Open Skies Greet "Dubya"
The Philippine Star
October 06, 2003

The aviation agreement between the United States and the Philippines that took effect on the 1st of October sets the tone in the upcoming eight-hour visit of US President George W. Bush on his way to Bangkok for the APEC leaders' summit.

Malacanang's pronouncements last Wednesday that it is seeking a review of this controversial aviation agreement appears to many as nothing but lip service especially since the open skies agreement was already in effect the same day.

In fact, any serious effort to push for concessions in the issues confronting the open skies accord could have been done earlier in the year, say in May during the US state visit of GMA.

From the point of view of the domestic airline industry, the open skies pact now in place underscores the inequity in the US-RP relations where the former gets away with practically everything, leaving the hapless latter to make do with whatever is left. The lopsided nature of this agreement is seen as the death sentence of the industry.

Long-drawn battle

The bilateral skies policy that removed restrictions on capacities, frequencies, and destinations of flights between the US and the Philippines is a product of the two countries aviation pact in 1982 but had been deferred for several times.

Renegotiations had bogged down in the past as both countries refused to budge on respective positions on crucial issues, particularly those relating to cabotage, seventh freedom rights, and third country code-sharing.

When the US says local airline firms have had sufficient time to prepare for open skies, it glosses over the real issue: no amount of time will allow our airline companies to compete fairly if the inherent basis of an agreement is lopsided in favor of only one party.

The inequity of "open" skies

According to PAL, and shared by other local airlines, cabotage, seventh freedom rights, and third country code-sharing are inequities in the agreement that will prevent them from competing in an even level playing field.

Cabotage rights, for instance, grants the US access to an unlimited number of entry points to the Philippines from US mainland while carriers like PAL are limited to only nine gateways in the US.

The agreement also bars Philippine airlines to carry domestic traffic on flights within the US skies, but permits American carriers extensive rights not only on local routes but also to virtually all countries in Asia, Middle East, Europe and Africa.

The controversial seventh freedom had been circumvented during the Ramos administration when Federal Express and United Parcel Service were allowed to operate hubs in Subic and Clark, and to fly their cargo to destinations other than the US.

Understandably, the Philippine government may have been ambivalent on the operations of Fedex and UPS since these represented direct investments and job opportunities for Filipinos. With the air pact now in effect, the earlier arbitrary arrangement with the two cargo carriers is now legitimized.

Another inequity is the third country code-sharing agreement that allows US carriers to transfer their rights on frequencies to the Philippines to a third airline. The code-sharing right is supposedly crucial to the US carriers as this gives them flexibility not to physically fly to a destination when traffic is scant or when it does not suit their marketing plans.

For instance, Cathay Pacific will be allowed to use the frequencies of Northwest Airlines to the Philippines. Through the code-sharing right, Northwest can sell passenger seats to the Philippines through the flights of Cathay.

Another controversial issue is the US's refusal to lift the cabotage barrier on routes like Guam where ethnic Filipinos make up 23 percent of the population.

Of the more than 133,000 Guamanians, more than 30,000 are Filipinos, many of whom would like to travel to the Philippines for a one-week visit before proceeding to Hawaii or the West Coast for a vacation.

PAL had wanted to sell Guam-Manila-West Coast or Guam-Manila-Honolulu routes, but had been prevented from doing so. The US transport department is imposing heavy fines on Asian airlines selling Guam-US travel and passing through their homeland.

Lingering doubts on benefits

It seems that-in the name of liberalization-we have just thrown another local industry into the global arena regardless of whether they will be able to competently compete and survive.

Open skies perhaps will benefit the growing number of traveling Filipinos, especially overseas workers, who are being promised lower fares, more choices, and "US-standard" air services. But doubts still linger as to the overall benefit of this agreement.

When queried about local apprehensions regarding the lopsidedness of an open skies arrangement, the American ambassador to the Philippines was quoted replying, "look up the skies, nothing is happening."

But just like in the old Indian-cowboy movies, the natives would say: "paleface speaks with forked tongue."

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