AIRLINE GROUPS BUCK INCREASED REGULATION
GOVERNMENT moves to expand aviation sector regulation have been criticized by international airline organizations, with the International Air Transport Association (IATA) particularly criticizing a Civil Aeronautics Board (CAB) proposal to cap air fares.
“We are against this measure. The prices should be driven by market forces,” IATA Director Gen Alexandre de Juniac said last week.
“Putting caps is the best way to … distort competition to the detriment of the passenger,” he added.
The CAB has proposed the issuance of a fare matrix specifying will be determined by factors such as distance, break even loads and return on investments, while the percent of the ceiling rate.
“Fares have dropped 30 percent ever since pricing was decontrolled since 1996 and we do think that if you cap fares, it will also limit our capability to offer low fares or
piso and CEO Lance Gokongwei said.
“What we would like to see is a continuation of the liberalized market where we do compete with other carriers and let the customers choose,” he added.
Budget carrier AirAsia, in a position paper to the CAB, has said that the “imposition of a floor and ceiling rate on domestic fares may unnaturally skew average domestic fares to higher levels while remain as is.”
“This may paint an unfavorable picture of the domestic aviation industry and affect domestic tourism as passengers will opt to travel internationally where fares are lower,” it added.
The IATA also urged the government to stop levying tourism taxes to spur economic growth.
“The more tax you put on the passenger, less prosperity you will bring into the country,” de Juniac said.
The short- term budget gains quickly disappear when tourist arrivals drop and the Philippine government must instead focus on investing in tourism infrastructure, he added.
“The extra tourist dollars you attract will pay the investments and make a greater economic contribution,” de Juniac said.
Airlines (AAPA), for its part, said added government regulations could prevent the aviation industry from fully contributing to the region’s development.
“The ever- growing burden of restrictive government legislation, increasing taxes and charges, and lack of shared vision for the industry, hold back the potential of Asia’s carriers in fully contributing to the social and economic development of the region,” AAPA said in a statement.
The traveling public as well as airline companies are already bearing the burden of numerous taxes and charges imposed by governments, it added.
“Despite past exhortations, taxes have been increasingly imposed by various states in respect of certain aspects of international air transport and charges on air passengers, several of which can be categorized as taxes on the sale or use of international air transport in contravention of International Civil Aviation Organization’s policies on taxation,” the AAPA said.
“AAPA renews the call on governments to carefully consider the overall economic effects of putting further financial strain on the traveling public and on the aviation industry, and to refrain from increasing the burden of aviation levies any form.”