EU AND PHILIPPINES TO SIGN OPEN SKIES AGREEMENT BEFORE YEAR END

Dino D'Amore
By Dino D'Amore December 8, 2010 10:57

EU AND PHILIPPINES TO SIGN OPEN SKIES AGREEMENT BEFORE YEAR END

Philippines tourism Secretary Alberto Lim and Finance Secretary Cesar Purisima confirmed today that President Aquino of the Philippines is set to issue an executive order enforcing an open skies policy nationwide except airports in Manila, thus opening the country’s secondary airports to foreign airlines. Purisima said the executive order is ready for signature by the President and should be enforced before yearend and then after that will be set in legislation.

“The economic managers have agreed on this. It is for the interest of the country,” he said, adding that the executive order will virtually be a total open skies policy, except for the so-called aviation fifth freedom of foreign airlines to pick up local passengers bound for a destination in a third country.

Many airlines in the Philippines are now calling for protection from foreign airlines. The government has in any event created a two tier system with this open skies policy as it is obvious that the flag carrier based in Manila is being afforded protection by the government. In response to this claim Alberto Lim stated:  “There will be more competition, some will be challenged, but the move will be vibrant for the country’s economy.

It is true that while some secondary airports in the provinces could not yet accommodate large aircraft, foreign airlines will always have the option to use A320 and 737NG aircraft. It is understood from contacts within the government that the EU will be the first to sign an agreement with the Philippines. The Philippines has a huge air cargo market with a large number of small to medium sized local air cargo companies, which are privately owned operating across the vast islands of the nation. It is highly likely that other large air cargo operators can have a bonanza in this market if they move in after the open skies agreement is passed into legislation, ensuring it is for the long term. Many airlines within the Philippines will now argue that they are at a disadvantage because competitors in neighboring countries are mostly owned by the state and enjoy subsidies and financial assistance. Expect this to become a familiar argument over the coming weeks.

This is great news for the air cargo market and indeed for all airlines in the APAC region. Expect the LCCs to move in quickly to this country where geography means air travel and air cargo are both established and essential.

Dino D'Amore
By Dino D'Amore December 8, 2010 10:57
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