First it was the Lopez conglomerate. Now, President Rodrigo Duterte in his usual confrontational manner is zeroing on Philippine Airlines. While it is the government’s mandate to collect debts and the right taxes, there has to be better way of doing so instead of the shock-and-awe style.
Why Duterte brought up the PAL arrears at a public forum was, to say the least, in bad taste. The airline’s management was already trying to reach a deal with the Civil Aviation Authority of the Philippines on a compromise payment. But this is the way Duterte does things. How then can he expect foreign investors to come in or local investors to stay if the President is projecting a government that is anti-business?
Familiar names in business like Antonio Cojuangco and Ramon Ang once owned PAL but gave up because of the multifold challenges that make operating an airline profitable. Even government tried its hand at managing PAL with Roman “Jun” Cruz at the helm but could not turn it around.
The collection notice could have been served in a less abrasive manner. CAAP officials could have delivered the President’s message instead of Duterte doing it all in an intimidating fashion. With our open-skies policy, the airline industry is a highly competitive field. There are not too many who would have the money to buy PAL even if PAL chairman and CEO Lucio Tan puts it on the auction block. Tan should really be commended for staying the course against government subsidized foreign flag carriers. PAL does not get any such subsidy and the government should at least understand the difficulty of staying afloat against such competition.
Why not let PAL pay in three or four tranches instead of adopting a hard line policy of collection? Other companies allow installment payments of delinquent debts. Why not the government? This option is better than not getting paid at all is behind this business concept.
Digong has given the national flag carrier 10 days to pay its P6.63 billion arrears with CAAP, threatening to close down Terminal 2 which is presently exclusively used by PAL. The sanction could include preventing PAL from using the runway for takeoff and landing. PAL built Terminal 2 in 1995 because Terminal 1 was then under repair and the government was still constructing the now-crowded Terminal 3.
“I don’t care if it adversely affects passenger traffic and tourists arrival, the law is the law. Kung walang airport, so what?” snorted Duterte during a speaking engagement at the Philippine Constitution Association Tuesday night.
If Duterte does not care about tourist arrivals but he needs funds for government expenditures, he should then just abolish the Department of Tourism with its high-salaried officials and staff. The DoT has spent a fortune in hiring ad agencies to come up with tourism slogans that don’t work anyway. In a recent report, 39 countries said they are staying away from the Philippines because of the high crime rate and impunity in the unabated killings of drug suspects. The DoT certainly cannot change this global perception of the Philippine with slogans alone.
Bangkok, Thailand with its tourist spots and low crime rate has been adjudged the No.1 preferred tourist destination in the world. The Philippines, on the other hand, is still playing catch-up with its Asian neighbors. Vietnam and Cambodia are getting a better share of tourist arrivals than we are.
Arrears in PAL’s payment are for air navigational fees and use of airport runways.
In a statement issued by PAL management, the airline said it is continuing to talk with CAAP and MIAA officials to reach a compromise agreement on how to settle the arrears.
This is PAL’s statement in full:
In August 2016 , the Civil Aviation Authority of the Philippines sent letters to PAL demanding payment of unpaid navigational charges in the amount of P6.63 billion.
This issue on alleged unpaid navigational fees involves complex legal issues which PAL has been trying to thresh out with the Authority for years. In fact, the same legal issues were the subject of a court case between PAL and the MIAA years back where the court ruled in favor of PAL. Despite the favorable ruling, PAL then opted to settle amicably with the MIAA as a manifestation of its full support to the government.
In similar vein, PAL has earlier manifested its willingness to amicably settle with the CAAP as a manifestation of its support to the Authority. Communications have been open between the parties as regard this matter. In fact, PAL stressed that CAAP created an inter-agency panel of negotiators for the proposed settlement via CAAP order 149-17.
PAL formally submitted its offer to CAAP which is more than the amount covered by the CAAP supporting invoices received by PAL. To date, however, PAL has not received any official response from CAAP on its offer.
“We look forward to meeting the negotiating panel and we are ready to submit a Compromise Agreement to settle this issue once and for all,” said PAL VP for Legal Affairs Clara de Castro.
Yun na naman pala. So why push PAL against the wall ?