Gov’t losing close to P200M a year from PAL, CebuPac, airlines’ cut on terminal fees. Find out how passengers are getting screwed, too
The Duterte administration is losing close to P200 million a year from the cut on terminal fees collected by Philippine Airlines of Lucio Tan, Cebu Pacific of John Gokongwei, and other airline carriers.
The Commission on Audit urged the Manila International Airport Authority (MIAA) to revise its loss-making process of allowing airlines collect the on passenger service charge on airline tickets.
In MIAA’s 2017 annual audit report, COA said the government was losing an average of P174.366 million from the 3.5 percent service fee deducted by PAL, CebuPac and other air carriers from the PSC – P200 for domestic and P550 for international passengers – at the point of sale. The integrated collection began in 2012 for domestic and 2015 for international passengers.
COA said Pal, CebuPac have not only profited from collecting the terminal fees, they have also “maximized and made effective use of the 15 to 31-day holding period for the terminal fee collection by remitting the funds on the exact deadline set. “This deprived the
MIAA of additional working funds or potential income from investment if PSC is remitted on a daily basis,” said
Based on a seven-month survey of terminal fee collections, COA said Cebu Pacific earns a monthly service fee of P6.331 million and free cash of P175.868 million a month which it could use as operational capital.
During the same period, PAL earned P7.06 million a month from service fees and getting free cash of P191.544 million per month.
COA said the skewed scheme gets better for PAL, CebuPac and other carriers through advance bookings on promo fares that result to “longer holding period of the PSC collected by air carriers.”
COA said even the 18 percent late remittance fee was not enough compensation for the government if you consider the cost of money and income-generation potential of the billions of pesos in terminal fees held by PAL, CebuPac and other carriers.
COA said airline carriers have pushed the money-making scheme even further by charging service fees on passengers exempted from the terminal ee such as as infants, flight and extra crew, overseas Filipino workers, pilgrims, sports delegates and Malacanang officials.
COA said the “service fee, as it connotes, should be charged only in consideration of the amount collected and remitted.”
These anomalies are on top of the lingering issue on the reluctance of PAL, CebuPac to refund terminal fees collected on “unflown tickets” that have reached a total of P500 million for just the Big Two.
COA said only five of 45 airlines have complied with with MIAA’s 2016 orders to refund terminal feeson unused tickets.
“Remarkably, Cebu Pacific, Philippine Airlines and Air Aisia, all locally based airline companies engaged in domestic and international flights, did not heed the request of MIAA,” COA said.
“Considering that the Memorandum was twice addressed to the Airline Companies and the fact that these companies are charging 3.5 percent service fee, we find no cogent reason on the non-compliance. Yet, no further action was undertaken by MIAA to compel the airline companies to comply with the request,” it added.
COA also questioned why MIAA has failed to conduct a full audit of the terminal fee collections of 45 airlines since 2012.
COA said that even a cursory review of a sample of the PSC collections by CebuPac showed glaring discrepancies in the number of passenger load and flights.”Considering that the PSC remitted by the AC is based on number of flown passengers, any discrepancy between the records of MIAA and airline carriers would cast doubt on the correctness of the PSC remitted to MIAA,” said COA which noted that MIAA relied primarily on data submitted by airlines.
Aside from these serious lapses in preserving government funds, COA said MIAA’s inaction have made it more unlikely that the airlines would pay for any discrepancies or refunds because all data concerning terminal fees were only good for three years. “MIAA may be denied/barred from recovering claims that may result from fraud or errors as a result of the scheme adopted,” COA said.