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Jul 13, 2018 @ 8:40

Lucio Tan profiting from Marcos-era perks: Govt losing P42M a year from PAL’s discriminatory 65% discount on landing, take-off fees

 

Philippine Airlines of bilyonaryo Lucio Tan is earning an extra P42 million a year from a hefty 65 percent discount on its landing and take-off fees based on a Letter of Intent (LOI) issued by then President Ferdinand Marcos in 1977.

The Commission on Audit (COA) urged the Manila International Airport Authority (MIAA) to seek the repeal of LOI 498 which allowed Tan, a Marcos crony, to continue enjoying the 65 percent discount which has become “ineffective” after the privatization of PAL in 1992 and created an uneven playing field among domestic airlines.

“Considering the purpose of the LOI, we believe that its applicability and effectively had ceased with the developments in the domestic aviation industry and the subsequent events that happened from 1988 to present, including the privatization of PAL in 1992. To interpret otherwise would entitle other domestic carriers like Cebu Pacific to such discount considering that the LOI provides for the reduction of fees for all aircraft engaged in domestic air services,” said COA in the 2017 annual audit report of MIAA.

COA’s review showed that PAL saved a total of P214 million in landing and take-off fees from 2013 to 2017 or an average of P42.82 million per year.

COA slammed MIAA for its “laxity” in seeking to stop PAL’s unfair advantage after it sought for the repeal of the perks in 2014 and 2015.

“MIAA wrote a letter to the Secretary of the Department of Justice (DOJ) dated August 19, 2015 seeking opinion on the matter. No reply has yet been received by MIAA as of this writing, neither was there further action initiated by the Authority.

COA believed that LOI 498 was “undoubtedly an administrative issuance which can be repealed or superseded by an executive issuance” and urged COA to follow-up the DOJ’s action on the PAL discount.

MIAA agreed with the recommendation and assured that they would ask the DOJ to speed up the repeal of the LOI.

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