PH urged to address airport infrastructure deficiencies

IATA calls for smarter aviation regulations

The Philippine government should address airport infrastructure deficiencies in Manila, abandon proposals for increased aviation taxes and adopt smarter regulation, according to International Air Transport Association (IATA) Director General and CEO Alexandre de Juniac during Friday’s Philippine Aviation Day conference at the Shangri-La Makati.

“Aviation is vital to the Philippines. It supports 1.2 million jobs and $9.2 billion in GDP. The domestic network binds the country across 7,000 islands. International links keep families and businesses connected, and bring in tourists,” he pointed out.

“But the social and economic benefits of air transport are at risk if the key issues of airport infrastructure, excessive regulation and taxation are not addressed.”

For one thing, the Ninoy Aquino International Airport (NAIA) was built to handle 30 million passengers but is handling nearly 40 million passengers currently. “There is an urgent need for an airport master plan to accommodate the growing demand for connectivity,” De Juniac stressed.

Immediately implementing proposals to enhance the runway and terminal capacities at NAIA will provide much needed additional capacity (to the maximum of the airport’s physical constraints) until a new airport is ready, he explained.

On the other hand, Clark International Airport should be developed as a secondary, not primary, airport for Manila because of Clark’s distance from the capital. The government should instead decide on a site within reasonable proximity of the metropolis where a two-runway airport could be built and expanded.

“There is no time to lose – every landing that cannot be accommodated is lost money and opportunity for the Philippine economy,” according to the IATA CEO.

“Siting, designing, building and financing a new airport and the connecting infrastructure can easily be a ten-year project. Even the most aggressive possible incremental capacity expansion plan of NAIA will not be able to adequately cope with the growing demand.”

Furthermore, the government should avoid excessive regulation.

“Well-constructed regulation has played a key role in making the industry safe and reliable. But excessively onerous regulation can be a huge burden on the ability of aviation to deliver its social and economic benefits.”

By itself, the new consumer protection legislation in the Philippines can cap air fares, prohibit overbooking and impose consumer protection extraterritorially.

In 2016, airfares in the Philippines were 77% cheaper than a decade before. Over the same period the number of destinations served directly from the Philippines increased from 40 to 55, while the number of travelers nearly tripled from 24 million to 64 million.

“Aviation is competitive. Airlines offer a wide variety of fares at different price points to satisfy consumer needs. Introducing government imposed fare caps would likely have the unintended consequence of reducing deeply discounted fares. If airlines cannot charge a premium for ultimate flexibility, then covering costs will likely lead to a rise in average fares.”

As for overbooking, “The reality is that more bookings are made than people who actually fly,” he elaborated.

“Managed overbooking helps fill the plane and keeps fares low. Revenue management systems watch trends and adjust the selling with tremendous accuracy. When they get things wrong, a flexible market solution, not inflexible regulation, is the answer.”

In addition, authorities should adopt smarter regulation principles to respect global standards where they exist and focus on solving real problems, at the same time, avoid implementing tourism taxes and Green Fees.

The economic and social benefits of tourism are compromised by tourism taxes.

“Short-term budget gains quickly disappear when tourist arrivals drop. The government should focus on making wise investments in the tourism infrastructure that will encourage people to visit. The extra tourist dollars you attract will pay for the investments and make a greater economic contribution,” De Juniac noted.

“The proposed Green Fee is misguided and should be abandoned. Governments through the International Civil Aviation Organization (ICAO) have agreed a global approach to climate change based on improvements in technology, infrastructure and operations,” he went on.

“And there is an agreed Carbon Offsetting and Reduction Scheme for International Aviation — CORSIA. The cause of sustainability is best served by the Philippines supporting this global approach and volunteering to participate in CORSIA.”