Australia-Philippines Negotiations: Fifth Freedom Rights Desired

At the most recent round of talks held from June 18 to June 19, Philippine and Australian aviation authorities failed to reach an agreement on a revised Air Services Agreement. 

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The Civil Aeronautics Board of the Philippines set a goal of doubling the current 6,000 seat entitlements between the Philippines and Australia. That represents approximately 33 weekly flights. 

Representatives from the Philippines stated that the two sides were unable to settle some outstanding issues related to the level of expansion desired by each country in addition to commercial opportunities for the airlines. While no specific details were given on the outstanding issues, it was shared that the negotiations involved fifth freedom rights which permit an airline to fly passengers from its home country into a second country where passengers are picked up and flown to a third destination. 

The Philippines is in desperate need of additional seats in order to satisfy tourism goals along with accommodating rapid expansion plans for local carriers. The Australian market is a popular destination for tourists in addition to being a strong source of tourism for the Philippines with a significant population of overseas foreign workers. 

The current 6,000 seat entitlements have yet to be fully used with only 60-70 percent currently in use by Philippine Airlines. Cebu Pacific also holds entitlements currently but is waiting for the expansion of its long haul fleet before it uses them. Cebu Pacific is also first in line to receive any additional entitlements received in future negotiations. Rumours earlier this year suggested that Cebu Pacific would be launching service between Manila and Avalon Airport which serves the metropolitan area of Melbourne in Australia. However, no official announcements have been made to date. 

Civil Aeronautics Board officials would not confirm details of struggles with respect to fifth freedom negotiations but unconfirmed reports suggest that Philippine Airlines has requested fifth freedom rights to connect Sydney or Brisbane to Auckland in New Zealand. But Australian authorities want Philippine Airlines to use Darwin instead. The next round of talks won't take place for another few months. 

Meanwhile, Philippine Airlines will be allocating one of the recently acquired Airbus A340 aircraft from Iberia to its Manila to Melbourne route effective July 9, 2013. The route which is served three times weekly will now be operated by the A340-300 replacing the Boeing 777-300ER aircraft on the route. The A340 will be configured with 36 in business class and 218 in economy.