Cebu-Doha flights’ suspension worries local business leaders

Business leaders in Cebu  appealed to the  national government to amend   policies that would enable international carriers to operate profitably in major destinations such as Cebu.

The appeal was made after reports that  Qatar Airways would suspend its Cebu-Doha flights by March 26 because of high fuel prices and high operations cost making the route no longer profitable.

Among the changes being lobbied is the removal of the  Common Carriers Tax (CCT) of 3 percent and the Philippine Billing Tax (PBT) of 1.5 percent to 2.5 percent depending on the tax treaty we enjoy with the country of the foreign carrier, said Gordon Alan “Dondi” Joseph, Cebu Business Club president.

“These are applied to outbound flights until their final destination thereby greatly affecting their revenues on long haul flights.”

Joseph said  the tax issue, cost of fuel, problems with the aged radar flight control system and the failure of the Philippines to adhere to ICAO or International Civil Aviation Organization requirements all contributed to these  unfortunate developments.

“Of course, these  affect tourism and  resulting revenues. To achieve the new goal of 10 million (tourists) by 2016, all these issues need to be addressed as soon as possible,” said Joseph.

Hans Hauri, president of the Hotel, Resort and Restaurant Association of Cebu (HRRAC), agreed with Joseph.

Hauri called on the Department of Tourism to intervene so that the new tourism goal would be achieved.

“I believe it is a combination of factors that pushed QR (Qatar Airways) to that decision: the uncertain fuel price developments, the low cargo revenues, the low yield from business-class, the CCT and PBT. What appears offensive is that a bi-lateral air agreement has come to waste and no other carrier can fill this void,” said Hauri.

Hauri said that the development may  have negative impacts on Cebu’s summer tourist season especially since Cebu-Doha Qatar flights was a  gateway for Cebu’s European market.

“HRRAC appeals to QR management for  reconsideration as we need their service for our connection to and from Europe. Traffic via Manila is not a desirable option. DOT must intervene to reach our goal of foreign arrivals of over 4 million for 2012,” said Hauri.

Joseph said  the Department of Finance under the leadership of Secretary Cesar V. Purisima already agreed to remove the 3 percent Common Carrier Tax but the remaining Philippine Billing Tax of 1.5 percent to 2.5 percent would have to be addressed through letters of intent and agreements with our tax treaty partners.

“The challenge now is to get these amendments through before Congress goes into recess. The CBC with  our coalition of business clubs has already begun to assist in lobbying for these congressional amendments and we will be asking  Cebuano legislators to sponsor these amendments,” said Joseph.

“I understand, too, that P-Noy (President Benigno Aquino III) will be sending a letter to Speaker Belmonte to express the urgency of the matter,” he said.

Other business leaders and tourism stakeholders  reinforced the  appeal for  government action.

“This (development) will  affect businesses in Cebu since QR serves major markets through Middle East which caters to our OFWs (overseas Filipino workers) and Europe. QR has also provided us access to South America. We need government consideration,” said Samuel Chioson, Cebu Chamber of Commerce and Industry president.

Jay Aldeguer, Islands Group president and chief executive officer, said  the suspension of  flights by QR from Cebu-Doha would be a big blow to tourism in Cebu.

“While I know Cebu is resilient and will be able to cope with the setback, it’s really high time that we have a more integrated tourism plan if we truly want to be a world-class destination,” said Aldeguer.