WASHINGTON, September 24, 2003  (STAR) By Jose Katigbak  (Washington Bureau) With neither side able to take advantage of the opportunity, the lifting of a cap on the number of flights that Philippine and US airlines can mount in either direction is being greeted with apathy by airline industry officials here.

Unable or unwilling to fill the 36 weekly flights currently allocated to each because of a depressed industry and low passenger demand, the officials said the last thing either side wants to do at present is increase frequencies.

Under a 1982 RP-US air transport agreement, the provision for more flights has been deferred five times owning to Manilaís insistence its carriers cannot compete on an even footing with US airlines. The provision is due to automatically come into effect on Oct. 1 unless both sides agree to a further postponement.

At a meeting in Manila in July the Philippines wanted the provision postponed again for 15 years to give local carriers more time to compete effectively.

A US government official who asked not to be identified said the American delegation was willing to agree to this in exchange for additional benefits such as code share rights for both sides, but the Philippines was unprepared to discuss this so the negotiations broke down .

Under code share rights a US airline for example can offer a flight in its own name to the Philippines, but another airline from the same country or a third country will provide some or all of the service.

Although the cap on flight frequencies will be lifted on Oct. 1 other provisions in the air treaty such as limits on routes and the number of carriers each side can use will remain in place, the government official said, adding "there will be a change on paper not a change in the real sense of the word."

"While we are seeking a general liberalization in air transport, we are not presently seeking a full open skies agreement," the official said.

The US Department of Transportation defines "open skies" as including among others, open entry on all routes, unrestricted capacity and frequency on all routes, unrestricted route and traffic rights, liberal cargo, charter and pricing rules and open code-share rights.

The US position is that it is up to the Philippines to ask for a renegotiation this time around as it was Washington which had asked for the failed July talks. Manila has so far made no effort to revive the negotiations, and given the limited time remaining before Oct. 1 it seems unlikely it will do so.

Asked who would benefit in the long run from an increase in flight frequencies, the source said "it is difficult sitting here to project what will happen two, three years from now."

"While American carriers have global reach they canít serve every market all of the time. They have to pick and choose," the official said.

For instance when the time comes that they are able to increase frequencies to the Philippines but the markets in say Hong Kong or Kuala Lumpur are more lucrative they could place more emphasis on these places, the official added.

Asked if the issue of open skies would come up at the Association of South East Asian Nations summit in Bangkok in October, the official said: "We have been raising with all countries that are ASEAN members our interest in expanding air rights bilaterally or multilaterally so we dealing with everyone."

Reported by: Sol Jose Vanzi

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