as attractive to local industries as an open grave, gobbling them up as foreign companies that have no stake in this country not only refuse Filipinos’ legitimate right to compete abroad, but block them out of local airports in the bargain.

This is why, local stakeholders said, “open skies” is not as important as “fair skies,” or the even-handed, reciprocal and mutually beneficial liberalization of air space over all countries. (Besides, the forum was told, there is really no such thing as unilateral “open skies” because all countries that say they have them demand reciprocating deals. So there.)

As the PAL people said, the recent financial success of the flag carrier (and the other, smaller airlines) can no longer be attributed to government coddling, preferential treatment or an artificial monopoly. But the danger is to go off the other end and give away the skies without any care for local businesses that want to expnad abroad, inward tourism or local jobs.

“What we need is a level playing field, equal opportunity and equal access,” the national airline said. Only in such a situation will open skies have true meaning—and benefit—for the people who can actually use the tool of liberalization for the good of all Filipinos.

Fair skies or open skies? The choice looks fairly and openly simple.

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