Monkey wrench of Tourism

I used to be very convinced that the 10 million tourist arrival target of the Department of Tourism (DOT) in 2016 is easily achievable.  Not anymore.  In the DOT Symposium on the National Tourism Development Plan at the Asian Institute of Management (AIM) where I was invited as a Reactor, I made it clear that a monkey wrench had been thrown at the well-intentioned plans of the DOT.

With the coming of low-cost carriers during the last few years, a price war broke out and triggered stiff competition in the commercial aviation industry.  Fortunately, the price levels were so low it invited even the low end of the travel market to fly.  It is not anymore uncommon to see travel groups consisting of family members, students on field trips, and low-income employees traveling by air.  Even our “kasambahays” are encouraged to take vacations to visit friends and relatives in the provinces and travel in style by air.  The ensuing robust growth of air traffic resulted in hundreds of brand new aircraft ordered and delivered creating capacity offering by local airlines never seen before.  It even made Airbus declare the Philippines as a megacity of aviation.

And yet the four to five million Filipinos of today traveling by air four to five times a year on the average resulting in over 25 million air trips a year represent just a small five percent of the total population.  There is still such a huge slice of the market that remains to be tapped.

The airlines are responding beautifully by keeping up the price war and adding more routes and more seats and more space for air shipments.  The hotels and the resorts continue to increase rooms to accommodate the growth of tourists and travelers.  More theme parks, entertainment establishments, convention centers, sports complexes, and new destinations kept coming up.  Everyone in the travel industry has been fired with enthusiasm by all these developments and committed themselves to the mission of creating more fun in the Philippines, until someone threw the monkey wrench and douse cold water on the intensity of the moment.

The robust growth of air traffic is palpably slowing down.  The airlines cannot introduce new flights.  Some just recycle by canceling weak flights for new ones, giving the perception of more flights and more routes being introduced.  The fact is not many new flights are created because there hardly are available airport slots at the Ninoy Aquino International Airport (Naia).  Airlines have to waste energy fighting for additional slots, instead of inaugurating new flights and destinations.

Everyone knows Naia has no more room for expansion.  The rate of decongesting it is so slow.  General aviation still abound because Sangley as its alternative is not ready.  The air force is yet to vacate it but only when Lumbia in Cagayan de Oro is ready for the transfer.  The night landing facilities of some eight provincial stations that could have stretched the slots for more take-offs and landings in Naia at night have not happened.  Those airport lighting projects are still being bid out.

To alleviate the Naia congestion, the airlines thought of flying the tourists and air travelers in their true origins and destinations.  Tourists hate connections so they would love flying from say Seoul non-stop to Boracay but it could not be.  Boracay’s nearest airport in Caticlan is too limited for the Airbuses.  As an alternative, the airlines forced Kalibo to become an international airport, prematurely though it may be.  This same approach can be duplicated and the airlines are willing to try it.

Iloilo has begun operating international flights nonstop to Singapore and Hong Kong.  Many other provincial airports can conceivably follow the Kalibo and Iloilo model.  The runways of Bacolod, Puerto Princesa, the new Laquindingan airport of Cagayan de Oro and a few more others can handle the Airbus A320s of the local airlines but the terminals need to be fixed.  Laquindingan can handle the flights at daytime but not yet at nighttime.  And the emerging concerns for all of them are CIQ.   That stands for Customs, Immigration and Quarantine.  Unless the government provides these airports with CIQ, they cannot operate international flights.

But we have “low-lying fruits” of airports.  There is Clark International Airport ready and willing, but government is hemming and hawing whether to make it a second gateway.  It is going to happen anyway by force of circumstances with or without the speed railway.  When Emirates and Qatar begin operating wide-body aircraft there in October, many others would follow.

There is Mactan-Cebu International Airport, but it is still under bidding for its P17 billion expansion and modernization.  Problem is most of the bidders have airline component which Department of Transportation and Communication (DOTC) Secretary Joseph Emilio Aguinaldo Abaya did not want but was apparently prevailed upon by some unknown forces.  But the issue is very real.

In the US, William Boeing became so powerful with his vertical integration and the US was forced to pass anti-trust laws.  That constrained William Boeing to make a choice of keeping just one, either Boeing Aircraft Corporation or United Airlines.  He chose to keep aircraft manufacturing and gave up United Airlines.  A parallel in the country is Caticlan Airport being modernized by Transaire Corporation, an affiliate of San Miguel.  The representative of a new airline asked Transaire for a space at the Caticlan Airport terminal and he was reportedly told to “talk to Ramon Ang.”  This has to be addressed before the ghost of PIATCO monopoly of Naia Terminal 3 begins to haunt us again.

(This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author is a member of the MAP National Issues Committee, and president and CEO of the SEAIR International, Inc. Feedback at [email protected] and [email protected]. For previous articles, please visit www.map.org.ph)