Travel agents seek junking of airline taxes

Photo shows an Air France-KLM plane on an airport tarmac. The Philippine Travel Agencies Association on Sunday, Sept. 23, 2012, called on the government to remove the common carriers tax on foreign airlines, which was cited by Dutch national carrier KLM as the main reason for its decision to eliminate direct flights between Manila and Europe earlier this year. PHOTO FROM AIRFRANCEKLM-FINANCE.COM

MANILA, Philippines—The umbrella organization of local travel agents on Sunday added its voice to the growing clamor for the government to remove a tax on foreign airlines, which had been blamed for the decision of some international carriers to discontinue their direct Philippine routes.

In a statement, the Philippine Travel Agencies Association (PTAA) asked the Aquino administration to support a bill currently pending in the Senate to remove the so-called common carriers tax (CCT) and the gross Philippine billings tax (GPBT).

“If we want to sustain the tourism momentum that has been built over the last two years, this issue has to be addressed by the government,” PTAA president Aileen Clemente said.

The CCT, in particular, was cited by Dutch national carrier KLM as the main reason for its decision to eliminate direct flights between Manila and Europe earlier this year. KLM’s Manila-Amsterdam route was the last direct flight service between the Philippines and Europe—a route frequented by overseas Filipino workers, especially those working in the maritime industry.

Clemente said there was a need to fast-track the passage of bills pending in both Houses of Congress that would eliminate the 5.5-percent combined tax from the CCT and GPBT.

The Lower House has passed its version and is awaiting the version of the upper chamber before the bicameral conference committee is convened to finalize the bill that will be presented to Malacañang for the President’s signature.

According to Clemente, the removal of airline taxes would provide a big boost to the Department of Tourism’s campaign to attract more tourists, and position the Philippines to meet the goal of having 10 million tourist arrivals by 2016.

“Direct flights from international airlines can bring into the country the lucrative long-haul tourists,” the PTAA chief said. “Tourists also have their preferred airlines. The availability of more carriers will impact tourist decisions whether to visit or not.”

Apart from the PTAA, the International Air Transport Association (IATA) and Board of Airline Representatives have also called for the removal of the airline taxes.

Both international organizations believe that the scrapping of the CCT and GPBT will increase foreign investments and rapidly develop secondary gateways, noting that neighboring countries have been providing incentives to international air carriers flying their routes as they have seen its benefits to both its trade and tourism.