The Philippine unit of Southeast Asia’s largest budget airline is opposing the government’s plan to put a price cap on domestic air tickets that may dampen the local air travel industry.
AirAsia Philippines legal counsel Julius Polinga said in a position paper to the Civil Aeronautics Board that the agency’s draft resolution to regulate airfare “could lead to the demise of smaller carriers and dampen the tourism industry in the Philippines while the rest of the Asean continue to flourish under liberalized environment.”
“The imposition of a floor and ceiling rate on domestic fares may unnaturally screw average domestic fares to higher levels while fares for international flights will remain as is,” Polinga said.
He said the proposal to put a cap on domestic fares could impact on the local aviation industry as passengers would opt to travel internationally where fares were lower.
Sought for comment, CAB executive director Carmelo Arcilla said the regulator was finalizing the draft resolution.
“It’s not yet final. We are still studying it,” he added.
PAL spokesperson Cielo Villaluna said PAL would submit its inputs on the issue accordingly.
“Let it be known that our fare applications are always filed with CAB for approval, in compliance with their regulations,” she said.
Cebu Pacific vice president for corporate affairs JR Mantaring said the airline gave its comments to the CAB and asked the agency to seriously consider its side. He did not elaborate.
Under the CAB’s draft resolution, the floor rate would be fixed in a rate not lower than 20 percent of a current ceiling rate.
Polinga said the draft resolution to put a cap on air ticket would only benefits 1 percent of the traveling public, while the majority would adversely affected by the rise in the lower tiered due to the 20 percent cap of the highest fare.
The AirAsia lawyer cited that the introduction of promo fares by low-cost carriers revolutionized the aviation industry in the Philippines.
“We hope that the government continues to pursue a liberalized regime like the neighboring Asean countries, Polinga said.
Data from CAB showed that domestic passenger traffic rose 12.8 percent to 12.79 million in the January-to-June period from 12.26 million passengers year-on-year.
International passenger traffic, meanwhile, increased 9.57 percent to 12.36 million passengers in the first half of the year from 11.28 million passengers.