PH competes with neighbors better positioned to attract tourists

MANILA, Philippines – The Philippines has a chance to meet its target of 6 million tourist arrivals by 2016 but a competitive environment in the region remains a challenge for the country, an airline executive said.

The Aquino government has launched a new country tourism campaign, issued an open skies policy to allow more foreign airlines to bring passengers, and lined up a series of airport and other transportation projects in an effort to double the tourists that visit the Philippines.

But despite the housecleaning, investments and marketing efforts, the Philippines is up against something that’s beyond its control: the already existing hubs-and-spoke system in neighboring countries.

“You’re getting what somebody else doesn’t want, for the most part,” according to Steven Crowdey, General Manager of Delta Air Lines Inc’s operations in Australia, Micronesia and Philippines.

He was referring to tourists that arrive in Asia through flights that connect to airport hubs in the region, including Singapore, Bangkok and Kuala Lumpur.

From these hubs, short-haul flights, or those that travel for less than 4 hours, fetch passengers bound for other destinations, including the Philippines.

“Policies that have been in place have really supported other neighboring countries’ hubs. They’ve grown those hubs. So they now offer “spokes” services to the Philippines from those hubs, strengthening those other countries’s hubs…They are leveraging those hubs to compete for the same leisure tourists that the Philippines is interested in having,” Crowdey said.

“They’re the ones who have non-stop service to a whole range of European and US destinations and the Philippines is left with very little long-haul,” he told Rappler in a recently concluded 45th ADB Annual Governors Meeting in Manila.

The hub and spoke model is named after a bicycle wheel, which has a strong central hub with a series of connecting spokes. Delta Airlines pioneered the method in the aviation industry where an airline routes all of its traffic through central hubs and almost all of the airline’s aircraft flies on spokes between destinations and the hub, with very few direct flights between other destinations.

When the Philippines aviation industry was still monopolized by Philippine Airlines (PAL), which was a state-owned carrier for decades, the governments of Thailand, Singapore and other neighbors opened up their local aviation industry, attracting foreign airlines to invest in them as their hubs in Asia.

Playing catch up, the Philippines deregulated its own industry, in the process creating a market for budget airlines that mount flights to domestic, as well as regional, destinations.

However, the capabilities of the local regulatory agencies did not catch up. In 2008, the United States’ aviation regulator, the Federal Aviation Administration (FAA), downgraded their rating of their Philippine counterpart’s ability to implement global safety standards upon airlines operating in the country. Not long after, the European Union issued a blanket ban on all Philippine carriers alongside African airlines.

These hit the Philippines hard. Philippine carriers cannot anymore mount new and additional long-haul flights to key tourist markets — the US and Europe — while the Asian neighbors going for the same markets could.

Crowdey noted that there are no more foreign airline mounting direct flights between Philippines and Europe. In April, KLM pulled out the last remaining direct flight between Philippines and Netherlands, citing punishing airline taxes that only Manila imposes.

Delta currently has 7 flights a week to Tokyo on to 10 gateways to the US and 5 flights to Nagoya and on to Detroit. – Rappler.com