Salceda bill a big relief for airlines

MANILA, Philippines — The country’s airlines are banking on a draft bill by Albay second district Rep. Joey Salceda to help survive the negative impact of the coronavirus disease 2019 or COVID-19 crisis.

In his Philippine National Stimulus Strategy bill, Salceda proposed programs for structural stimulus with a gross fiscal cost of P1.65 trillion from 2020 to 2023.

This will consist of P300 billion worth of negative interest loans from the Land Bank of the Philippines and the Development Bank of the Philippines, a P350 billion package from the National Emergency Investment Corp. – to be created by the bill – another P350 billion in credit mediation and refinancing service and P650 billion worth of enhanced stimulus for the government’s Build Build Build program.

In his bill, Salceda identified industries that would have high exposure to the negative effects of the virus – apparel, automotive, manufacturers, suppliers, consumer durables, gaming, lodging, tourism, retail, global shipping and passenger airlines.

The objective of the bill is to “provide relief for firms and individuals by ensuring liquidity of firms, reduce regulatory compliance costs and encourage regularization, boost aggregate demand at the household level to support firms.”

Another objective is to reduce permanent structural damage of a temporary crisis by preventing bankruptcies,

maintain to a viable degree the employment size of firms and encourage firms to continue expansion and productivity boosting plans made before the COVID-19 pandemic.

For the airlines, one possible clause in the bill could provide the legal mandate for a government bailout, if the measure becomes a law.

Salceda said the National Emergency Investment Corp. could help bail out firms who would go bankrupt because of the current COVID-driven difficulties, but which would be profitable under different conditions.

The National Emergency Investment Corp. would be supervised by the Department of Finance and this is fiscally comparable to the Central Bank-Board of Liquidators and the Power Sector Assets and Liabilities Management Corp.

The country’s airlines, Lucio Tan-owned Philippine Airlines, the Gokongwei’s Cebu Air, and Romero-led Air Asia are all struggling to survive the negative impact of the pandemic because of the business disruption as a result of travel restrictions.

All three are seeking whatever form of assistance they can get from government.

Industry sources said at least one of the three airlines is actively lobbying to be bailed out under the Salceda bill framework.

For Cebu Pacific president and CEO Lance Gokongwei, any assistance from the government will help although he said is aware that the airline industry is not the priority given the enormous needs of other sectors such as the small and medium enterprises.

“We recognize that the government’s priority is helping MSMEs but certainly if they are going to provide support in tourism and aviation, there are many ways to assist. It can be in the form of loans and grants, reduction in fees and wage support,” Gokongwei said.