MANILA, OCTOBER 1, 2003  (BULLETIN) By Emmie V. Abadilla  - Restrictions lifted as tough talks end without agreement.

The "Open Skies" regime between the Philippines and the United States takes effect today, Oct. 1, after two decades of being postponed.

Two rounds of tough talks this year failed to produce an accord on extending the postponement.

In reality, the two countries are still on a stalemate although under the 1982 treaty, the "Open Skies" provisions take effect in the absence of an agreement between the Philippines and the US.

The current capacity restriction, set at 36 flights per week between the two countries, expired yesterday. Without an agreement, there will be no more restrictions between the two countries on frequency. However, the restrictions on the number of carriers, chartered flights, pricing, and codesharing remain and the routes do not change, as American transport officials themselves pointed out earlier.

To a certain extent, the assertion of US Ambassador Francis Ricciardone that "nothing" would happen after the Oct. 1 deadline is true, Philippine Airlines President Avelino L. Zapanta confirmed.

"Today, US carriers will not suddenly flood the Philippines with flight frequencies and capacities," he said. After all, today, US carriers are entitled to fly to the Philippines 36 times a week yet they fly no more than 14 times weekly. The US carriers have not yet fully recovered from Sept 11, 2001, and at present, the global aviation market remains depressed."

However, he stressed that the present situation is misleading and the original "Open Skies" policy signed by the late President Ferdinand Marcos under American pressure and without public consultation, is outdated and lopsided in favor of the US.

"We want true open skies," Zapanta said. "It should be open and unlimited, with no restrictions and limitations. As it is, it's one way (in favor of the US), with no third and fourth freedom. In the US, Philippine carriers will be limited to 9 points within US and 5 points beyond US, while the US carriers can fly anywhere beyond the Philippines from Japan down to Australia, all the countries and cities in between. US airspace should be unlimited and unrestricted to us, even domestic flights must be open, like what the European Union is asking for."

Deregulating the skies between the two countries was supposed to eliminate all government restrictions on the international economic decisions of airlines and allow the carriers of both countries to make decisions on routes, capacity and pricing without government interference and fully liberalize conditions for charters and other aviation activities including unrestricted code-sharing rights.

But the Philippines is being offered a "pseudo" deal, Zapanta argued. "There can be no truer and more real open skies than access to, through and within each other's skies. This provides the greatest extent of air liberalization between our two countries." "After today (October 1), many inequities in the treaty will remain in place and more. Worse, the US has new demands that will add to its already formidable advantages," he said.

The Americans insist on so-called seventh freedom rights for their cargo carriers to legitimize the latter's legally questionable operations at Clark and Subic airports.

They are also demanding generous code-sharing rights on the trans-pacific route for their airlines, allowing them to assign such privileges to favored US and even third-country carriers at the expense of Filipino carriers.

Philippine negotiators sought to accommodate the demand on the 7th freedom via a creative solution during the July round of talks in manila but we were rebuffed when the US insisted on an all-or-nothing categorical declaration in the treaty - a move at odds with a Constitutional provision.

On the broader issue of open skies, Zapanta called on the US to recognize what the 25-nation EU and other countries have long pointed out that the US domestic skies must be open to foreign competition for the concept to have any real meaning. "The trouble with the US brand of open skies is that it wants to open three fourths of the existing air traffic of the world and at the same time keep the remaining one fourth represented by its domestic market to itself," Zapanta quoted a European analyst as saying.

He cited the reality that today's aviation world had become a series of competing geographic blocs defined less by national boundaries than by airline economics. For example, in negotiating air rights with the US, the EU is considered one country, with flights between France and Germany, for example, classified as a domestic service.

In the same vein, Zapanta noted, East Asian states should be regarded as one aviation bloc. "If US carriers have the right to carry passengers between Manila and Hongkong, as they do now, Philippine carriers must have a reciprocal right of equal value to carry traffic between Los Angeles and Las Vegas."

"The only way to a fair trade in aviation is to open up the U.S. domestic air market to foreign competition in the same manner that the domestic air markets of Europe, Asia, the Middle East and Africa are open to everybody. That is true and real open skies." Senate has voiced opposition to the open skies policy and has started hearings before the negotiations. But todate, there was no official report on the policy.

"We understand the labor unions and Non-government Organizations, such as the Fair Trade Alliance and Airline Employees for Fair Skies, are questioning Open Skies and intend to bring the case to the courts," Zapanta noted.

Reported by: Sol Jose Vanzi

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