A cloudy open skies

is the subject of my Trade Tripper column this Friday-Saturday issue of BusinessWorld:

There’s a line from CNN that goes somewhat like this: "do you go with those who got it right or with those who got it wrong?" Because, frankly, in relation to the ongoing debate on the open-skies policy, do we give credence to those men able to build business empires from scratch, as well as the men and women able to effectively run local airlines for the country, or do we believe the promises of some guy who spent a considerable amount of money just to come up with "Pilipinas kay ganda"? I know what I’d choose.

Look, I don’t know Lucio Tan. I don’t know what he’s like. But I do know what he did and what he did is all around us. From beer to banks to airlines to cigarettes, this is a man who knows business. And when you have guys like that who can actually get things done, I would think we should instinctively help them or their endeavors. Apparently, we’d rather do the reverse.

Because at a time when a lot of people are predicting uncertainties for the global economy this year, with the concomitant unpredictability of our own economy, why we should be making it harder for the Philippines’ very own PAL (as well as Cebu Pacific and Zest Air), at this particular time, is beyond me. We shouldn’t be making it harder for them, we should be helping them.

Considerably, our tourism industry needs more than additional plane seats to get going: they need better airports and an efficient infrastructure. Both of which, we don’t really have. Such also needs careful and coordinated planning. None of which is being done effectively. We have a Category 2 rating from the International Civil Aviation Organization due to deficient aviation infrastructure and safety standards. All these are beyond the purview of local airlines. But they do fall squarely within the responsibility of the government. Traffic, peace and order, pollution, sanitation? These are not the responsibility of the local airlines. These are government’s. So why put the burden squarely on the shoulders of our airlines?

Besides, what does "pocket open skies" even mean? How different is that from a mere open skies? I suspect it’s one of those terms some policymaker cooked up to obfuscate matters, like "calibrated trade liberalization." They have no practical meaning. It’s either you open or you don’t. If one is going to be selective about it, then there better be good reasons for the selection. And if the selection turns out to be opening almost all air travel anyway, then that is not "pocket." That is open skies. Period.

Some people argue from the perspective of the expected benefits of "liberalization." Let’s not be simpletons about this. This column obviously is partial to liberalization. But there’s a difference between being partial and blind. As in all matters, we need to be smart about this. Look, US skies won’t open unilaterally. And it’s done very deliberately. Liberalization entails competition, which entails we step our game up, which means all of us, which means the government and private sector. If one of those factors or players is missing from the equation, then we just made people lose their jobs for no purpose. We can’t just open our skies up and hope that a "trickle down" effect ensues. We simply cannot gamble with people’s livelihoods.

Government assistance is particularly crucial for the airline industry. I don’t know of any successful foreign airline that made it without government support. Aside from airports, infrastructure, security, and safety, government help, particularly in economic crunches, is significant. The ability of the government to open up markets for our airlines is vastly important as well. To open up our skies without getting reciprocity from the other countries is to place an undue handicap for our companies. It’s not only unintelligent, it’s unconstitutional.

Besides, the nature of the market doesn’t seem to support the idea of open skies. People sometimes rail against our airlines for being monopolies, but we may have to accept that a "natural monopoly" may be necessary as far as airlines in the Philippines is concerned. That’s because the market could perhaps support only two or three players. That being the case, I’d rather have those two or three to be Filipinos. It then follows that we support such Filipino airlines as to be able to compete against those better-funded and larger foreign airlines.

The importance of Filipino carriers goes beyond economics. There’s also "transport security" (similar to "food security" arguments), particularly to ensure the safe return of our numerous OFWs during international emergencies. Finally, there’s also national pride. I rather like the idea of having Filipino-owned planes flying around. I like the thought that we have a flag carrier. And, despite (or because of) our difficulties, I’d really like to still be able to lift my head up and see the Philippines soar.