‘Open skies’ may force PAL out of business, says Zapanta

The country’s flag carrier, Philippine Airlines, stands to lose about P50 billion in annual revenues when the government implements the open skies policy.

Avelino Zapanta, PAL president, said the airline might have to close because of the new air policy and this would also mean losses for the Philippine government. "The money will go to the other countries. It will have an economic multiplier effect."

In a draft order, President Estrada has sought to liberalize the air industry by opening Philippine skies to foreign airlines on a country-to-country basis.

The order will amend Executive Order No. 219 issued during the Ramos administration. This was not implemented and the Civil Aeronautics Board (CAB) was reportedly finalizing its implementing rules and regulations (IRR).

A provision of the draft order states that all foreign passenger charter flights shall not be subject to reprocity. This means there will be no limit as to the capacity or frequency to charter flights outside of Manila.

The order also stipulates that all international all-cargo carriers may operate in Clark, Subic, Laoag, Cebu, General Santos and Davao.

Zapanta noted they did not know of the provisions but took it in the context of the open-air policy that will enable foreign airlines to divest PAL of revenues.

He added that PAL does not oppose liberalization "provided that national interest is protected."

"All the Philippine carriers will eventually die. They will kill the opportunities, not only for PAL but for other carriers as well," Zapanta said in a press briefing.

For his part, Transportation and Communications Secretary Vicente Rivera Jr. admitted that industry players would be affected by the new policy but this would only be in the "immediate term."

"But like growing pains, we feel that, in the long term, this experience can help make them and the industry stronger and more stable in a highly competitive market," he added.