Rainbows and clouds in ‘Open Skies’

Are we ready to open our skies with the United States?

This question has cropped up time and again since 1979 when the Philippines signed an Air Transport Agreement (ATA) with the United States calling for the implementation of an "open skies" arrangement. The "open skies" provision was originally supposed to take effect in 1983, but has been postponed six times hence.

A new deadline for the RP-US "open skies" arrangement is expected to take effect in October 2003. Both parties are given a one-year notice in case either of them opts to postpone the arrangement. This would mean the Philippines would have to call its counterpart back to the negotiating table before October of this year.

Before then, much lobbying is already happening. The noise, as to be expected, comes from two camps: one defending "open skies" as a scheme that would benefit the economy; and the other vehemently saying that "open skies" is prejudicial to Philippine carriers.

The US government is an aggressive advocate of an "open skies" policy. At present, it has agreements with 56 countries that include France, Malaysia, Singapore, and New Zealand. Among the earliest advocates are Switzerland, Norway and Sweden who signed treaties as early as 1995, and are to date continuing to espouse the "open skies" agreement with the US.

Several countries, on the other hand, persist in resisting implementation of the agreements. The Chinese, Japanese, Australian and British governments have rejected an "open skies" aviation policy on ground that it would inflict more harm than good to their economies.

In the Philippines, the pro stance is being championed by the Freedom to Fly Coalition (FFC). They espouse that the progressive liberalization of the country’s civil aviation since 1992 has contributed immensely to increased passenger and air cargo, not to mention lower fares in the domestic market, improved services and more local routes.

The cons, on the other hand, argue that the local carriers –including the Philippine Airlines which is still recuperating from ailment – is not ready to compete in a liberalized environment. Newly organized Save Our Skies (SOS) movement is very vocal about postponing the "open skies" agreement.

"Open skies" is a liberal term applied to air service agreements between countries that basically removes the restraints on how airlines from two countries would operate between and beyond their respective territories. This involves restrictions on routes, number of designated airlines, capacity, frequency of flights and even the types of aircraft to be used.

Civil aviation needs to be liberalized

The FFC, an NGO led by Narzalina Lim, clarifies that "open skies" is not a full, unhampered opening up of access into the country by anyone who wants to fly in, but rather a bilateral and reciprocal process between the two. In fact, FFC points out that many countries have gone beyond bilateral agreements and formed regional cooperation called multilateral agreements to further enhance their air access and strengthen negotiating capacity.

Advocates say that opening our skies – much like liberalizing trade – would be beneficial to our economy since it would allow us to significantly participate in the world’s tourism trade, tourism being the easiest way to generate foreign exchange for a developing country like the Philippines.

Air access, they state, would also be a critical component of our economic growth. While records from the Civil Aeronautics Board (CBA) show that only two percent of the total volume of Philippines exports is air transported, the equivalent value on the other hand represented more than 70 percent of the country’s $35-billion export receipts in 2000.

Liberalizing local air travel also has the potential of boosting our trade if existing restrictions are removed. This, apart from the fact that the entry of more foreign air lines, would mean more hubs and increased foreign direct investments in the country.

Only when there is a level playing field

SOS, headed by Robert Lim Joseph who is also the president of the Network of Independent Travel Agencies, on the other hand, argues that through the years, US-designated carriers have obtained much more improved air traffic rights through amendments of the RP-US air treaty agreement.

Case in point, according to Joseph, is the free access of US carriers from unlimited origin and destiny points in both the US and the Philippines. "There are no restriction insofar as routing, stopovers or gateways are concerned," he says.

On the other hand, argues Joseph, there is limited access for Philippine carriers. There are only nine points that a Philippine carrier may fly directly, and only through these can they fly on to 16 other interior points in the USA.

Furthermore, given the dominance of US cargo carriers like FedEx and UPS in the trans-Pacific and Asian air routes, Philippine air carriers will have little success in effectively competing. "Open skies," according to Joseph, will only be beneficial between countries whose air carriers are similarly situated and are capable of competing with each other on equal footing.

Let’s get ready

Doubtless, liberalized air travel-whether to carry people or ferry cargo – is an integral component that will determine our competitiveness in future. We have three million overseas workers and two million resident Filipinos in the US. All that travel potential is a good point to start bringing down air fare rates.

While the prospect of a robust tourism for the Philippines is largely affected at the moment by a confluence of many factors, primordial of which is the issue of peace and order, it cannot be ignored that our neighbors are benefiting from tourist arrivals and trade. Thus it would be foolish to mope around just waiting for problems to solve themselves.

Understandably, local air carriers – most especially the financially beleaguered national flag carrier – will feel threatened especially if and when the US counterparts start exerting pressure to bring down passenger and cargo rates.

But the local economy cannot in the long run ignore the prospect that a liberalized civil aviation policy can bring investments for new fleets, modern hubs and more cost efficient service. This is something that we need very badly today.

I agree: let us exercise caution as we move towards a more progressive "open skies" regime. We must be vigilant that we don’t get short-changed as details of agreements are negotiated.

However, PAL and the other Filipino-owned airlines should-in the long-run-prepare to be able to compete against foreign-owned carriers. Of course, I am assuming that PAL and the others will make the necessary investments. At a certain point in time, whether there is PAL or no PAL doesn’t really matter.

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