Washington, Feb. 24, 2003 - The Philippines is not yet ready to fully open its skies to United States aviation traffic. It is seeking to extend for the next 15 years the deferment of the full open skies agreement it signed with the United States in 1982.

First deferred in 1995, the open skies provision of the bilateral air agreement is due to take effect after Sept. 30, 2003 - unless both countries mutually agree to roll it back.

The Philippine air transport panel that held negotiations here Feb. 20 and 21 told US counterparts that the country cannot compete profitably under an open skies agreement that kicks in under the current downturn of the airline industry.

The Philippines also wants US cargo shippers doing business in the country to give a portion of the cargo market in the Asia-Pacific region to Philippine air cargo companies.

The panel headed by Transport Undersecretary Arturo Valdez also asked the US to allow Philippine passenger airlines to do more business in the US domestic market by giving them new route rights and allowing them to pick up passengers in third countries.

Under current terms of the air agreement, the US has the upper hand in the open skies privileges. Its airlines operate in the Philippine freely and pick up passengers within two hours flying time from the Philippines to other points of destination in the Asian region. No such freedom is enjoyed by the Philippines in the US and its neighborhood.

The US panel headed by Laura Faux-Gable of the State Department could not be reached over the weekend for comment.

But sources close to the negotiations said the US panel has resisted the Philippine requests and preferred to study them instead.

The bilateral aviation talks have started to take place at a time when the world's airline industry is taking a beating from the impact of Sept. 11. Airlines around the world, including those of the Philippines and the US, are limping along with reduced traffic, travel constraints and the threat of bankruptcy. US cargo shippers such as FedEX and UPS are the only ones making a profit in the air shipment market but still the market is bleak for aviation commerce.

The negotiations took place in "a frank and candid" manner, said Valdez but the Washington talks are significant as they occasioned a new development in the Philippines' negotiating strategy.

Philippine Airlines president Avelino Zapanta called the Philippine panel's strategy "a new move to put forward bold initiatives" to level the playing field for mutually beneficial air commerce.

"We're not saying we are disappointed in the outcome of this new round of talks," said Valdez. "You cannot wrap up anything in one session. What we're doing is to work for reciprocity and equality of opportunities."

Both countries noted in a joint statement at the end of their talks Friday that the Philippines has concerns regarding "the balance of opportunities."

The two countries signed in 1982 a bilateral air agreement that went into negotiations in 1995. Both countries agreed to opens skies but "only the US has been enjoying that right in the Philippines," a Philippine panel adviser noted.

"There has been no reciprocity for the Philippine air industry in US skies," the adviser said. "And in Philippine skies, not even crumbs are given by the US to our air cargo industry."

No agreement has been reached in Washington during the talks last week except to "review individually respective positions and to continue contract via diplomatic channels," the joint statement said.

Both countries agreed to meet again in the Philippines before the September 2003. (Mercedes Tira Andrei, PNA)

Reported by: Sol Jose Vanzi

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