AirAsia asks gov’t to scrap travel tax, airport fees

Written by bh0ngg. Posted in News

AirAsia Philippines Chief Executive Officer Dexter M. Comendador said the budget carrier submitted a proposal last month to the departments of finance, tourism, trade and industry, and transportation, seeking the removal of the travel tax collected by the Tourism Infrastructure and Enterprise Authority (TIEZA), as well as airport fees

“We kept on asking the government that they give us incentives… One is airport fees. We are talking to CAAP [Civil Aviation Authority of the Philippines], could you please waive airport fees for about three to five years? It will lessen our operational costs,” Mr. Comendador told reporters in a recent interview.

“We asked also the DoT (Department of Tourism) to remove first the TIEZA fee of [about] P1,600 so that we can stir outbound traffic,” he added.

Airline passengers leaving the Philippines are charged a full travel tax of P1,620 for those in economy class, and P2,700 for those in first class. Overseas Filipino workers and Filipino permanent residents abroad, among others are exempted from paying travel tax.

However, scrapping the travel tax would need legislative action. Under Republic Act No. 9593 or the Tourism Act of 2009, 50% of the travel tax collection will be given to TIEZA while 40% is allotted for the Commission on Higher Education for tourism-related educational programs, and the remainder will be given to the National Commission for Culture and the Arts.

“Inbound traffic is easy, but travel is two-way…. I have to stir up the domestic tourists to go out. One way is to remove the P1,620, and hopefully the airport fees. That will total roughly P2,000 per passenger, because airport fee is P500… If a family of five goes to Hong Kong, [they will spend] P10,000, and they haven’t left the Philippines yet,” Mr. Comendador said.

Airport terminal fees, also known as Philippine passenger service charge, range from P50 to P200 for domestic flights, and P550 to P700 for international flights.

“We have a study that says if you take away the travel tax and the airport fee, you will lose roughly P4 billion in five years. But, you will gain P299 billion in terms of tourists coming in, [from] direct revenues and induced [revenues],” Mr. Comendador said.

The AirAsia Philippines CEO said waiving fees will encourage more Filipinos, particularly those in the provinces, to travel.

So far, Mr. Comendador said they have received positive feedback, particularly from Bohol Governor Edgardo M. Chatto who was open to waiving fees at the Panglao Airport.

Earlier, AirAsia Group CEO Tony Fernandes had raised the issue of lowering airport taxes, particularly in small airports, during a meeting with Department of Finance (DoF) Secretary Carlos G. Dominguez III.

Meanwhile, Mr. Comendador said Philippines AirAsia is also in talks with the government for a proposal to build low-cost carrier terminals (LCCT) or budget terminals, similar to the  Kuala Lumpur International Airport 2.

“In fact, we’re willing to offer our engineer, we have an engineer in AirAsia Group, who helps in designing low-cost carrier terminals,” he said.

Mr. Comendador said LCCT will allow 25 minutes turnaround time, as it uses stairways instead of tubes which will allow passengers to deplane in five to ten minutes.

AirAsia is proposing to convert Clark International Airport Terminal 1 into an LCCT, with the upcoming construction of new terminals for the expansion of the airport.

“We’re requesting that they convert Terminal 1 into a low-cost carrier terminal if they want (terminals) 2, 3, and 4 to be world class,” Mr. Comendador said.

AirAsia Philippines is planning to raise up to $250 million from an initial public offering (IPO) by mid-2018. Proceeds will be used primarily to expand its facilities. — Patrizia Paola C. Marcelo