Cebu Pacific urges removal of taxes paid by passengers

MANILA, Philippines — Budget carrier Cebu Pacific is urging the government to regulate and remove some of the taxes being paid by air passengers.

Cebu Pacific vice-president for commercial planning Alexander Lao said the cost of travelling to the passenger is very important, especially as 60 percent of total air passengers in the country use low-cost carriers (LCCs).

“I think we’re one of two countries in Southeast Asia that charge Filipinos a travel tax,” Lao said.

“LCCs are able to stimulate demand because the overall ticket price should be much lower than it was in the past. So certainly, removing and regulating some of these taxes, some of these passenger service charges are important,” he said.

Passengers leaving the Philippines are charged a full travel tax of P1,620 for economy class, and P2,700 for first class, while overseas Filipino workers and Filipino permanent residents abroad are exempted from paying travel tax.

Meanwhile, a terminal fee of P550 for international and P200 for domestic flights are being charged at the Ninoy Aquino International Airport. The amount is expected increase to P750 and P300, respectively, starting April.

“Certainly we know that some of these taxes are traditional in nature. Some of these taxes of course have to go to airport operators for them to continue to build and improve the airports but at the same time, I think we have to ask the airport operators themselves, can they look at what their revenue streams are going to be,” Lao said.

Lao said apart from aeronautical revenue streams, airport operators should also explore more non-aeronautical revenue streams such as development of real estate, sales through retail, and operation of duty-free outlets.

“Sometimes, what is being looked at for revenues is mainly the airlines. It is the airlines themselves that try to stimulate the demand so it’s very important that we’re able to pass on all of these cost savings to our customers,” Lao said, adding that “the Philippines is one of many countries in the world fighting for the tourism share. Philippines as a country is competing against so many countries competing for the same tourism wallet. Frankly, the Philippines has a great product.”

Cebu Pacific said it has maintained leadership in the domestic market—having flown over 11.1 million passengers across 37 destinations, 76 routes, and over 2,130 weekly flights from January to September last year.