The Economic Impact of the Open-Skies Policy

Villagarcia, Ma. Camille

28 Jun 2011

Outline

• What is Open Sky Policy?

• Open Skies Policy in the Philippines

• Economic Benefits– Tourism– Trade– Investment

• Conclusion

What is Open Sky Policy?

• International agreement between 2 or more countries allowing passenger and cargo planes to fly over an area without restrictions

• Aims to promote:– Free market competition– Cooperative marketing arrangements– Competitive pricing

Some Countries w/ Open Skies Policy

Open Skies Policy in the Philippines

• E.O. No. 219 (3 Jan 1995)

“The exchange of traffic rights and routes with other countries shall be based on (a) the National Interest which shall include value for the Philippines in terms of promoting international trade, foreign investments and tourism, among others; and on (b) the reciprocity between the Philippines and other countries. Reciprocity shall be interpreted to mean the exchange of rights, freedoms, and opportunities of equal or equivalent value. The Civil Aeronautics Board (CAB) shall determine "national interest" taking into consideration the larger interest of the country, especially the users of air services.”

• Limits coverage to major airports (Ninoy Aquino International Airport)

Open Skies Policy in the Philippines

• E.O. No. 500-A (22 Aug 2006)

“Any provision of Executive Order No. 219 (Series of 1995), Executive Order No. 32, (Series of 2001) and related issuance to the contrary notwithstanding, the Civil Aeronautics Board (CAB) shall process within thirty (30) days from receipt all applications for international passenger transportation services to DMIA and SBIA, in accordance with the CAB’s current and applicable rules, regulations and procedures”

• grant of unlimited 3rd & 4th freedom rights to foreign air carriers operating in the Diosdado Macapagal international Airport (DMIA) and the Subic Bay International Airport (SBIA)

Open Skies Policy in the Philippines

• E.O. No. 29 (14 Mar 2011)

“In the negotiation of the ASAs, the Philippine Air Panels may offer and promote third, fourth, and fifth freedom rights to the country’s airports other than the Ninoy Aquino International Airport (NAIA) without restriction as to frequency, capacity and type of aircraft, and other arrangements that will serve the national interest as may be determined by the CAB.”

• Foreign carriers may now fly / operate in any airport in the country

• Prohibits “cabotage”

Open Skies Policy in the Philippines

• E.O. 29 was written and signed to:a. Promote domestic tourism

b. Promote investment, trade, and employment generation

c. Spur competition in the Philippines aviation industry

d. Enhance the competitiveness of Philippine domestic carriers

Economic Benefits

• Tourism

• Trade

• Investment

Tourism

Tourism

Trade

• for every foreign tourist who comes to the Philippines, an average of $1,000 is spent and one direct or indirect job is created

Employed Person by Major Industry Group

Investment

Conclusion

Is the Open Skies Policy beneficial to the Philippines?

The Economic Impact of the Open-Skies Policy

Villagarcia, Ma. Camille

28 Jun 2011