KLM hikes Phl capacity

MANILA, Philippines - KLM Royal Dutch Airlines is increasing by 10 percent the capacity of its Amsterdam-Manila-Amsterdam route after President Aquino signed a law removing a tax that discriminates foreign airlines from local airlines.

In a statement, KLM Royal Dutch said daily flights would continue to operate via Taipei using an aircraft combination of Boeing 777-300s and Boeing 777-200s.

“With aforementioned capacity increase, KLM aspires to take a first step towards the joint goal with the Department of Tourism of bringing more tourists to the Philippines,” the airline said.

The Aquino administration is looking at 10 million tourists visiting the Philippines by 2016 from last year’s level of about 4.3 million.

The airline cited Republic Act 10374 otherwise known as the Common Carriers Tax Act that rationalized the taxes paid by international carriers.

The law signed last month by President Aquino removed the three percent common carriers imposed on passenger traffic of foreign airlines.

John Paul Cabalza, president of Philippine Travel Agencies Association (PTAA), earlier said  leading international carriers including Cathay Pacific, Delta Airlines, Etihad, KLM, Kuwait Airlines, Lufthansa/Swiss Airlines, Qatar Airlines, and Singapore Airlines are expected to add more flights into the country by middle of this year

The law also exempted  international air and shipping carriers  from paying Gross Philippine Billings provided that the carrier’s home country “grants income tax exemption to Philippine carriers” on the basis of reciprocity or an applicable tax treaty or international agreement.

The law also exempted international carriers from paying the 12-percent value added tax (VAT) for the transport of passengers.

Both CCT and GPBT carries a 5.50-percent tax on airlines that translates to P2.50 billion in revenues for the government.