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MANILA, Philippines – The country’s three largest airline groups are asking lawmakers for financial aid of roughly P8.6 billion per month, including wage subsidies, as they prepare to restart operations amid uncertain demand.
The Philippine Air Carriers Association (Acap), whose members have been bleeding billions of pesos after the travel bans and the closure of Luzon, appealed for help during an online Senate hearing on Monday, saying it expected the losses will continue until 2020.
Philippine Airlines (PAL), Cebu Pacific and AirAsia Philippines and their subsidiaries comprise Acap.
The hearing, chaired by Senator Grace Poe, was the first act of the Senate conducted via online video conferencing after the camera adopted new rules for observing security protocols amid the coronavirus pandemic. Acap’s request for financial aid consisted of P1.3 billion in salary subsidies, According to its vice president, Roberto Lim, P6.8 billion in working capital and P500 million in navigation and airport charges paid at the gates of link around the Philippines.
Gateways include Ninoy Aquino International Airport, Clark International Airport, and Mactan Cebu International Airport.
Lim said the airline industry employed about 25,000 workers and supported thousands more by counting partner industries, such as the severely affected tourism sector.
The Acap official pointed to figures from the International Air Transport Association, which estimated Philippine airlines and tourism losses at $ 4.48 billion, while job losses could reach 548,300 this year alone.
He said the recovery would be slow as consumer confidence in air travel was affected amid the coronavirus pandemic.
“The projection that local operators have for this year is that we will be able to resume only 20 to 30 percent of our original network in terms of capacity and destinations,” Lim said.
Physical distancing
When asked by Senate President Pro Tempore Ralph Recto how physical distancing that would reduce passenger load by 50 percent would affect carriers, Lim replied that the scheme would not be economically viable “because the minimum [passenger load] of airlines is 70 percent. “
Acap raised the issue of financial support to the Department of Transportation, the Department of Finance, the Department of Tourism, the Department of Commerce and Industry and the National Authority for Economy and Development in a letter dated March 25.
Calling the COVID-19 pandemic an “existential threat” to the aviation sector, Acap also asked the government for debt guarantees, six-month emergency credit lines in addition to long-term loans with low interest rates and an exemption from navigation and airport charges. . These charges are currently being deferred.
PAL and Cebu Pacific have cut nearly 500 jobs since March. 1Aviation Groundhandling Services Corp., an aviation support company whose main customer is Cebu Pacific, laid off 400 employees in early April.
Aid is not “aid at the expense of Philippine taxpayers,” but access to working capital, as airlines have ongoing expenses while the main sources of revenue have evaporated, Acap said in his letter.
Suspend rates
At the hearing, Poe said the government should consider suspending the collection of some of the mandatory fees imposed on airlines to help them recover from the health crisis.
“We need to see a comprehensive proposal to ensure that any lifeline will be used directly to shore up the industry,” Poe told the Investigator in a message from Viber.
“We are confident that any help provided to the airline industry will primarily support Filipino workers and ensure that they remain employed as we overcome this crisis,” he said.
Responding to a query from Recto, Lim regretted that prolonging the flight ban in the country’s main cities would result in further losses for the aviation sector.
The Acap vice president said that different policies implemented by local governments would increase the burden on airlines, as this could lead to a longer suspension of domestic flights.
“If we are going to move to a scenario where restrictions will be relaxed, we believe there are still other challenges because the [local governments] they do their own risk assessment on whether to open their individual cities and municipalities to passenger flights, ”Lim said. INQ
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