AirFrance KLM sees lifting of common carriers tax

MANILA, Philippines - AirFrance KLM is confident that the removal of the common carriers tax (CCT) would help boost tourism in the Philippines and level the playing field between foreign and domestic airlines.

Marnix Fruitema, senior vice president for Asia Pacific of AirFrance KLM, said the removal of the CCT slapped on foreign airlines would help lure more tourists to the country in line with the government’s slogan of “It’s More Fun in the Philippines.”

Fruitema said the campaign undertaken by the Department of Tourism (DOT) as well as the improvement of the country’s international airports would help bring the Philippines back on the radar screen of tourists.

“The Philippines should keep on investing in infrastructure such as state-of-the-art airports to develop Manila as a stopover point,” he stressed.

Likewise, he pointed out that the Philippines should be competitive in terms of costs to foreign airlines and revived calls for the removal of the CCT.

He warned that foreign airlines would be forced not to expand their operations in countries with high costs including New Delhi in India.

“You have to make sure that the cost you are charging to foreign airlines should be competitive. Look at New Delhi, they increased the taxes so much making it difficult for both Indian and foreign airlines,” he added.

Last March 26, AirFrance KLM stopped its direct flights to Manila to Amsterdam and opted to mount a stopover in Taipei in a bid to slash taxes paid to the Philippine government

However, he is confident that Congress would enact a law that would remove the CCT imposed on foreign airlines.

House Bill 6022 has been approved on third and final reading at the House of Representatives seeking to remove the three percent CCT while a counterpart bill is now pending before the Senate Ways and Means Committee.

For his part, AirFrance KLM regional general manager of South China Sea Jurriaan Stelder said the removal of the CCT would level the playing field between foreign and domestic airlines.

 “We are very happy with the progress, but it (law removing CCT) should be signed. This law on CCT is unique to the Philippines and this is discriminatory against foreign airlines,” he said.

Stelder said the removal of CCT would help AirFrance KLM save at least 25 percent of the $5 million of its operating costs in the Philippines.