Bill to scrap travel tax progress
From AB Capital's The Opening Bell: Three Moves
Event
The House Committee on Tourism approved a consolidated bill seeking to abolish the Philippines’ travel tax imposed on outbound air and sea travelers under a 1977 presidential decree. While the measure still requires plenary and Senate approval, its advancement signals legislative momentum toward reducing travel-related costs for Filipinos, despite concerns over funding gaps for agencies currently supported by the tax.
View
We see this as a marginal demand-positive for airline operators, particularly Cebu Air, Inc., as the removal of the travel tax lowers total travel cost and could stimulate incremental outbound demand. While the tax is not airline revenue, lower ticket friction may improve load factors and ancillary spend at the margin. Airport operators may benefit from higher passenger throughput, while integrated resort names such as Bloomberry Resorts Corporation are likely neutral given earnings are more tied to gaming and inbound flows. Macro impact appears limited unless funding replacement becomes fiscally contentious.
Catalyst
Key near-term catalysts include progression through House plenary and Senate deliberations, clarity from the Department of Finance on fiscal offsets, and guidance on implementation timing. Markets will also watch outbound passenger data for signs of elasticity to lower all-in ticket prices, particularly among leisure travelers, which would validate earnings sensitivity assumptions for travel-linked names.
Action
Maintain a positive stance on travel-linked equities, with accumulation bias on airline names on weakness as structural travel recovery remains intact. No immediate earnings revisions are warranted at this stage, but monitor legislative progress and outbound traffic data for confirmation of demand uplift before adjusting forecasts.
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.
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