EXASPERATED by the government’s inaction on its appeal, the head of Air France-KLM in the Philippines said the only way the government can stop the airline from carrying out its planned withdrawal is to “abolish the common carriers tax and the gross Philippine billings tax on cargo and passenger revenues tomorrow.”
“Once we stop our flights, it will send a signal that doing business in the Philippines is very difficult and no European carrier will fly to the Philippines,” Cees Ursem, country manager of Air France-KLM, said during a telephone interview on Tuesday.
“The airline business worldwide is in a very bad shape,” he said. “We are absolutely not happy and absolutely oppose these taxes.”
The airline’s decision to stop direct flights between the two cities was prompted by the government’s insistence on charging a 3-percent common carriers tax and a 2.5-percent gross Philippine billings tax on cargo and passenger revenues originating from the country.
The same taxes, together with increasing competition from heavily subsidized Middle Eastern competitors, have forced other European airlines out of the Philippine market over the last decade.
Those that no longer fly out of Manila include British Airways, Sabena, Lufthansa, Alitalia, Scandinavian Airlines System, Swissair (now Swiss International Airlines) and Air France.
Starting November 1, Air France-KLM will move from daily flights to six times per week, said Ursem, who had been in the country for the last two years.
And in April 2012, the airline will altogether stop direct flights to Manila and fly via Hong Kong instead before landing Manila.
“Then we resume daily operations again via Hong Kong,” he said, adding that this move will decrease the number of European passengers going to the Philippines. It will also affect its crew accommodations for local hotels, since the airline’s crew will spend their layovers in Hong Kong.
“We use 11,000 rooms in Manila per year but that will all be gone,” he said.
Ursem is puzzled that despite European carriers extending help to local carriers, their plea to abolish the taxes had fallen on deaf ears.
“We have been extending help to Philippine Airlines in providing training, so much money had been given to the Philippines,” he rued. “Now for the first time in all those years, we’re knocking on the doors of the Philippine government to help us, since all our requests for abolishing those taxes had been ignored.”
Ursem said the taxes have been levied since 1997 and because of that, seven European air carriers had ceased flying out of Manila.
He said the taxes are “especially harmful” to airlines flying long distances just to reach the Philippines, what with the high cost of aviation fuel.
“The taxes are levied over the value of the ticket,” he said, adding that European carriers pay the maximum price, regional carriers pay far less and Philippine carriers do not pay the taxes at all.
Told that Transportation Secretary Manuel Roxas II has said he would talk to the airline, Ursem said he had heard many promises before from the government bureaucrats, but all of them to no avail.
“I have talked to [former Finance Secretary Margarito] Teves. [Finance Secretary Cesar] Purisima, [Rep. Ermilando] Mandanas, [House Speaker Feliciano] Belmonte, [former Tourism Secretary Alberto] Lim, (former Tourism Secretary Alberto] Lim, [former Customs Commissioner Angelito] Alvarez, [Executive Secretary Paquito] Ochoa,” he said.
He said he also wrote to President Aquino.
“How many more letters do we have to send? Who is solving our problem? Nothing happened,” he said. “We made it clear, if you don’t help us, we will make the action.”
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By: Recto Mercene
Source: Business World, October 18, 2011
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