Struggling Philippine Airlines is fighting to retain its share of the cargo market as it starts to suffer under the impact of the government's liberal air services regime.
Reportedly heading for a US$65 million loss in its current financial year, the carrier has appealed to the Civil Aeronautics Board to cancel cargo authorities awarded to Hong Kong's Cathay Pacific and Taiwan's China Airlines, claiming they are siphoning off cargo business to the US and Europe through sixth freedom operations.
PAL has been under pressure on the cargo front since early this year when Manila brokered a new bilateral with Washington, which gave US carriers virtual open skies in the freight sector. The airline has released no figures, but it is understandably having difficulty competing with the might of its US rivals' large cargo networks.
With little hope of changing Manila's mind on its agreement with the US, PAL has rounded on Cathay and CAL. In a submission to the CAB, PAL chief financial officer Jaime Bautista highlighted that CAL's once weekly Manila-Taipei freighter service, launched in May, has same day connections to New York, Los Angeles, and Luxembourg and next day connections to Chicago, Dallas and San Francisco.
'Such carriage of sixth freedom cargo compete not only with PAL's Philippines-Taiwan but mainly with the Philippines-US and Philippines-Europe cargo operations as well,' Bautista argued.
PAL has been seeking rights to operate cargo services between Subic Bay and Taiwan for some time, but Taipei has refused to give its approval. Bautista says the Taiwanese are exceeding maximum capacity entitlements under the two countries' air service agreement. CAL's weekly freighter service lifted Taiwanese capacity on the route above the agreed equivalent of 21 Airbus A300 services to 21.5, including the services of Taiwan's other major EVA Air, according to Bautista.
PAL is clearly also concerned about the leakage of freight business through Hong Kong and the inequality of opportunities. Cathay operates four cargo services a week between Manila and Hong Kong using passenger aircraft, although they carry no passengers under a voluntary capacity restriction approved by the CAB. 'On the other hand, PAL has not been allowed by the Hong Kong Aviation Department to operate flights under voluntary capacity restrictions when it needs to, so that PAL can have maximum operating flexibility in deploying different types of aircraft while still complying with the bilateral,' PAL complains.
The Philippine carrier believes the least it should expect is the same flexibility that Cathay Pacific enjoys in its operations to Manila.
Tom Ballantyne
Source: Airline Business
