Air France-KLM to add flights to PH

After halting the country’s last nonstop flight to Europe earlier this year, Air France-KLM has announced plans to expand its Philippine operations to take advantage of the country’s booming aviation sector, driven by a strong domestic economy.

Air France-KLM regional general manager for the South China Sea area Jurriaan Stelder said this was part of efforts to invest and expand in the region, amid economic problems in the airline’s domestic markets.

“The Philippine economy is growing resiliently. Other markets have adjusted their growth targets downwards but the Philippines continued to grow at 6 percent even in the second quarter,” he said at a briefing.

Starting November, Air France-KLM will have one flight a day from Manila to Amsterdam, with a stopover in Taipei. This will be more than double the three weekly flights the company has out of the Ninoy Aquino International Airport.

Air France-KLM, which has headquarters in Paris and Amsterdam, is the last European airline with flights to the Philippines.

In the first quarter of 2012, Air France-KLM ended its direct, nonstop flights between Manila and Amsterdam amid high costs that made the route unprofitable. Blamed for the high costs of operating in the Philippines were the common-carriers tax (CCT) and gross Philippine billings (GBP) tax that are both imposed on foreign airlines.

The 3-percent CCT and 2.5-percent GBP taxes are imposed on airlines as a percentage of their revenues from operation in the Philippines.  The duties only apply to direct flights to and from the Philippines, which means longer direct flights become more expensive.

Stelder said having a stop at Taipei had made the Manila-Amsterdam route more profitable because the company is able to pick up more passengers before flying to Europe.

Stelder said the company was optimistic about recent moves to remove the CCT and GBP taxes.

Sen. Ralph G. Recto earlier filed Senate Bill No. 3065, which seeks to remove the taxes on foreign airlines, which the International Air Transportation Association described as discriminatory.

Iata estimates that the Philippines could earn P3.3 billion in additional revenues, mostly in the form of taxes from higher spending by tourists, if the CCT and GBP are removed.