The International Air Transport Association (IATA) warned the Philippines against implementing “excessively onerous” rules, which it believed would further curtail growth in the aviation sector and ultimately hurt the flying public.
IATA director general and CEO Alexandre de Juniac, in his recent visit, said he had grown “a bit concerned” on recent developments in the country.
He singled out calls by some lawmakers to ban overbooking, an industry practice in the aviation sector, as well as a proposal to implement price caps on airline ticket prices.
IATA, the trade group of the world’s airlines, echoed similar worries earlier aired by local carriers such as Philippine Airlines, Cebu Pacific Air and Air Asia Philippines on these proposed measures.
“Excessively onerous regulations can be a huge burden on the ability of aviation to deliver its social and economic benefits,” De Juniac said during the first Philippine Aviation Day business forum.
Average fares would also increase as a result, he warned.
The Civil Aeronautics Board is studying a proposal to impose a cap on the maximum and minimum price of airline tickets.
This came in the wake of lawmakers’ complaints on the high cost of tickets bought close to the departure date.
Airlines argued that the response would be to increase average fares, which would hurt a large slice of the market that relies heavily on discounted prices and promos.
De Juniac said the move would also “distort” competition and put local carriers at a potential disadvantage to their international rivals.
“We are strongly reluctant to see fare caps,” he said. “We think it doesn’t work.”
A potential ban on overbooking was another concern for the global airline group.
The House committee on transportation is holding hearings on calls by some lawmakers to prohibit overbooking, a key revenue management scheme used by airlines to fill empty seats in case of “no show” passengers.
Around the world, airlines oversell available capacity by 5 percent to 15 percent, which they said allowed them to keep average prices down.
“We know overbooking has a bad reputation,” De Juniac acknowledged, while adding that the industry has since evolved and has grown more sophisticated.
“A flexible market solution, not inflexible regulation, is the answer,” he said.
In cases where more passengers show up than the available number of seats, airlines must adhere to regulations outlined under the Air Passenger Bill of Rights.
The law said the airline must offer passengers compensation until they voluntarily decide to give up their seats. The airline must increase the compensation package until the required number of volunteers is met, it added.
CAB executive director Carmelo Arcilla said new regulations were still under study.
“We will do what is best for the riding public,” he said.