PAL: Ban state subsidies as prelude to "open skies"

As a precondition to the full liberalization of the local aviation industry, flag carrier Philippine Airlines has asked the withdrawal of all forms of government subsidies to airlines from other countries, particularly those from the Middle East and Southeast Asia. Lucio Tan-controlled PAL, the only privately-owned flag carrier in the Association of Southeast Asian Nations, said on Monday that subsidies and all other forms of state aid “can seriously distort competition." ASEAN flag carriers, except for PAL, are either fully or partially owned or subsidized by their governments. PAL said that it is ready to compete, but in an "open skies" regime that endorses “equal opportunity." The airline has submitted its position to Philippine government for proposal to other ASEAN governments in ongoing regional multilateral air traffic rights negotiations. ASEAN member-countries agreed in 2004 to adopt open skies in the region beginning with unlimited flights between ASEAN capital cities by December 2008. The Philippine flag carrier insists that if ASEAN wants to liberalize the airline industry to encourage tourism growth, governments must first withdraw all subsidies to their flag carriers for the sake of fair competition. Earlier, several airlines, most vocal of whom was Australia’s flag carrier Qantas, pushed for a ban on unfair subsidies enjoyed by Emirates, Qatar Airways, Singapore Airlines and other carriers. In Southeast Asia, aside from Singapore Airlines, Thai Airways International and Malaysian Airlines are also known to have received aid from their respective governments. PAL said if ASEAN member-countries want to establish a free market within the region, a level playing field must first be created by eliminating the undue advantage of carriers who are subsidized by their respective governments. According to PAL, the unfair advantage of state-supported carriers had repeatedly been criticized in the past. Qantas previously attacked foreign governments for unfairly subsidizing their airlines that operate in Australia. Lufthansa, likewise, hit back at the undue incentives given to the competition and called for a subsidy ban. The European Union Commission recently investigated foreign carriers that received state aid resulting in unfair pricing practices. - GMANews.TV