It is rare to have negotiating leverage. So United Airlines is making a pawn of what should otherwise be a mundane regulatory request from a small Filipino airline.
United wants to introduce an additional flight to Manila but has been turned down for slots at the city’s main airport, Ninoy Aquino International, where congestion is legendary, although not as infamous as the surrounding urban traffic. Local carrier Cebu Pacific decided restrictions on adding new flights at Manila would be long-term, so it changed its strategy by operating widebody aircraft on short-haul flights.
But slot congestion and constraint do not mean there are no available slots. Even London Heathrow has unused slots, although at unfavourable hours and their overall proportion of Heathrow’s capacity requires a decimal place. Slot availability is not black and white but has shades and it is here United is prepared to fight – after all, this is the airline with the former Battleship Grey livery.
While United has been rejected for Manila slots and terminal space, it says Philippine Airlines (PAL) has increased flights from Manila to the US by 25% including additions made this year. A local airline being given a home advantage? Unthinkable. Such bias is prohibited in the US-Philippines air transport agreement, which requires each country “allow a fair and equal opportunity for the designated airlines of both Parties to compete” and “eliminate all forms of discrimination or unfair competitive practices.”
If the Philippines is not upholding the agreement, the US should not permit changes that will benefit a derelict Filipino aviation industry, United agues. Into this charged atmosphere enters the airline known as PAL Express, owned by PAL. PAL Express applied to the US Department of Transportation, which oversees aviation matters for territories like Guam. PAL Express had a simple request to codeshare with parent PAL on its new Guam flight that will operate just twice a week. The timing was unfortunate.
United balked, saying it does not object to the codeshare in principle but takes issue since the application “seeks benefits that are currently being denied to United”.
A slot for United is not the same as a codeshare for PAL Express, but both are a form of commercial benefit where access should be fair and equal. United does not want DOT to approve the codeshare until United’s Manila slot quandary is “addressed” – which could leave open United does not receive slots but has a more thorough assessment.
A security guard stands outside the controversial, new and unused Ninoy Aquino International Airport ... [+]
United’s Manila scenario almost replicates when Air China renewed its Beijing-Houston flight but American Airlines in 2017 objected not out of substance but because Air China appeared to have favourable slot access in Beijing while regulator CAAC denied American any slots, even those at “commercially non-viable times, such as between midnight and sunrise when few passengers want to takeoff or land,” American wrote.
The effect was undermining the US-China agreement that had a similar “fair and equal” clause as the US-Philippines treaty United takes issue with. The DOT did not dismiss American’s rejection, which American withdrew a year later after securing Beijing slots, so United’s regulatory strategy has precedent. There are more historical procedural commandeering examples going back to a 1997 matter between Northwest Airlines and Air India.
Yet precedent does not equal validity. United notes PAL has added flights to Los Angeles and San Francisco, which it already serves. United could be inferring that additional flights to an airline’s existing destination should have lower slot priority.
United’s slot priority is unclear since it does not say where it wants to add Manila flights to, except that it would be a daily flight. If United wanted to increase its current Guam-Manila flight from daily to double daily, that slot request would be at a lower priority than if United wanted to start service from a different city like Honolulu or San Francisco.
Under the slot procedures Manila says it follows, United would have a higher slot priority for a hypothetical new Honolulu-Manila flight than PAL increasing its own Honolulu-Manila flights since United’s entry to Honolulu-Manila would see the entry of another airline and foster competition.
This priority is for when airlines are requesting similarly timed slots. While United noted PAL was growing at Manila, United did not say if any of PAL’s new slots were at times United requested. “United has offered no evidence to support its claim,” PAL Express wrote to the DOT. PAL Express dismissed United’s methods, saying United should not divert a proceeding but instead file a complaint under the dedicated Fair Competitive Practices Act – which is also what the DOT told freight operator Kalitta Air this year, making for perplexing precedents.
Despite PAL Express’ attempt to dismiss United’s objection last month, United on December 5 doubled down on claims. “PAL continues to grow and further deepen the disparity in the competitive landscape at Manila,” United wrote. “United’s inability to secure greater access to Manila is creating an unfair disparity in growth between United and Philippine carriers.”
Although United is not withdrawing its application, it calls for the US and Philippines to “address the growing competitive disparity at Manila” via diplomatic or other channels outside of this regulatory proceeding that has taken on unexpected contention. Previous similar regulatory diversions have been for high-stakes Los Angeles-Beijing slots or more low-key codeshare reciprocity, so United’s persistence does not necessarily mean it is pursuing significant growth at Manila. This raises a larger problem.
More airports are becoming constrained with demand outstripping planned infrastructure capacity. With more slot requests than available slots, there is no established framework to select which request will generate the most benefit to the airport, government and – hopefully – the public.
A narrowbody flight from a new airline would have higher slot priority than an existing airline offering another widebody flight to a currently served destination. That principle is in IATA’s Worldwide Slot Guidelines, which Manila follows. But the guidelines are just that: suggestions, not enforceable rules.
The “fair and equal” clauses in international aviation agreements cited throughout this matter make difficult a future where if the Philippines determines there is greater public benefit from another PAL flight than a United service, it can rule so unashamedly.
