CAB stops SEAIR-Tiger Airways flights for cabotage violation

By Coco Alcuaz, ANC

Posted at May 19 2011 02:06 PM | Updated as of May 20 2011 03:49 AM

MANILA, Philippines - The Civil Aeronautics Board (CAB) has issued a cease and desist order stopping SEAIR and Singapore-based Tiger Airways from starting Manila-Cebu and Manila-Davao flights, saying these are a way for Tiger to get internal flights reserved for local carriers.

The CAB said advertisements for the flights, as well as the booking and payment arrangements, indicate that they are Tiger flights using SEAIR routes. This is beyond the aircraft lease agreement approved by the CAB, the agency said. The CAB said it was acting on petitions from Cebu Air, Philippine Airlines and Air Philippines Express.

"It has been clearly demonstrated by the facts so far established and essentially sustained by the pleadings as well as the allegations, admissions and arguments of both SEAIR and the complainants during the hearing, that Tiger has effective control for the most part, of SEAIR's operations where the aircraft leased by Tiger to SEAIR are utilized,'' the CAB said in a resolution obtained by ANC. Acting Board Secretary Dominador Salanga confirmed the order had been approved. 

"The collaboration between Tiger and SEAIR is beyond that of an aircraft lessor-lessee and beyond the norms of a credible marketing agreement between two independent airlines."

"The very apparent abnegation by SEAIR of the core elements of its standing as an airline, and Tiger's wresting of these core elements from SEAIR... may be tantamount to allowing Tiger to exercise cabotage, which is a right Tiger can not directly or indirectly operate."

Cabotage refers to transporting passengers or goods between two points within a country. It is covered by so-called eighth and ninth air freedom rights. President Benigno Aquino's "pocket" open skies order, issued in March, only covered third, fourth and fifth freedom rights.

SEAIR and Tiger have had lease and marketing agreements since at least 2006, according to CAB. Cebu Air and other airlines opposed these, resulting in a 2008 ruling clearing the agreements with conditions. In February this year, the airlines announced that Tiger planned to buy 32.5% of SEAIR. Advertisements for the Cebu and Davao flights followed.

"Our competition is eager to stop our domestic operations,'' Seair President Avelino Zapanta said in a phone interview. "We're a threat, we were going to charge much lower. The public is the loser."

SEAIR and Tiger were given 30 days to submit an authenticated copy of their marketing agreement.