DOT: We need upgrade this year, PTAA: Tourism gains under threat

The travel sector led by Tourism Secretary Joseph Ace Durano recently appealed to the ATO to immediately resolve the FAA downgrade within the year to avoid adverse effects on the industry.

"Definitely, we must get the upgrade (to Category 1 rating) this year so we can move forward and expand by 2009," Durano said.

Under the Category 2 rating, the country’s flag carrier will continue its services to the US and its territories but it is not allowed to increase its 33 flights a week. It is likewise prohibited from changing the type or increasing the number of aircraft used on these routes. The downgrade has also halted PAL’s plans of opening new services to San Diego, Chicago, New York and Saipan.

Durano, however, ruled out any immediate or drastic effect of the FAA downgrade at this time. The national airline’s existing capacity of 900,000 air seats per year from the US to the Philippines is more than enough for the Department of Tourism to get its growth targets in terms of arrivals from the US.

Last year, tourist arrivals from the US reached 578,983. The US is the second largest source of tourists to the Philippines next to Korea.

Jojo Clemente, president of the Philippine Travel Agencies Association (PTAA) echoed Durano’s sentiments on PAL’s strong consumer base of mostly FilipinoAmericans or balikbayans who will continue to patronize it despite the downgrade.

But he argued that this may not be the case during the peak seasons.

"During the peak season, if CAT 2 stays, obviously others carriers will come in to fill the available seats, which will then drive up air fares. This goes for traffic on both sides," Clemente explained.

If this happens, he said, people may just choose to go to other destinations or forgo their travel altogether.

This repercussion, according to him, would translate to loss of business for travel agents that sell tickets to the U.S. and fewer arrivals from there.

"Moreover, it is possible that other regulatory bodies may also look at the Philippines reported safety standards and decide to impose similar downgrades on other Philippine carriers in other destinations. If this happens, we may wipe out some of the gains made by our tourism industry," lamented Clemente, who is also president of Rajah Tours, one of the biggest tour operators and a pioneer in inbound and outbound travel.

He also stressed that the downgrade casts a negative image on the country as a whole, as Philippine carriers and ports are deemed unreliable and unsafe.

To avoid these adverse effects, the country must recover its Category 1 rating within the next 6-12 months.

For his part, Durano reasoned that the most important thing to do right now is not to find blame but to make sure that concerned government entities get this right within the year.

In 1994, when the country was first downgraded to Category 2, the ManilaSeoul-Los Angeles and Manila-Vancouver-New York routes flew on a wetleased MD-11 aircraft from World Airways, a US carrier, in accordance with the restrictions of Category 2.

But under the wetlease agreement, the airline was billed by World Airways for the use of its MD-11, crew, maintenance and insurance costs. After three years, flights to these routes were suspended due to heavy losses incurred from the high wetlease costs.