Grant of additional flights to United Arab Emirates carriers to drive out competition

MANILA, Philippines - The grant of additional flight entitlements to the United Arab Emirates (UAE) airlines during the air talks this week could drive out competition in the market, flag carrier Philippine Airlines (PAL) warned. 

In a statement issued over the weekend, PAL said the Middle East carriers being investigated by the US and European governments for allegedly receiving billions of subsidies, could use their unfair advantage to choke out competition should they secure new entitlements during the air talks to be held between the Philippines and UAE on Aug. 27 to 28. 

PAL predicts the grant of new entitlements to UAE airlines would mean a repeat of the experience in the 1990s when the flag carrier had to stop flying operations to destinations such as UAE and Europe due to unfair competition brought by subsidies received by Gulf carriers. 

PAL said six European airlines also suspended routes to Manila during the same period due to the impact of government subsidies to Gulf carriers to operations. 

With the suspension of operations by Philippine and European airlines to the Middle East, Gulf carriers had a monopoly of air service which resulted in higher air fares and constrained growth of European tourists visiting the Philippines.

While the flag carrier is ready to compete, it noted the need for a level playing field. 

“Should the UAE airlines get the additional entitlements they seek during the coming Philippine-UAE air talks, this will undermine the investments PAL and other airlines have made for the country in opening new routes to serve Philippine tourism and overseas Filipino workers,” PAL president Jaime Bautista said.

At risk is the healthy state of competition in the Philippines’ global aviation network with new routes such as London, New York, Abu Dhabi, Dubai, Riyadh and Dammam opened by PAL within the last two years. 

Other Philippine and European airlines have opened their own routes to Dubai, Kuwait, Riyadh, Doha and Istanbul and all of which are also vulnerable should Emirates Airlines and Etihad Airways get increased frequencies between the Philippines and the UAE.

The current bilateral air services agreement between the Philippines and UAE allows Emirates and Etihad a maximum of 28 weekly flights to Manila and unlimited flights to Clark, Cebu and other airports in the Philippines.

Emirates is pushing for the revival of its third daily flight on the Manila-Dubai route citing the need to meet the demand for more seats in the market. 

Since the removal of its third daily flight, Emirates claimed its two daily flights on the Manila-Dubai route have been operating at 100 percent capacity in the economy class with no seats left for international tourists and overseas Filipino workers.