Flaunting in the air
The Civil Aeronautics Board, the policeman of air transport here, seems to be under attack in media for its rejection of the bid of this foreign airline to add more flights in and out of Manila. Hmmm.
The foreign airline is none other than Qatar Airways, which is the 19-year-old state-owned flag carrier of the Middle East monarchy called Qatar, and based on recent media reports, the airline is accusing the CAB of “protectionism.” In particular the reports flaunt for their targets none other than the CAB executive director, a lawyer named Carmelo Arcilla, who must be stupid or whatever, because Qatar Airways supposedly only has the best interest of the Philippines at heart. Fine!
But it is not as if air rights are just things floating in the air, and any Tom, Dick and Harry named Qatar Airways can just grab them. In fact, all the countries in Asia are now quite determined in getting “reciprocity” when they give away air rights. At present, Qatar already has authority in the Philippines for some eight flights a week, or roughly one flight a day, and it wants the CAB to increase its frequencies, well, to about three flights a day—or almost triple the present frequency.
Not too long ago, however, the same Qatar Airways that is only after the welfare of the Philippines, well, already canceled its flights between Cebu and Doha, citing as reason the “high costs of operating in the Philippines”—i.e. it was not making money. And so the guys down here in my barangay can quickly doubt the noble selfless motive of Qatar Airways in wanting the additional frequencies in the Philippines. After all, as shown by its cancellation of the Cebu flights, the airline is also after profits.
From what I gathered, the noise in media against the CAB misses out on one important issue in the bid of Qatar Airways, and that is, the airline wants the so-called 6th freedom right. That is a rarity in the international airline business since it basically steals the market of the flag carriers of the host country. In fact, the issue over 5th and 6th freedom rights of huge dominating foreign airlines has become explosive in Asia. In the case of Qatar Airways, it wants the CAB to give it the “right” to add 13 more flights a week on its Manila-Qatar-Europe routes at the expense of the country’s flag carrier Philippine Airlines.
By establishing the Manila–Qatar–Europe route, Qatar Airways in effect can offer Europe-bound passengers from Manila some ridiculously cheap rates, cutting a bit of its profit to corner the market, since the Manila-Qatar leg is already lucrative enough. In fact, the 6th freedom rights of Middle East airlines such as Qatar Airways has been blamed by Europe-based airlines for their cancellation of direct flights between Manila and European cities, which ultimately would have a dampening effect on the country’s tourism market in Europe.
The question is this: If the CAB grants Qatar Airways its simple wish, with the Philippine government sacrificing its own flag carriers like PAL and Cebu Pacific, what is the upside for the Philippine side? From what I gathered, the Aquino (Part II) administration from the start has been mindful of “bilateral” benefits in its decision to give additional frequencies here to foreign airlines. It seems that the CAB has other considerations in denying the application of Qatar Airways, such as the all-important “potential” for developing a two-way (as against one-sided) arrangements between two countries, particularly in tourism.
The last time I checked, the population of Qatar remains at less than 2 million and based on official figures, less than 4,000 of them actually visit the Philippines every year, which does not exactly make the Department of Tourism jump for joy.
In the airline business, they think that the 6th freedom rights of Middle East airlines like Qatar Airways may even tend to discourage the resumption of “direct” (i.e. fast and convenient) flights between Manila and Europe. As it is, PAL, which last year boldly resumed direct flights between Manila and London, is seen to face an uphill climb in reestablishing itself in Europe because Middle Eastern carriers—somehow—can mysteriously offer ridiculously low rates.
Media reports also missed out on another crucial point: Air rights are always a matter of reciprocity. In the case of Philippine carriers, they claim to face impossible odds in getting air rights in Qatar. The reports also note that the Philippine government looks more kindly to the airline of Saudi Arabia, known as Saudia Airlines. Well, they forget that the air agreement between the Philippines and Saudi Arabia has been in existence for the past 30 years or so. At one time, in fact, Saudi Arabia was the only country in the Middle East that allowed PAL to serve its market. There are also 1.3 million OFWs in Saudi Arabia, plus more than 600,000 in the United Arab Emirates, compared to 175,000 OFWs in Qatar.
You know—that kind of reciprocity! Mutual benefits, in short!
Now according to the International Air Transport Association, or Iata, which groups some 240 international airlines, the airline business is becoming a major factor in the expansion of the global market. Air cargo now accounts for 35 percent of world trade. In fact, the data on air cargo are always linked to the level of business confidence in any country. They are now economic indicators.
Based on the Iata forecast, the rapid growth in both passenger and cargo will mostly like come from the emerging markets. You know—countries like the Philippines. The association also foresees an increase in international passengers of some 215 million international passengers this year, and about about half of the increase will be in the Asia-Pacific region, which by the way includes the Philippines.
To the guys down here in my barangay, it seems that those are the things that Qatar wants, with the help of certain media reports, of course. In the end, contrary to claims of selfless and undying devotion to the host country, foreign airlines want more and more flights to the Philippines, giving nothing in return, in order to raid the Philippine market.
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