AirAsia exec reiterates call to scrap travel tax
Philippines AirAsia Inc., a wholly owned subsidiary of AirAsia Inc., is intensifying its appeal to the Philippine government to fully scrap the travel tax charged to Filipino travelers going outside of the Philippines.
Although this call has already been presented to the proper authorities in the Philippine government, AirAsia Philippines chief executive officer Dexter M. Comendador reiterated the airline's petition to scrap the P1,650 travel tax collected from travelers departing from the Philippines.
As premier low cost airline operator in the ASEAN, AirAsia is consistent with its advocacy to make international travel much more affordable for Filipinos.
Aside from asking national government authorities on this ambitious advocacy, Comendador said the company has also reached out to the Mactan International Airport authority on this matter.
Comendador was in Cebu Wednesday to officially announce AirAsia's three direct flights from Cebu to three cities in China — Shenzhen, Hangzhou and Shanghai.
According to Comendador, copies of such proposal were already submitted to departments of finance, tourism, trade and industry, and transportation, seeking the removal of the travel tax collected by the Tourism Infrastructure and Enterprise Authority (TIEZA), as well as airport fees.
The low cost carrier believes that scrapping these payments collected from passengers would encourage movement and traveling.
"Our travelers are price sensitive. We are the only country in Asia that taxes our fellow countrymen to travel," Comendador said.
Based on the airline's independent study, if the government were to abolish the travel tax, it stands to lose P4 billion in revenues accumulated in five years, from AirAsia's volume of passengers going outside the Philippines.
Airline passengers leaving the Philippines are charged a full travel tax of P1,620 for economy class, and P2,700 for first class.
However, overseas Filipino workers and Filipino permanent residents abroad, among others are exempted from paying travel tax.
Scrapping the travel tax would need legislative action. Under Republic Act No. 9593 or the Tourism Act of 2009, 50 percent of the travel tax collection will be given to TIEZA while 40 percent is allotted for the Commission on Higher Education for tourism-related educational programs, and the remainder will be given to the National Commission for Culture and the Arts.
Inbound traffic is easy, but travel is two-way, said Comendador adding that to stir up the domestic tourists to go out, one way is to remove the P1,620, and hopefully the airport fees. That will total roughly P2,000 per passenger, because airport fee is P700.
"If a family of five goes to Hong Kong, [they will spend] P10,000, and they haven’t left the Philippines yet," he added.
Airport terminal fees, also known as Philippine passenger service charge, range from P50 to P200 for domestic flights, and P550 to P700 for international flights.
"We have a study that says if you take away the travel tax and the airport fee, you will lose roughly P4 billion in five years. But, you will gain P299 billion in terms of tourists coming in, [from] direct revenues and induced [revenues],” added Comendador.
So far, Clark International Airport has already abolished travel tax. It also received favorable reaction from Bohol government while the province is about to open an international airport in Panglao.
AirAsia Philippines is a wholly owned subsidiary of AirAsia Inc., which is a joint venture company among Filipino investors Antonio O. Cojuangco, former Ambassador Alfredo Yao, Michael L. Romero, Marianne B. Hontiveros and Malaysia's AirAsia Berhad.
The airline operates a fleet of 17 aircrafts with domestic and international flights out of hubs in Manila, Cebu, and Kalibo.