The International Air Transport Association (IATA) has urged the Philippine government to train its focus on addressing the more urgent matter of airport infrastructure rather than entertaining proposals to increase aviation taxes in the form of a tourism tax and Green Fee.
“Aviation is vital to the Philippines. It supports 1.2 million jobs and US$9.2 billion in GDP…But the social and economic benefits of air transport are at risk if the key issues of airport infrastructure, excessive regulation and taxation are not addressed,” said IATA Director General and CEO, Alexandre de Juniac, during the Philippine Aviation Day in Manila.
The capital’s main aviation hub – Ninoy Aquino International Airport (NAIA) – was designed to handle 30 million passengers but instead is forced nearly 40 million passengers.
“There is an urgent need for an airport masterplan to accommodate the growing demand for connectivity,” said de Juniac.
Top priorities should therefore be to realize proposals to improve the runway and terminal capacities at NAIA; continue developing the Clark International Airport as a secondary, not primary, airport for Manila; and decide on an area within reasonable proximity of metropolitan Manila area where a two-runway airport could be established and subsequently expanded.
“There is no time to lose – every landing that cannot be accommodated is lost money and opportunity for the Philippine economy. Siting, designing, building and financing a new airport and the connecting infrastructure can easily be a 10-year project. Even the most aggressive possible incremental capacity expansion plan of NAIA will not be able to adequately cope with the growing demand,” said de Juniac.
Unnecessary regulation also needs to be properly addressed, with de Juniac pointing out new consumer protection legislation in the Philippines that would cap air fares, prohibit overbooking and impose onerous consumer protections extra-territorially.
“Aviation is competitive. Airlines offer a wide variety of fares at different price points to satisfy consumer needs. Introducing government imposed fare caps would likely have the unintended consequence of reducing deeply discounted fares,” de Juniac explained.
IATA reiterated that while the industry backs consumer protection in line with the world’s standards and smarter regulation principles, what is being planned in the Philippines is askew and clearly oversteps its bounds. The Montreal Convention and ICAO’s principles for consumer protection are the model to follow, IATA pointed out.
With regards to the Philippines’ proposed tourism tax, de Juniac had this to say:
“Short-term budget gains quickly disappear when tourist arrivals drop. The government should focus on making wise investments in the tourism infrastructure that will encourage people to visit. The extra tourist dollars you attract will pay for the investments and make a greater economic contribution.”
The proposed Green Fee was also described as misguided. Governments through the ICAO have consented to a global approach to climate change based on advancements in technology, infrastructure and operations, while there is already an agreed Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).
“The cause of sustainability is best served by the Philippines supporting this global approach and volunteering to participate in CORSIA,” said de Juniac.
De Juniac asserted that officials should take on smarter regulation principles when developing the regulatory framework. These include recognizing global standards, focusing on solving urgent issues, being able to pass rigorous cost-benefit analysis and being transparent without distorting competition.