US also screwing Europe on Open Skies

The trouble with us is, we always think we are special with the United States. Take open skies, for example. If you read the local papers, you get the impression that the United States is picking on us for special unfair treatment. I was reading a recent issue of The Economist and, as it turns out, Europe is also being equally screwed. In fact, the European Union is about to open negotiations on an air services agreement to replace the individual "open skies" deals of the US with 11 of the 15 current EU members.

According to The Economist, current agreements are far from a free market. "They give American carriers rights to fly to and from a particular country without regulation of fares, routes or frequencies." The Europeans complain that "the Americans get the better of the deal: Their carriers can pick up passengers and carry them on within Europe, whereas European carriers do not enjoy reciprocal rights in America." That complaint sounds familiar to us since that’s also what Philippine Airlines had been saying all these years.

The Economist also pointed out that another unfair feature of the current "open skies" arrangement between the US and a host of European countries is that "foreigners are allowed to own up to 49 percent of European airlines, but just 25 percent of American carriers. However, the Bush Administration also want to raise this now to 49 percent, because the cash strapped American carriers badly need injection of fresh equity to keep them flying.

It isn’t surprising, The Economist observed, that the Europeans would like to rip up the current rulebook. "Loyola de Palacio, Europe’s transport commissioner, would like foreigners to be able to hold majority stakes in both American and European airlines, thus kick-starting the consolidation that is so desperately needed. That might allow the likes of Virgin Atlantic, for example, to set up domestically in America."

More significant to us because this is what we have been fighting for, the Europeans, would like all airlines to be free to fly to and from wherever they want across the Atlantic, and for their airlines to have the freedom to fly within America. In such a world, British Airways might fly from Paris to New York, or Air France from Dallas to Los Angeles.

But hopes are not high anything like that is about to happen. According to The Economist, "unfortunately, the negotiations are unlikely to go quite that smoothly. Even if regulators on both sides saw sense, the complexity of the deal would mean that it would take a couple of years to thrash out." The Europeans it seems, are under no illusions that the Americans, "despite having a Republican administration, are likely to argue for something far short of a truly free market. After all, the status quo suits them."

We also have to remember that the Americans, unlike many of our policy makers in government and some segments of our private sector, see their airline industry as vital to their country’s national security. Some of us see Philippine Airlines as basically the problem of Lucio Tan.

This national security concern is reason why the American Congress voted fat subsidies to keep American carriers financially solvent following the market plunge related to 9/11. This is also why the American Congress will likely oppose any air services agreement that will end the unfair provisions currently enjoyed by American carriers.

It is clear that for the Americans, the concept of free market competition is not applicable to their airline industry. This is why the Americans will never allow free competition in its "domestic" routes. There is even a "Fly America" law requiring government employees or contractors to fly on American carriers, shutting off a huge customer base.

This is why negotiating for a fair air services agreement with America is so frustrating. While we must not abandon our demands for fairness, we should be ready for continued stonewalling on our just demands. The Americans however, must not begrudge us for trying to win for our carriers what they have won for theirs on the basis of simple reciprocity.

I think we should also take a leaf from the American posture. Given our large expat worker communities all over the world, having the modern international fleet of Philippine Airlines and soon, Cebu Pacific as well, should be treated as a national security matter. The national security significance of our national flag carriers is also made even more critical because our air force has practically zero international airlift capability.

We got a taste of how life would be without PAL when the airline momentarily ceased operations early in Erap‘s watch. A PNB subsidiary had to arrange and subsidize Cathay Pacific to mount domestic flights just so people and cargo can still move around in our archipelago.

This being the case, the survival of our flag carriers should be a primary concern of government and shouldn‘t be sacrificed just on the nebulous promise of generating more tourists. While PAL and Cebu Pacific should compete vigorously with each other, there are areas when their combined interests are also in the national interest.

We should remember that more than just Lucio Tan gets screwed when Philippine Airlines is screwed by the United States. Our national interest gets screwed. The Europeans see that problem clearly in those terms. We ought to, as well.

Hopeless Voters?

Got this e-mail from reader Ferdie T. Sibal of Tandang Sora, Quezon City.

Good day Mr. Chanco! The quality of a nation’s leadership is a function of the quality of its electorate. I am amazed that prior to Martial Law, our country has elected its best and brightest in Congress the likes of Jovy Salonga, Soc Rodrigo, Ninoy Aquino, Pepe Diokno, Gerry Roxas, Arturo Tolentino, Ambrosio Padilla , Ramon Felipe, Melanio Singson and many others.

In 1992, the quality of elected national leaders suffered when the electorate brought to the Senate comedian Tito Sotto and actor Ramon Revilla and made Joseph Estrada vice president. In 1998, instead of electing Haydee Yorac and Edcel Lagman to the Senate, we got Tessie Oreta and Robert Jaworski. In 2001, instead of a Winnie Monsod, we got Loi Ejercito; instead of a Bobby Tañada we got Panfilo Lacson.

The level of political debate and discourse in the Senate would have been elevated to a higher and more intelligent level had our electorate been more discerning and wise in their choices. Unfortunately, 2004 does not offer any real hope that our voters have become more educated, intelligent and enlightened in their choices if we are to go by the Pulse Asia survey.

What has the likes of Bong Revilla, Imee Marcos, Jinggoy Estrada got to offer? It is a pity if we do not elect the likes of Mar Roxas, Oca Orbos, Cito Lorenzo, Butch Abad, and other qualified young leaders to the Senate.

What can you expect from a country with a low readership of books and newspapers? What can you expect from a country too preoccupied with telenovelas whether of the Pinoy, Mexican or Taiwanese variety rather than watching intelligent talk shows and news/ current affairs programs? What can you expect from a country that idolizes false heroes i.e. Honasan, Trillanes and their kind? Nothing!

Trade Off

And now, here’s Dr. Ernie E.

The old gentleman was aging more rapidly than he wanted.

"Your gout is getting worse," said the doctor. "I recommend that you give up smoking, drinking and sex for a while."

"WHAT!" said the man. "Just so I can walk a little better?"

Boo Chanco’s e-mail address is [email protected]