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PAL, gov’t in talks to settle arrears

/ 05:34 AM September 29, 2017

Flag carrier Philippine Airlines (PAL) is in talks with the Duterte administration to resolve a long-running issue regarding alleged unsettled navigational fees and other charges amounting to over P7 billion.

A PAL spokesman on Thursday said the airline was negotiating with the Civil Aviation Authority of the Philippines with the objective of “expediting the resolution of this issue.”

“We can confirm that communication remains constant,” a PAL spokesman said, without giving added details.

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A person privy to developments said discussions involved PAL offering better terms, after the DOTr earlier turned down its request to pay the amount over seven years.

There was no development on their negotiations as of this writing.

The talks came after the Department of Transportation threatened legal action against PAL if it did not settle what was allegedly owed within 10 days. Demand letters were served to PAL Thursday morning.

The amount, which accumulated over a period of several years, also included unpaid take-off and landing fees, according to the DOTr.

PAL, controlled by the Lucio Tan group, owed the CAAP P6.96 billion as of July 30 and the Manila International Airport Authority P370.58 million as of Sept. 26, the DOTr said in its statement, issued by public information chief Goddess Hope Oliveros-Libiran.

This amounted to some P7.3 billion combined.

PAL also incurred fees worth P370.58 million from January to July 2017 and these were paid recently, Libiran said.

The DOTr noted in a statement that the letters were sent “preparatory to the filing of appropriate legal action in order to protect the interest of government.” The DOTr did not indicate when PAL’s arrears started.

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The issue came to light during a speech this week given by President Duterte at the Philippine Constitution Association.

During his speech, Duterte also threatened to close down the Ninoy Aquino International Airport Terminal 2, which PAL uses exclusively, if the airline did not settle its unpaid dues.

“I said, ‘Thank you, but—,’” Mr. Duterte said. “I said, you are using government buildings, airport, you have… debts on the runway that you are not paying.”

According to him, he told Tan to resolve the problem himself.

“I will give you 10 days. Pay it. If you don’t pay, then I will close it down. There will be no airport. So what?” he said.

Filipinos would have to travel overland from Luzon to Davao, he noted.

“I do not mind. If we sink, we sink. But I said, ‘We have to enforce the law.’ So guys, you guys, if you are put into a great discomfort, sorry. There is nothing I can do. The law is the law. It is the law,” he added.

PAL, in a statement, said it received demand letters from CAAP as early as Aug. 2016 to settle unpaid navigational charges “in the amount of P6.63 billion” and that it was seeking a compromise settlement.

“This issue on alleged unpaid navigational charges involves complex legal issues which PAL has been trying to thresh out with the authority for years,” PAL noted.

PAL is controlled by billionaire Lucio Tan, whose business empire spans banking, beer, airlines, liquor, tobacco, and real estate, has a fortune estimated by Forbes Magazine at $4.3 billion. —WITH REPORTS FROM Leila B. Salaverria, JEROME ANING

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TAGS: Civil Aviation Authority of the Philippines, Duterte Administration, Philippine Airlines (PAL), unsettled navigational fees
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