Davao economy bleeds P5M a day as airport shutdown cripples trade

(Updated 4:58 p.m.) With its major portal shutdown since Sunday night after an emergency landing by a Cebu Pacific plane blocked the runway, Davao is losing as much as P5 million per day, a businessman said Tuesday.

 

Davao City Chamber of Commerce and Industry Inc. president Daniel Lim said the halt in operations of the Davao International Airport has a "huge impact" on the economy of the city, also dubbed as the gateway to Mindanao.

 

"Tourism... businesses are affected. The estimated loss per day is P5 million, and about P1 million of this is from cargo. We hope that the aircraft will be removed as soon as possible," Lim told GMA News Online.

 

Shipments by air "to and from Manila and other parts of Mindanao carry newspapers, frozen fish and other goods, spare parts and other materials," Lim added.


Negative multiplier effect

 

The airport's closure also causes a "negative multiplier effect" on the local economy, Jason C. Magnaye, Davao City Tourism Office and Investment Promotion Center officer-in-charge, said in a separate interview.

 

"Definitely [the closure of the airport has a] huge impact since it is a major gateway. There is a multiplier effect. Businessmen fly in to transact with local merchants, products are being shipped via air transport. And over the last two days, this has not been happening," Magnaye said.

 

"We have asked Cebu Pac to remove the aircraft as early as yesterday morning. I also understand CAAP gave them a deadline 8 p.m. yesterday, but this has lapsed already," he said, referring to industry regulator Civil Aviation Authority of the Philippines.  

 

"Everyone is incurring losses," Magnaye noted, saying this means the local economy, the airport, the airline companies including Cebu Pacific, and other businesses in Davao.

 

Davao exports tuna to Japan, while food products are shipped to many franchise stores which still get supplies from Manila.

 

Magnaye estimated the losses at P1.5 million in the tourism sector since the airport shut down late Sunday, citing reports from hotels and resorts on canceled bookings.

 

"On a weekly basis, we have about 450 flights going in and out, and the average passengers per flight is 180... That is about 11,600 passengers per day," the government official noted.

 

Magnaye said the alternate route for passengers via General Santos City. "Airline companies are flying their passengers to General Santos City International Airport, providing bus transfers and meals for their trip to Davao... despite incurring more costs," he said.

 

General Santos is 152 kilometers south of Davao.

 

Earlier Tuesday, Philippine Airlines announced on its Facebook page that six flights to and from Davao were canceled, prompting the carrier to mount special flights from Manila to General Santos City and the other way around for stranded passengers. 

 

On its Twitter account Cebu Pacific noted it has arranged for 15 extra roundtrip flights to General Santos from Manila, Cebu, Zamboanga and Kalibo to re-accommodate affected passengers.

 

On Sunday night, a Cebu Pacific plane made an emergency landing and skidded off the Francisco Bangoy International Airport in Davao.  

 

Lim raised concerns on the capacity of the Davao airport management in handling emergency situations. "I am now more concerned about the airport which does not seem equipped to handle an incident like this. Airport management is quite inadequate," he said.

 

The Davo business chamber official noted emergency vehicles were not immediately available when the Cebu Pacific plane made the emergency landing. "There were no emergency vehicles present... That's why the cabin doors were not immediately opened... premature statements were made... when we should have waited for the final investigation report," Lim added.

 

Share prices of Cebu Air
 

Share prices of Cebu Air Inc., Cebu Pacific's owner and operator, plunged by more than 3 percent to P76.40 apiece in intraday trading Tuesday before closing down 0.57 percent to P78.55 from P79.00 Monday.

 

"Cebu Pacific shares are a bit down... Investors are a bit skeptic on the recent incident at Davao International Airport," AB Capital Securities Inc. analyst Gregg Adrian Ilag said.

 

This, however, is for the short term, "as affected scheduled flights may be offset by the abundant flights of Cebu Pacific in other areas and revenues will come from the other flights."

 

The analyst noted a similar incident in 2011 involving another Cebu Pacific plane did not impact much on the Cebu Air's share prices. 

 

On January 12, 2011, a Cebu Pacific plane had a flat tire and landed on a grassy area along the tarmac of the Puerto Princesa airport in Palawan. 

 

The Puerto Princesa airport reopened the less than 24 hours later.

 

The incident in Davao will have "no major effect on Cebu Pac share prices as investors are likely to look at fuel jet prices in the long term. In the first quarter, the jet fuel prices were down but in the second quarter, it might be slightly higher," Ilag noted.

 

In 2011, Cebu Pacific reported a lower net income of P3.62 billion despite revenues of P29.1 billion due to due soaring fuel costs which constitute about 50 percent of the airline's P30.41 billion in  consolidated expenses.

 

Higher fuel expenses, which jumped by 55.2 percent, continued to hammer Cebu Pacific in 2012 as it registered a 1.5 percent decline in net income to P3.57 billion despite revenues growing by 16.7 percent to P33.935 billion. — VS, GMA News