Home » Aviation, Breaking News » Higher costs loom for PH shippers to Europe

Atty Carmelo Arcilla, executive director of Civil Aeronautics Board, at the recent PortCalls Cargo Economics Conference

Philippine exporters and importers face increased costs with the impending pullout of Air France-KLM’s Amsterdam-Philippine service, the country’s only direct flight to and from Europe.

Other airlines could take up the slack but since all alternative services feature stopovers, this means longer cargo transit time and greater expense for shippers, pointed out Civil Aeronautics Board (CAB) executive director Atty Carmelo Arcilla.

“Trade requires direct flights in order to maximize growth… the impending pullout of Air France-KLM will really be a big blow to us,” Arcilla said at the sidelines of the recent annual PortCalls Cargo Economics Conference at the Manila Diamond Hotel.

“The CAB and the transport department are hoping the airline will reconsider its position. Air France-KLM has been in the Philippines for a very long time and has been a partner of the Philippines in terms of our European connectivity,” he said.

President Benigno Aquino III last week directed Transportation and Communications Secretary Manuel Roxas II to engage the carrier in talks to dissuade it from halting the service.

“(The service) has been a valuable component of our aviation strategy and an important part of our aviation network considering (our airlines) cannot operate to Europe because they are banned from doing so. I hope they will reconsider.”

The EU ban stems from safety concerns on the country’s aviation sector.

Air France-KLM will start phasing out its Amsterdam-Manila flights starting end October and completely abandon the route by April 2012 following insistence of the Philippine government to charge international carriers a 3% common carrier tax on gross receipts and 2.5% tax on all cargo and passenger revenues originating from the Philippines in an uninterrupted flight.

The latter levy particularly makes the tax base of Air France-KLM higher than other foreign airlines with stopovers operating on the same route.

Air France-KLM is competing on the Europe service with Middle Eastern airlines that fly to Europe via cities in the Middle East.

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