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Gokongwei: P52-M fine on Cebu Pacific may set ‘precedent’ in airline industry

/ 03:47 PM January 21, 2015

MANILA, Philippines—Cebu Pacific CEO Lance Gokongwei expressed his fear that the P52-million fine slapped against the budget carrier over its canceled and delayed flights during the Christmas rush may set a “precedent” in the airline industry.

During the House of Representatives transportation committee’s hearing on Wednesday, the budget carrier president said he acknowledged that they need to pay the penalty for their role in the fiasco, but said his legal team is studying the amount imposed by government.

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“We admit that we are responsible for shortcomings. We agree that we have to pay the penalty. But our legal team is reviewing the basis and amount because of possible precedents,” Gokongwei told lawmakers in the hearing.

The House panel is conducting the hearing over allegations that Cebu Pacific allowed overbooking despite the peak season of Christmas from December 24 to 26, resulting in flight delays, cancellations and chaos among irate passengers on their way to see their families for the holidays.

Gokongwei flatly denied that overbooking caused the long queues of irate passengers, saying the contributing factors are undermanned operations, absenteeism of staff, as well as Cebu Pacific’s failure to anticipate the effects of the holiday peak season.

He also apologized for “failing” their patrons in their duty to provide efficient transportation.

At the sidelines of the hearing, Civil Aeronautics Board Executive Director Caremelo Arcilla said he does not think the fine would set a bad precedent in the industry.

He said the P52-million fine may be the highest ever imposed on an airline in the country, but “it is quite low compared to fines in other countries.”

“I don’t think (it might set a precedent). For me, public interest is paramount. We have to use the coercive power of the law in order to make the airlines comply with their obligations,” Arcilla said.

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The penalty was imposed after the CAB, Civil Aviation Authority of the Philippines (CAAP), and the Manila International Airport Authority (MIAA) found liability on the part of Cebu Pacific over the airport chaos. The fine was calculated by multiplying the 10,422 inconvenienced passengers with a P5,000 penalty per passenger as indicated in the Republic Act 776 or the Civil Aeronautics law.

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TAGS: Airline industry, airlines, Carmelo Arcilla, Cebu Pacific, Congress, fiasco, Lance Gokongwei, NAIA, Penalty
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