Route of the problem
When the country’s flag carrier, Philippine Airlines, or PAL, launched last week its 12 new routes, seated beside each other at the table were PAL president Ramon S. Ang and Tourism Secretary Ramon Jimenez.
Hmmm… Do you think Jimenez might be the first tourism secretary in quite a long time that, as an avowed mission in life, would not be directly hostile to the ever-struggling flag carrier?
After all, among the priorities of Jimenez at the Department of Tourism, or the DOT, as spelled out in his comprehensive tourism program, was what the DOT called “market accessibility.”
For the sake of our brilliant senatorial candidates, it means that Jimenez simply applied tourism economics, which has been telling us all this time that the 100 percent value-added sector called “tourism” would only take off if the government would put up modern infrastructure called airports that, on their own, with no need for incentives such as tax breaks and all sorts of freebies, would naturally attract airline expansions.
In the past, with the false pretense of supporting tourism, certain bosses at the DOT pushed to the government a bright idea to give away the main market of PAL. This was of course the bulk of overseas Filipinos who as of last count already numbered more than 10 million. Former DOT big shots wanted to open our country to all—I mean “all”—foreign airlines under a free-for-all scheme. The bright idea naturally came from some foreign governments in cooperation with their own troubled airlines. They obviously wanted the humongous OFW market.
In the PAL launch last week, PAL president RSA, who also happens to be the COO and president of the country’s biggest conglomerate, San Miguel, announced the airline’s 12 new destinations, namely Kuala Lumpur (Malaysia); Darwin, Brisbane and Perth (Australia); Guangzhou (China); Abu Dhabi (United Arab Emirates); Doha (Qatar); Riyadh, Jeddah and Dammam (Saudi Arabia); and Dubai (United Arab Emirates).
In November this year, PAL also intends to resume domestic flights to the pristine Basco in Batanes, which is already the most fascinating destination for both domestic and foreign tourists.
Take note that six of those new routes, or half of them, were planned to be in the Middle East. To serve the multitude of OFWs in that part of the world, PAL must nevertheless compete with heavily subsidized airlines.
Well, the world airline industry knows fully well that the root of the problem in the Middle East routes was the government subsidy extended to Middle East-based airlines. OK, subsidized fuel and scandalously cheap petroleum!
That was, in fact, the reason offered by a number of European airlines that already dropped their non-stop direct flights to Manila. They could not compete with Middle East airlines unconstrained by the exorbitant cost of fuel.
Still, the business-math wizard RSA figured that, despite the subsidized fuel of its competitors, PAL would still make money on its new Middle East routes through a combination of secret moves, although between us girls, I could say that RSA would rely chiefly on PAL’s new fleet of aircraft.
As a rule of thumb in the airline business worldwide, fuel accounts for about 40 percent of the airplane fare, making it the most fuel-demanding, cost-challenging transport business in the entire universe.
With the entry of San Miguel into PAL last year, plus the $500-million injection of fresh capital, the airline was able to embark on fleet modernization, acquiring the latest models of US aircraft maker Boeing and the European alliance called Airbus, which were known in the airline business as the new generation of fuel-efficient aircraft.
At an average fare of $800 one-way, the Middle East Market would perhaps remain attractive to RSA, considering that PAL already took delivery of 75 of the 100 new aircraft in its planned fleet modernization.
It cannot be denied that the presence of PAL in the new Middle East routes may trigger the “fare war” much desired by OFWs for so long now, since the Middle East airlines must contend with the other “special” services of PAL, such as warmth, familiar cuisine and beautiful flight attendants.
But RSA figured that Middle East airlines could only enjoy fuel subsidy in their home base. In other countries such as the Philippines, they would have to pay the same rate for fuel as other airlines. Meaning, really, half of the problem solved!
PAL nevertheless must contend with other problems such as the refusal of the governments of South Korea and Japan to grant PAL additional flights, which PAL felt to be rather underserved, as airline ticket prices have been flying through the roof because of big demand with short supply.
Reason for their refusal has always been our CAT-II problem, courtesy of the US Federal Aviation Authority, or the FAA, which a few years ago downgraded its rating of the Philippines for airport safety to Category II. As a result, PAL could not add new routes to the United States or even replace its existing aircraft serving the US routes with new ones.
From what I heard, our salvation from the damning CAT-II has been a moving target for the Aquino (Part II) administration, as the FAA insisted on some measures that would perhaps take more than a lifetime for us to meet. For instance, the FAA insisted that the government should not rely on PAL experts for pilot training, meaning, the government should train its own instructors, which would only take years and years of flying experience, and where would you get that except from PAL?
Hmmm, maybe there is something more in the CAT-II problem than just the airport “safety.” After all, US airlines are also having a grand time flying here, serving those 10 plus million OFWs.
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In a statement, the man named Band… Wrist Band…, who is a mayoral candidate in Manila running against the incumbent, former police general Fred Lim, said the city deserved “full transparency” in its finances.
Former President Joseph Estrada said the city needed huge amounts to finance urban renewal, thus making Manila the center of trade and commerce in the country once more.
But the need for funding goes hand in hand with “transparency,” he said.
He said: “We will fund badly needed infrastructure projects not only to transform Manila into a livable city, but also to create more jobs that will stop mendicancy and put food on the table of Manileños.”
Question: How does Estrada intend to do this thing called transparency? Well, he said he would computerize the city’s tax collection system and fund utilization, which the public could access for easy tracking of the projects.
Really, in this day and age, Manila still has no computerized revenue system?
No wonder, as Estrada pointed out, quoting an audit by the COA, Manila is buried in debt of P3.5 billion, putting the city in the DILG report somewhere there at the bottom of the ranking of urbanized cities in the country—number 36 out of 38 cities.
