Philippine Airlines braces for air fight with UAE carriers

Philippine Airlines is worried that the carrier’s routes to the Middle East, Europe and the US are at risk once the UAE secures increased frequenciesBy Arno Maierbrugger/Gulf Times Correspondent /BangkokBilateral talks between Philippines and UAE are due today and tomorrow over additional flight entitlements to the Philippines for Emirates and Etihad Airways, an idea which is strongly opposed by the country’s national carrier Philippine Airlines.In a note released over the weekend and obtained by Gulf Times, Philippine Airlines’ president Jaime Bautista said that “should the UAE airlines get the additional entitlements they seek during the coming Philippine-UAE air talks, this will undermine the investments Philippine Airlines and other airlines have made for the country in opening new routes to serve Philippine tourism and Overseas Filipino Workers.” The existing air pact between the Philippines and the UAE allows Emirates and Etihad Airways a maximum of 28 weekly flights to Manila, equally divided between Dubai and Abu Dhabi, as well as unlimited flights to Clark, Cebu and other airports in the Philippines. Emirates, which currently operates 14 flights per week, seeks to expand its existing traffic rights to 21 weekly flights per week, adding a third daily flight to the route. Etihad Airways also wants to expand flight frequency, but did so far not specify how many more flights it wants.Emirates argues that its commitment to the Dubai-Manila route has been “a catalyst for growth” in the UAE-Philippine bilateral trade and tourism to the Philippines since it commenced direct flights in 1990, adding that the flights “support thousands of jobs” for Filipinos through direct employment, catering, ground handling jobs and other posts related to air travel services. The airline went on saying that its current two daily flights on the Dubai-Manila route have been operating at 100% capacity in economy class on most of the flights “with no seats left for international tourists and Overseas Filipino Workers.”However, Bautista, who fears that his airline’s routes to the Middle East, Europe and the US are at risk once the UAE secures increased frequencies, is of completely different opinion, alleging that Emirates and Etihad Airways were enjoying government subsidies that give them “financial advantages” and contribute to “competitive distortions” on these routes, being able to offer cheaper tickets and “siphon passenger traffic” via their hubs in the UAE.“Philippines Airlines is always ready to compete energetically on a level playing field. In fact, we have been successful in operating at high frequency levels on many hotly contested routes between the Philippines and the USA, Japan, China, Hong Kong, Australia and South Korea,” Bautista said, adding that “the Middle East and Europe routes are, however, unique because the competitive field is distorted by the massive subsidies enjoyed by UAE carriers.”At present, Philippine Airlines operates five weekly flights to Abu Dhabi, Riyadh and Dammam and six weekly flights to Dubai. There are around 930,000 Filipinos living in the UAE and around 1.3mn in Saudi Arabia.The second large Philippine carrier, Cebu Pacific, also has concerns about new flight entitlements for UAE carriers.“Talks with the UAE should not be held until all available Manila flight entitlements are fully utilised by Philippine carriers who are ready, willing and capable of operating routes to the UAE,” an airline spokesman said.However, Emirates’ CEO Tim Clark strongly rejects benefiting from unreasonable subsidies or from subsidies at all, for that matter. In a 27-page report entitled “Airlines and subsidy: Our position” available for download on the airlines’ website, he says that “Emirates is completely unsubsidised. We campaign against airline subsidies. Governments should not provide injections, borrowings or financing to airlines, regardless of shareholding status.”Etihad Airways also rejects allegations of receiving unfair subsidies as “not supported by fact, logic, law or treaty,” while conceding in a recent official statement it received $14.3bn in “equity payments and loans” from the Abu Dhabi government between 2004 and 2015.