Local airlines’ recovery may not be easy without government help

MANILA, Philippines — Local airlines are at risk of being the last to recover among their peers in the region due to a lack of government support.

Philippine Airlines, Cebu Pacific, and AirAsia Philippines are all still far from being out of the woods as they continue to lose money due to dismal demand amid the pandemic.

“Once our region recovers, our competitions will be the first to recover because they receive money,” Air Carriers Association of the Philippines (ACAP) executive director and vice chairman Roberto Lim told The STAR.

“So where are we going to end up if all of the competitions were able to get money?” he said.

The country’s aviation industry has received P800 million worth of benefits in the form of waiver of navigational fees under the Bayanihan 2 Act, which expired last June 30.

The amount is considered small compared to those extended by governments in neighboring Asian countries, as well as in Europe and US, which according to Lim have provided “a lot more cash support and guarantees early on.”

“Always remember, our neighbors all got money. They had cash infusion, they were given loan guarantees, and they were also given new loans. We do not have those,” Lim said.

“And yet, the airline industry has been able to survive, but in a hard way. They were forced to cut their workforce. It entailed a lot of sacrifices from everybody – the owners, managers and employees,” he said.

Lim said the local airlines’ road to recovery would be easier if the government would provide the industry more support in the form of loans or even loan guarantees.  “So we wait. Hopefully, attention will be given to us,” he said.

Aside from the long-requested loan guarantees, ACAP is also seeking an extension of the waiver of airport fees up to December.

In a statement last April, International Air Transport Association director general Willie Walsh said the government plays a definite role in providing relief measures to ensure that critical employees and skills are retained. He said critical employees and skills are vital in the success of restarting and rebuilding the aviation industry.

Walsh said while some airlines appear able to ride out the storm due to government relief measures, cost-cutting and success in accessing capital markets, others are less well-cushioned and may need to borrow more money from banks or capital markets.