22 January 2002
Philippine Airlines is employing several means to block the South Korean service of Cebu Pacific, to prevent the entrance of a competitor in this market.
Should CEB be forestalled from operating to South Korea, the significance of Executive Order 219's policy of progressive liberalization would be meaningless. EO 219 states that at least two international carriers shall be designated as official Philippine carriers.
According to CEB, having more than one airline servicing a particular route gives the flying public more choices, better service, and more affordable fares.
The Gokongwei-owned airline likewise stated that should it be allowed to fly only one frequency a week between Manila and Seoul, the airline would not fly at all, because the service will not be a viable venture for any airline.
At present, PAL already has 13 frequencies in existence, plus two of CEB's, which was temporarily “lent” to them by the CAB.
In December 19, 2001, CEB was awarded by CAB three frequencies to South Korea , the result of Air Talks between the Philippines and Korea in the previous month. PAL opposed the negotiations for an increase in frequency entitlements.
In January 11, 2002, PAL “borrowed” two of CEB's three frequencies, which the CAB granted to them only until March 1, 2002 . Now, PAL wants to keep the loaned frequencies permanently, claiming that the Cebu market would suffer should it discontinue its service between Cebu and Seoul .
CEB reiterated that this concern can easily be addressed should PAL re-allocate its existing flights to service Cebu.
“And if it wants to really serve the flying public in general, it must allow Cebu Pacific into the sector and compete fair and square,” Cebu Pacific said. “It should not claim better service and profess nationalistic intents at the expense of its rival.”
In a statement issued by PAL in January 22, 2002 , it has even gone to the extent of misrepresenting facts of the entire issue.
CEB pointed out that its perfected and vested right to the new traffic stems from the failure of PAL to submit a motion for reconsideration 15 days after the frequencies were awarded to CEB. Under Administrative Order No. 1, PAL only had until January 3, 2002 to seek reconsideration, after which, the grant to CEB becomes final. PAL's petition was dated January 9, 2002 . It would therefore be correct to state CEB has having a “perfected and vested right” in the said air traffic.
Also contrary to PAL's statement, CEB did not fail to comply with any of its commitments to use entitlements to Korea.
CEB's July 23, 2001 letter simply stated the airline's intent to mount international operations by October 2001 and listed the countries and capacity offerings in its plan. It did not specify that Seoul services would be started in October.
Though CEB established January 22, 2002 as the start-up operations to Korea , it could not have mounted its flights on the said date as the frequencies were only granted by the CAB on December 19, 2001.
The Board Secretary's certification, a prerequisite in the submission of documentary requirements for the Foreign Air Carriers Permit (FACP) to Korea , was obtained by CEB only in December 27, 2002 . These documentary requirements were submitted by the airline on the same date it received the certification.
However, Korea 's Ministry of Construction and Transportation (MOCT) has a requirement of 60 days for the processing of permits from Korea , which would have been ready by the end of February. Thus March 2, 2002 was established as CEB's start-up date.
PAL's statement failed to mention that an airline's start-up operation is more often than not, dictated by government approval processes. Cebu Pacific's intent to operate the Korea route continues to be resolute and is held back only these official permit requirements for scheduled operations.