By Arjay L. Balinbin
LOCAL AIRLINES are appealing for government help, as the “catastrophic impact” of the coronavirus disease 2019 (COVID-19) pandemic threatens their survival.
“The Philippine carriers are facing an existential threat to their survival which is faced by other airlines in the region and in other parts of the world,” the Air Carriers Association of the Philippines (ACAP) said in a March 25 letter addressed to the heads of the Departments of Transportation, Finance, Tourism and Trade, and the National Economic and Development Authority.
The group, composed of Philippine Airlines, Inc. (PAL), Cebu Air, Inc. (Cebu Pacific), Philippines AirAsia, Inc., Air Philippines Corp. (PAL Express), and Cebgo, Inc., emphasized that they are not seeking a “handout” at the expense of the taxpayers but only want to have ready working capital to allow them to restart and continue operations.
“Given these extraordinary times where the survival of the domestic airline industry is at stake, ACAP member airlines urgently appeal… for timely government intervention which is indispensable if Philippine aviation will have the capacity to resume its vital role of connecting people for trade, commerce and tourism,” ACAP said.
ACAP said its member-airlines temporarily shut down passenger operations until April 14 after Luzon was placed under enhanced community quarantine (ECQ). Over 30,000 flights were canceled, affecting nearly five million passengers.
Airlines are now unable to generate revenues in the next few weeks or even months, while banks have tightened credit lines.
ACAP asked the government to provide a credit guarantee scheme “that guarantees the banking sector’s loans and credit lines, most of which are secured with collateral, to remove its aversion to the poor credit risk of the airline industry under the present operating environment.”
The group also requested the government to give them access to emergency lines of credit to fund six months of operations of airlines and other aviation-related companies, “in order for the industry to remain viable until overall demand recovers.”
“We request that upon the lifting of the ECQ hopefully by April 14, uniformity in aviation transport regulations would be implemented in the entire country, and that LGUs be mandated to align with National Government,” it added.
To ensure airlines successfully recover, ACAP said they need a “long-term facility with attractive rates or a guaranty facility to allow them to restructure their debt at manageable levels, and secure better terms from aircraft lessors, bankers and creditors.
Lastly, the local airlines sought a full waiver of all navigational and airport charges, which include airport office rentals and land leases, until the end of 2020.
“ACAP member-airlines assure the government that these financing will be used for legitimate business stabilizaton purposes with the corresponding corporate governance in place,” the local airlines group said.
Sought for comment, Finance Secretary Carlos G. Dominguez III told BusinessWorld in a mobile phone message that they “will ask the BSP (Bangko Sentral ng Pilipinas) to support the banks that support their clients, including airlines.”
Transportation Assistant Secretary Goddes Hope O. Libiran, speaking for Transportation Secretary Arthur P. Tugade, said in a mobile phone message that ACAP’s request will be discussed during a meeting of the Inter-Agency Task Force (IATF) for the Management of Emerging Infectious Diseases.
The International Air Transport Association (IATA) last week said without government support, up to 50% of global airlines face possible bankruptcy in the coming weeks. IATA estimated revenue losses from the COVID-19 crisis to reach over $250 billion this year.
Earlier, the Australia-based Center for Asia Pacific Aviation (CAPA) has said airlines in Asia-Pacific countries, including the Philippines, will be the most badly affected by the COVID-19 pandemic.