Airlines need more revenues to avoid further job cuts

MANILA, Philippines — Local airlines are in dire need of more revenues to avoid another round of job cuts, according to a local airline official.

A local airline official who requested anonymity told The STAR that Philippine carriers “may be forced to make another round of painful job cuts if passenger revenues do not see significant improvements by next year.”

The official said airline revenues may have been improving in recent months, but not in a “satisfactory pace.”

Philippine carriers consisting of flag carrier Philippine Airlines, Cebu Pacific, and AirAsia Philippines have each undertaken their respective right-sizing initiatives this year to preserve cash as losses mount due to travel restrictions brought about by the COVID-19 pandemic.

Roberto Lim, executive director and vice chairman of Air Carriers Association of the Philippines (ACAP), told The STAR that it is imperative to open domestic air transport to help local airlines.

He said local government units (LGU) need to adopt a single uniform policy, and remove a 14-day quarantine if the passenger is tested negative before departure.

“People are having more confidence to travel. LGU policy and outlook should relax also,” Lim said.

“The opening of the domestic air transport will allow revenue to come in and support airline activity. The more revenue the less pressure on the operating costs of the airline,” he said.

According to Lim, the domestic air sector is just around 16 percent to 20 percent of pre-COVID traffic levels at present, while domestic air travel in other countries in Asia Pacific have already reached between 40 percent and 70 percent.

The International Air Transport Association (IATA) in its revised estimates for the Philippines in June said that  570,000 jobs, including those supported by aviation, are at risk in the country.

The figures showed a significant jump from the April and March estimates of 548,300 and 419,800 potential job losses, respectively.

Similarly, airline revenue for the Philippines market was seen  decreasing by $4.63 billion this year, with passenger demand expected to fall by 49 percent.

In the nine-months ending September, revenues of the three local airlines have plunged significantly as a result of the lockdowns.

PAL’s consolidated revenues during the nine months ending September fell by nearly 62   percent year-on-year to P45.29 billion, while that of Cebu Pacific plummeted by 70 percent to P19.34 billion.

AirAsia Philippines, for its part, posted a 94-percent drop in revenues in the third quarter to P370 million from P6.23 billion in the same three-month period last year.

ACAP has appealed for government assistance in the form of long term credit facility, working capital credit lines, credit guarantee arrangements, and temporary relief from navigational and airport charges.

Under the Bayanihan to Recover as One Act (Bayanihan 2), the Department of Transportation said local airlines would get P821-million worth of relief from the government in the form of waived airport fees.

Of the amount,P469 million will be allocated for the Manila International Airport Authority, which operates the Ninoy Aquino International Airport, while P300 million and P52 million would go to the Civil Aviation Authority of the Philippines and the Mactan-Cebu International Airport, respectively.