CAB: Other airlines using RP’s flying rights to Mideast

REPORT FROM BUSINESSWORLD Stiff competition has deterred local airlines from flying to the Middle East and allowed foreign airlines to use Philippine entitlements to the route, the Civil Aeronautics Board (CAB) said. In a telephone interview, CAB Deputy Executive Director Porvenir P. Porciuncula said that Middle Eastern airlines have been using Philippine entitlements to the region. "There is overcapacity already, and the foreign airlines like Qatar Airways and Gulf Air are now using Philippine entitlements — but the problem is, we have very stiff competition from the Gulf State airlines, like Emirates; they offer very low prices," he said. Last year, a total of 1.17 million travelers shuttled between the Philippines and the eight Middle Eastern points on 45 flights. Exactly 50,218 travelers, mostly overseas Filipino workers (OFWs), flew out of the country. Emirates Airlines, one of the national carriers of the United Arab Emirates (UAE), single-handedly carried 32% of the total passenger volume. Qatar Airways followed with 18.42%; then Gulf Air, Saudi Arabia’s oldest airline, with 14.15%; and then another UAE flag carrier, Etihad Airways with 9.55%. Last week, Etihad reported a 92% flight occupancy on its Manila-Abu Dhabi service during the first six months of 2007. Mr. Porciuncula said, "the Saudi market alone is big, with the OFWs coming and going, but its only Saudia (Saudi Arabia Airlines) which flies there." "But of course, even if there is a large OFW traffic, it’s not so lucrative because the pricing is low, [the routes] are low-yield [financially]," he added. "But the market is definitely growing, and it’s the Middle East airlines that are getting all the business." CAB records show that flag carrier Philippine Airlines (PAL) registered 9,572 passengers or 0.8% of traffic on its books last year. But the national carrier, which stopped flying to the Middle East last year, ferries its passengers on Saudia flights based on a code-sharing agreement. PAL Vice-President for corporate communications Rolando G. Estabillo in a phone interview Monday said that the airline wanted to service the route. "We want to go to the Middle East too. One way or another we will find a way [but] there is an overcapacity in this area," he said. "They (Middle East airlines) offer cheap rates, because they are subsidized. Whether they admit it or not, one way or another they get protection," he added. PAL suspended its thrice-a-week flight to Riyadh last year and teamed with Emirates to fly to Dubai. Mr. Estabillo said PAL could not compete with Gulf state airlines. "Our competitors are subsidized, how do we compete with their prices?" he said. Former PAL President and now Southeast Asian Airlines President and Chief Executive Avelino L. Zapanta, however, said PAL employs double standards when it complains about subsidies than its competitors. He said PAL is a private company that "gets remuneration without having a lot of expenses." "This has several impacts, our foreign exchange reserves are being depleted, and then our image is bad," he said. "We look like beggars, we are a country whose airline needs support from other airlines. And then look, millions of Filipinos go to the Middle East and they don’t ride on Filipino carriers," he added. He added PAL was "whining too much." "There are other airlines, Air Asia, Jet Airways which compete with national carriers, and they are not complaining. So why should PAL?" he said. — Maria Kristina C. Conti/BusinessWorld