MANILA, Philippines—(UPDATE) The Civil Aeronautics Board (CAB) has prohibited Southeast Asian Airlines (SEAir) from using jets leased from regional giant Tiger Airways for domestic flights.
The order issued on Wednesday will make way for an investigation to determine whether the partnership between Tiger and SEAir violates the “cabotage” restriction on foreign firms under the Constitution.
Cabotage refers to the right to transport cargo or passengers between two points within the country—reserved only for local entities.
“There are strong indications that there may be a violation on the restriction on cabotage,” CAB Executive Director Carmelo Arcilla said in an interview.
While the cease order is in effect, SEAir will be barred from mounting its Manila-to-Cebu and Manila-to-Davao flights, using aircraft leased from Tiger.
These flights were supposed to begin by July.
International flights by SEAir using Tiger plans will not be affected, however.
SEAir has direct flights between Clark Freeport and Singapore, Hong Kong and Macau.
Announced last year, the partnership between the two airlines will allow SEAir to lease several jets from Tiger, to be used for the expansion of the former’s domestic and international route network.
In exchange, Tiger would sell these SEAir flights on its website, where most of the Singaporean budget brand gets its bookings.
SEAir currently operates two Airbus A320 aircraft leased from Tiger.
The SEAir flights would then be marketed and sold through Tiger website, where the latter gets most of its ticket bookings. Tiger is also set to acquire a 32-percent stake in SEAir.
The cease order was issued following opposition from competing local airlines that said SEAir was merely standing as a front to allow Tiger to tap the country’s fast-growing air travel market.
If the allegations are proven true, the CAB said this may be “tantamount to allowing Tiger to exercise cabotage, which is a right that Tiger cannot directly or indirectly operate.”
The CAB noted that Tiger has been promoting the Manila-Cebu and Manila-Davao flights as its own.
SEAir said it would file its motion for reconsideration before the end of the 30-day period given by the CAB.