Philippine Air Cancellations May Trigger Higher Fares, Lim Says

http://www.businessweek.com/news/2010-08-02/philippine-air-cancellations-may-trigger-higher-fares-lim-says.html

Aug. 3 (Bloomberg) -- Philippine Airlines Inc.’s cancellation of flights following the resignation of 25 pilots may spur higher ticket prices and encourage the government to ease market restrictions, said Tourism Secretary Alberto Lim.

The reduction in services “shows the need for more carriers to serve the tourism industry as well as business and investment,” Lim said in a phone interview from Manila today. “It would help the cause of liberalization.”

The country eased restrictions on services by overseas carriers following a Philippine Air pilots strike in 1998, Lim said, to pare its reliance on the nation’s flag carrier. The government yesterday held an emergency meeting with officials from Philippine Air and other local airlines because of concerns that the reduction in services may disrupt tourism and exports.

Philippine Air handles about a third of the nation’s overseas and domestic services, Lim said. The airline canceled 22 flights over the past three days after the pilots quit for better-paying jobs overseas.

The airline will reduce some domestic and regional services, President Jaime Bautista said today in interview broadcast on ABS-CBN News Channel. Services to the U.S. won’t be affected, he said. Transport Secretary Jose de Jesus will meet with pilots today, his information officer said.

PAL Holdings Inc., the carrier’s parent, was unchanged at 4 pesos at 11:04 a.m. in Manila trading. The company is controlled by billionaire Lucio Tan.

Electronics-makers, which account for about half of the $167 billion economy’s exports, may avoid disruptions as the industry tends to rely on dedicated cargo carriers, such as FedEx Corp. and Deutsche Post AG’s DHL, said Arthur Tan, director of trade group Semiconductor and Electronics Industries of the Philippines Inc.

“In terms of cargo, the effect is not so much,” said Tan, who is also president of Integrated Micro-Electronics Inc.