DOTr threatens to sue PAL over unpaid fees of almost P7B

/ 08:05 PM September 27, 2017
PAL planes

Philippine Airlines (File photo from Philippine Daily Inquirer)

The Department of Transportation (DOTr) is threatening legal action against Philippine Airlines (PAL) if the flag carrier does not settle almost P7 billion in unpaid “navigational fees and other charges” in the next 30 days.

According to a DOTr statement, PAL owes the Civil Aviation Authority of the Philippines P6.59 billion for the years as of Dec. 2015 and “prior” and a separate P322.1 million to the Manila International Airport Authority (MIAA) as of Sept. 2017.


The total is about P6.9 billion.

In separate demand letters dated Sept. 27, 2017 that were sent to media outlets, including the Inquirer, CAAP and MIAA told PAL to “settle your obligations in 30 days, otherwise, we will be constrained to do all that is necessary to protect the interests” of the state.


DOTr confirmed that 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.

It also noted that PAL had negotiated to settle its unpaid fees to cover a period seven years.

“All such requests have been denied,” the DOTr said.

In a statement on Wednesday, PAL 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.

The charges sought by MIAA were not mentioned in PAL’s statement.

“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 also noted that it wanted to “amicably settle” with CAAP and, in recent months, all parties have been working to validate the claims.

“PAL formally submitted its offer to CAAP which offer is more than the amount covered by the CAAP supporting invoices received by PAL. To date, however, PAL has not received any official response from CAAP on its offer,” PAL said, without detailing the contents of its offer.

PAL is controlled by billionaire Lucio Tan, whom President Rodrigo Duterte had called out as one of the tycoons whose campaign donations he refused to accept during his presidential bid.

Tan, whose business empire spans banking, beer, airlines, liquor, tobacco, and real estate, has a fortune estimated by Forbes Magazine at $4.3 billion.

The unpaid fees sought by government would be a big blow to PAL, which is struggling, along with other airlines,given rising oil prices and increasing competition.

Recently, PAL obtained regulatory approval to restructure its capital. The move was aimed at wiping out an old deficit from years of losses and to attract an investor, likely a foreign airline group.

PAL Holdings itself disclosed a net loss of P1.63 billion in the first semester of 2017, reversing a P4.53 billion profit in the same period last year. This was partly due to a surge in fuel prices.

PAL Holdings’ total revenues hit P67.76 billion, up 17.7 percent.

In 2016, it posted a profit of P3.5 billion on revenues of P116.6 billion.


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TAGS: CAAP, DOTr, MIAA, navigational fees, Philippine Airlines
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