Passenger bill of rights being drafted

Government now has the unenviable task of balancing the interests of budget airlines, which employ thousands of workers and invest billions of pesos every year, and the rights of passengers—many of whom have complained of alleged abuses by local carriers.

Earlier this month, the Department of Transportation and Communications (DOTC) announced the formation of a technical working group (TWG) to craft a new passenger bill of rights that seeks to address the growing complaints against budget carriers.

“A vibrant airline industry is essential to our economic well-being,” said Carmelo Arcilla, executive director of the Civil Aeronautics Board (CAB).

“But that does not mean that we will sacrifice the comfort and convenience that the public deserves,” Arcilla said in a recent interview. “When you engage in a public utility undertaking, you assume a duty to the public,” he said.

He declined to give details, but assured that definitive steps were being taken to ensure that consumer rights are better protected.

“The primordial purpose of airlines is to benefit the public. This duty is paramount to business interests,” he said.

The creation of the TWG was announced along with a set of new measures aimed at reducing congestion at the Ninoy Aquino International Airport in Manila, focusing mainly on better distribution of flights throughout the day.

The TWG is made up of representatives of the DOTC, the CAB, the Manila International Airport Authority and the Department of Trade and Industry.

Arcilla said the TWG was seeking to address “birthing pains” that go with the rapid growth of budget airlines.

“The low-cost carrier model is a phenomenon sweeping the whole world. Of course there will be birthing pains when you grow this fast. Infrastructure will be overtaken and discomforts will be encountered,” he said.

However, local airlines have warned against measures that could end up choking the industry that has helped drive economic development over the past decade.

“We don’t want to come up with something that would strangle the growth of the airline industry,” said Candice Iyog, Cebu Pacific vice president for marketing and distribution. “We will support efforts to come up with a fair bill of rights,” she said.

Overly restrictive rules, she said, could lead to the loss of the country’s gains due to the growth of budget airlines.

“The industry has grown faster than any other industries around the region. The airline industry has grown 17 percent annually for the past five years, which is pretty fast relative to other markets,” Iyog said, adding that most of this growth should be attributed to budget carriers.

The growth of budget airlines has been a boon for most of the country, but a bane for some, particularly the passenger shipping sector.

Data from the Philippine Ports Authority show that the number of passengers who traveled by ship in the second quarter of 2011—the latest period for which data were available—dropped by 6.5 percent from a year earlier due to competition from budget airlines.

The growth did not come from rising income levels across the country. Instead, Iyog said the growth came from more and more people in lower income brackets who were able to afford air travel—a luxury previously reserved for the wealthy.

Marianne Hontiveros, CEO of industry newcomer AirAsia Inc., said too much of the blame was being directed at airlines.

“The complaints, from what I hear, have to do more with delays, ‘nonrefundability’ of unused tickets and overbooking. On the delays, there’s not much that airlines can do about it in most situations,” she said.

“It’s easy to focus on the airlines but there are other factors in it,” she said. “If you did not have Cebu Pacific, and now us, I don’t think the aviation industry would be as robust as it is,” Hontiveros added.

“If you make the environment too restrictive, you will discourage airlines from investing and everybody loses,” she said.

One such restrictive rule being drawn up is the proposal to ban overbooking of flights. The CAB did not confirm the existence of the rule, but Cebu Pacific said overbooking was an industry norm that was vital for budget airlines that operate on slim profit margins.

“We are filing a motion for reconsideration against that draft. Our problem is, if that rule is passed, we would be forced to compete with international airlines that will still be allowed to overbook their flights,” Iyog said.

She said the guidelines that the TWG would come up with should be benchmarked with regulations in other Asia Pacific airline markets that have been growing at a pace similar to that of the Philippines. Paolo G. Montecillo