EOs 28 & 29 seen to jeopardize SMC plans for PAL expansion

MANILA, Philippines - San Miguel Corp.’s expansion and growth plans for Philippine Airlines (PAL) and Air Philippines would be put to naught unless the government amends Executive Order 28 and EO 29, the Save Our Skies (SOS) said.

SOS president Robert Lim Joseph said with San Miguel’s entry into and control of management of PAL and sister firm Air Philippines, it’s about time the government undertook a review of the two EOs.

San Miguel has acquired a 49-percent stake in PAL Holdings, Inc. for $500 million and has plans to buy up to 100 new aircraft for both PAL and Air Philippines over the next half decade as well as invest in a new international airport.

Joseph said the two EOs as they are now would hamper San Miguel’s expansion and growth plans for PAL and Air Philippines unless amended to provide a level-playing field for local airlines.

Joseph has been urging the government to amend EO 28 and EO 29 because of provisions disadvantageous to local carriers. He has written President Aquino about this on Sept. 28, 2011, who, in turn, forwarded his letter to Transportation and Communications Secretary Manuel Roxas III and Foreign Affairs Secretary Albert del Rosario.

However, up to now, no action on Joseph’s concerns has been taken by the DFA and DOTC.  

In his letter to the President, Joseph pointed to the lack of reciprocity under EO 29 as it unilaterally grants unprecedented fifth freedom rights to foreign airlines without guarantee from their governments that they would be giving the same reciprocal arrangement to local carriers.

On EO 28, the tourism leader took issue against the exclusion of Philippine carriers from the Air Negotiating Panel and Air Consultation Panel despite airlines being the biggest investors in the industry.

“Under these two EOs, only foreign airlines would be benefitted, to the detriment of local carriers,” Joseph stressed.

He said even if the number of aircraft of PAL and Air Philippines is increased, they would still be unable to compete with foreign airlines because of the advantages given to the latter.

He added that they expect the government to take out the three percent common carriers tax (CCT) imposed on foreign airlines, a move which could again put local airlines at a disadvantage.