PAL seeks equal sharing; Cebu Pacific says it’s a David-Goliath affair

"We want 2-2 sharing. They want 4-0."

This sums up the position of Philippine Airlines on the allotment of four new flight entitlements to Korea. The word "they" refers to Cebu Pacific.

PAL said its equal-sharing proposal for the four new frequencies is an equitable way of allocating these additional air rights and ensuring that they are utilized for the benefit of the country.

Cebu Pacific, in a filing with the Civil Aeronautics Board last Nov. 30, said it wants all four entitlements (three immediately and the fourth in April) for use on the Manila-Seoul route.

"This despite the fact that it has twice reneged on past commitments to fly the route. Even its new start-up date of March 2, 2002 remains uncertain," PAL said in a statement.

"In contrast, PAL said it is all geared up to operate permanently two of the four new air rights on the Cebu-Seoul route.

"The essence of the air liberalization policy is that all local carriers should freely compete for available frequencies, presenting their plans on how best these rights could be used for the country’s benefit," the airline said.

PAL said its decision to operate the two entitlements on the Cebu-Seoul route answers the clamor of the Cebu tourism industry for more direct international flights, especially to markets such as Korea that have sustained it in these troubled times.

Unlike Cebu Pacific, which will utilize its rights on the already crowded Manila-Seoul route, PAL’s Cebu-Seoul operation will contribute more to the Philippine economy and advance the national interest by generating new traffic to a destination where there is strong demand," Cebu tourism establishments pointed out.

Korean tourists have replaced the Japanese as Cebu’s largest visitor group in the wake of the Tokyo government’s negative travel advisory last October. In the process, they have saved, almost single-handedly, the city’s tourism industry.

Cebu’s entire tourism sector, led by Vice Mayor Michael Rama, who heads the city’s tourism commission, and Dr. Mila Espina of the Cebu Chamber of Commerce and Industry, have denounced the plan to reduce the city’s flight links to Seoul and allocate them to Manila instead.

"Manila does not need more frequencies to Seoul since there are already 21 flights per week between them. We do. Cebu desperately needs more direct international links," Espina was quoted as saying.

Meanwhile, PAL refuted Cebu Pacific’s claims on other issues in the dispute:

• On the claim that a start-up operation of just two weekly flights would not be viable, PAL said its own experience on the Cebu-Seoul and Manila-Pusan routes showed otherwise. From initially two weekly flights, PAL developed both routes to the current four-times weekly schedule.

• On the charge that PAL submitted its motion for reconsideration to the CAB’s Dec. 19 decision too late, the airline said it formally received the board’s verdict only on Jan. 9, 2002, and that it filed its petition on the same day, well within the period allowed by law.

• On the assumption that the CAB would not reverse or amend its decisions, PAL said the board has the power to do so if it finds a motion for reconsideration meritorious to warrant such act. Thus, Cebu Pacific cannot claim the new frequencies as its own before the CAB rules with finality.

• On the allegation that giving PAL additional capacity would be "destructive" to a level playing field, the airline countered that Cebu Pacific cannot invoke its nascent state to prevent PAL from growing. Leveling the playing field does not mean a prior operator, which has invested in and developed routes, can be deprived of new rights until new entrants can catch up.

• On the claim that PAL opposed additional frequencies during last November’s air talks with Korea, the airline in fact proposed a "seat capacity" formula that, if adopted, would have resulted in up to 11 more weekly flights for all Philippine carriers to share. However, the final accord did not adopt this, opting instead for the "frequency ceiling" that allowed local carriers only four new entitlements.

On the other hand, Cebu Pacific said that what PAL wants is a completely lopsided playing field.

In a statement Cebu Pacific said PAL wants to have 15 flights weekly to South Korea and leave us only one, which means a passenger who flies with us on a Monday will have to wait the following week to come home.

"A ratio of 13 weekly frequencies against three for us is a David and Goliath affair but Cebu Pacific will take on PAL on these terms.

"We have and will pioneer low fares wherever we go – domestically in 1996 and last month in Hong Kong – and we ask PAL to complete fairly."