THE Civil Aeronautics Board (CAB) said that it will come up with a “fair” policy on air fare caps.
“Rest assured that we will come up with what is fair and what is best for everyone,” CAB Executive Director Carmelo L. Arcilla said during the Philippine Aviation Day.
The agency had a draft resolution which proposed fare bracket guidance for domestic flights, with a 20% ceiling and floor above and below the bracket.
Mr. Arcilla said that CAB is “currently reviewing this issue,” alongside an ongoing initiative in the House of Representatives.
“There is no easy answer. Right now we are looking at freezing for a while the cap, just the cap.”
Philippines AirAsia, Inc., the local unit of AirAsia Group, filed a position paper in September expressing concern over the proposed caps, saying that they “could lead to the demise of smaller carriers and dampen the tourism industry.”
Cebu Pacific (Cebu Air, Inc.) said they will be in dialogue with CAB regarding the matter, but its position is for fare liberalization.
“It also limits our capability to offer low fares, piso fares… What we would like to see is continuation of liberalized environment where we do compete with other carriers,” Cebu Pacific CEO Lance Y. Gokongwei told reporters on the sidelines of a Cebu Pacific launch event.
Mr. Arcilla acknowledged the consequences of regulating lowest and highest fares. “The problem with this is you take away the segment that cannot afford the P2,500, so you narrow down the market base… increase the fares and reduce the number of flights,” he said, referring to the supposed fare ceiling.
The International Air Transport Association (IATA) warned regulators on fare caps.
“We believe prices should be determined by market forces… Putting caps is the best way to distort competition to the detriment of the passenger,” IATA Director General and CEO Alexandre de Juniac told reporters during a press briefing on Philippine Aviation Day.
Mr. de Juniac added that liberalization, which has led to prices decreasing by 77% from 1996 levels, has grown the domestic aviation sector and tripled the number of travelers. – Patrizia Paola C. Marcelo
