Dedicated regulator for airports proposed

International carriers operating in the Philippines are asking the government to appoint a dedicated economic regulator for airports, as they worry new air gateway privatization deals could lead to anticompetitive practices, increasing costs for passengers and leading to poor services.

The Board of Airline representatives, whose members include the Philippines’ three domestic carriers as well as global giants like Delta Air Lines, Etihad and Singapore Airlines, made the request via a letter to the Philippine Competition Commission on March 23, 2017.

In the letter, the group said an economic regulator for airports would protect the interest of all stakeholders, including passengers, airlines and airport service providers.

“Independent economic regulators for airports exist in several countries, and have been very effective in creating a level playing field that benefit all airport users, where airport operators, if left unchecked, could otherwise exert significant unilateral market power,” the board said.

“This is no different from how water and energy companies are regulated, and airports should in fact be regulated as any other public entity, given their importance,” it added in the letter addressed to PCC chair Arsenio Balisacan.

The board cited the Department of Transportation’s plan to proceed with the public private partnership auction of five regional gateways, collectively valued at P108 billion.

The board said it was not opposed to the PPP. But it made clear that the privatization of airports effectively transformed the facilities into monopolies.

“This is in accord with the constitutional mandate that a monopoly, which is not prohibited, must be regulated,” it said.

The board warned that poor regulation here could lead to airlines being “forced to pay exorbitant prices for the use of newly privatized facilities, or finding out that their chosen or existing service providers are no longer allowed to provide services.”

“This will seriously compromise the airlines’ ability to serve the travelling public in a reliable and effective manner, and at a reasonable cost,” it said.