PAL, Emirates battle (again) for Manila-Dubai rights

MANILA, Philippines – Legacy carriers Philippine Airlines (PAL) and Emirates are at odds over the rights to service the Manila-Dubai flights, one of the most lucrative routes.

PAL, now under the management of local diversified conglomerate San Miguel Corp., wants the government, through the Civil Aeronautics Board (CAB), to keep the existing 14-flights-a-week that each Manila and Dubai governments have agreed to mount.

Emirates, however, wants to increase the weekly flight frequencies to 21 by January 2013.

For years, the two airlines have been constantly battling each other over regulatory rights that the Philippine government awards to its local airlines.

At stake are flights and fares for overseas Filipino workers (OFW) bound for or coming from jobs in the Middle East, of which Dubai is a key destination.

Renting ‘air rights’

PAL is currently the only local carrier granted by the Philippine government the right to fly the route.

However, PAL has not been flying its own planes for the route since 1998, but has been effectively renting its regulatory rights to Emirates via a “code-share agreement.”

According to a letter of PAL executive Socorro Gonzaga to CAB, PAL is objecting to Emirates’ request to increase the flight frequency since the requested 21-a-week exceeds the existing 14-a-week specified in the air service agreement between the Philippines and the United Arab Emirates.

“We believe that it would be difficult, perhaps impossible for Philippine carriers to viably sustain our own operations over the long term in the face of such a commanding undue advantage on the part of our top competitor,” Gonzaga wrote.

She described Emirates’ request as “market busting and corrosive, resulting in over-capacity that fosters ruinous competition.”

PAL has been citing that the playing field for both is not even since Emirates is subsidized by its government while the local airline is on its own.

Increase flight frequencies

Gigie V. Baroa, Emirates’ Philippine manager explained otherwise.

She wrote to CAB that the requested additional frequencies will not just benefit Emirates but the Philippine carriers as well.

She said there is “extra-ordinary size and growth of the market demand on the route,” thus the capacity increase they are seeking is just meant to address this.

The Aquino government is seeking to liberalize aviation policies to hike tourism arrivals. A pocket open skies policy is in place allowing foreign airlines to operate as many flights as they want in 5 airports near tourism spots.

The open skies regime, however, does not include Manila, currently the gateway to the country, because the airport runway and the terminal facilities are already congested.

Competition among local airlines to cater to growing number of flying passengers has been stiff.

For particular routes between Manila and destinations in the UAE, budget airlines Cebu Pacific and Zest Airways area also planning to mount flights there in 2013.

PAL is also requesting the Canadian government for additional rights so it could mount more flights to both Vancouver and Toronto. – Rappler.com