LOCAL carriers will be incurring massive losses from the planned closure of Boracay Island, even as they continue to wait for the final word from the government when the closure will start and for how long.
Sources in the aviation sector have raised some rough estimates on the industry losses based on a two-month closure, from April 26 to June 26, 2018, after the airline representatives met with Tourism Secretary Wanda Corazon T. Teo on March 13. But two days after, Environment Secretary Roy A. Cimatu said in a news briefing that the closure could reach a maximum of one year. (See, “Cimatu’s decision: Close Boracay for up to 1 year,” in the BusinessMirror, March 16, 2018.)
Paolo Misa, marketing head for Air Juan, which operates scheduled and charter flights between Manila and Boracay, and Busuanga and Caticlan, told the BusinessMirror “we’ll take a big hit,” adding that the Boracay/Caticlan routes account for about 15 percent of the airline’s business.
The Manila-Boracay nine-seater seaplanes cost about $4,000 (P208,000) to charter, one way. With summer being the peak travel season, he added, the carrier usually has about one chartered flight a week to Boracay. For a two-month closure alone, that will cost the airline at least P1.66 million, based on the fare quoted above. Misa admitted that the impact on the airline’s finances will be higher if carriers are made to absorb cancellation or rebooking fees.
He noted that the carrier’s flights usually have a passenger load factor of 90 percent, meaning that each plane carries eight confirmed passengers per flight.
The airline’s route between Busuanga and Caticlan using its nine-seater land planes, for another, is also a profitable operation, as it carries mostly European tourists who travel to the country’s beach destinations. “We were actually contemplating to increase the flights from the current five times a week because of the summer season, but now we can’t do that because of the planned closure [of Boracay],” he said.
The Busuanga-Caticlan flight, one-way, costs an average of P5,000 per person. With a 90-percent passenger load factor, the airline is estimated to lose at least P1.6 million, if Boracay is closed for eight weeks.
Aviation sources also concurred that carriers like Philippine Airines (PAL), Cebu Pacific Airways (CEB), SkyJet Airways and AirAsia Philippines, which operate scheduled flights, will incur “opportunity losses” on routes going to Caticlan or Kalibo, especially if they are made to absorb the rebooking fees of passengers.
They said many of the passengers on these routes may have taken advantage of seat sales by these carriers, and if their tickets have to be rebooked, the fares on the new destinations will not cost the same as when the ticket was first booked.“For instance, the passenger bought ticket at P500 one way last year, then they will reroute to Siargao or Batanes, the airline will absorb the fare difference. That’s revenue loss or opportunity loss,” an aviation source pointed out.
Charter partners of these carriers have already expressed concern about the ongoing issues in Boracay, aviation sources noted. “We are talking to our charters. Most are Chinese. This Boracay issue is wreaking havoc outside the Philippines. Our partners in South Korea, Singapore, Australia, Dubai, etc. are all worried,” said one airline official, who requested anonymity because he had no authority to speak on the matter.
The official also asked, “Where do you divert the passengers bound for Boracay? Are the other destinations in the Philippines ready? Save for Boracay, the other destinations haven’t quite caught up on tourism; the area might just be destroyed because they don’t have support systems.”
Another aviation source confirmed that “January to May are usually the highest months” for bookings for local airlines for flights to Boracay via Kalibo and Caticlan. These profitable months include Chinese New Year, Holy Week and the summer break. “So definitely, the airlines will lose a big amount of money,” if the closure pushes through even for just two months starting April 26. “What more if it will be a year?” the source retorted.
CEB insiders said the airline has about 142,000 passengers confirmed for scheduled flights to Caticlan and Kalibo from April 26 to June 25. The carrier has 16 daily between Manila and Caticlan; one flight, Clark-Caticlan; and two times a week to Kalibo from Manila, Cebu, and Incheon.
The airline also has chartered flights to Kalibo from several destinations in China “about once or twice a month,” with each flight carrying 180 passengers, insiders added.
PAL insiders said inquiries from passengers on flights to Boracay have “definitely” been received.
“They’ve asked us, ‘what are you going to do? Are you going to cancel?’ We can only answer, ‘we don’t know yet.’ We will, of course, adjust [the schedules and routes] when the government announces its plan.”
PAL has at least five scheduled flights a day to Caticlan from Manila, Clark and Cebu, and at least five scheduled flights to Kalibo from Manila and Cebu. The carrier also has “multiple charter flights by tour groups from China, as well as scheduled flights from Taipei and Korea to Kalibo,” said the airline insiders.
Meanwhile, PAL and CEB issued official statements regarding the planned closure of Boracay.
“We will wait for the final directives from the government. We had meetings with our charter partners and have given them our plans for their review and support,” PAL President Jaime Bautista said.
CEB Spokesman Charo Logarta Lagamon said: “We have been monitoring the developments regarding the government’s rehabilitation of Boracay Island. We will take the necessary actions as soon as we have clarity on the government’s plans and timeline.”
She added: “In the event we are required to cancel services, we will offer full refunds along with opportunities to transfer to other destinations where seats are available.”
‘Awkward’
In a related development, Environment Undersecretary Jonas R. Leones, the designated spokesman of Cimatu, said: “It will be awkward to see the demolition while there are tourists nearby.”
A stop in tourism activities, he said, means respite from pollution, particularly the direct discharge of untreated wastewater to the beaches and aquifer, encroachment on forestlands, wetlands and beaches; as well as excessive garbage production.
Boracay is the country’s top tourist destination, chipping in around P56 billion a year to the economy.
“As early as 2008, the population of Boracay because of tourism has exceeded the island’s carrying capacity,” he said. “By all indications, Boracay has exceeded its carrying capacity: water pollution, traffic and garbage problem and perennial flooding.”
He confided that the Cimatu’s decision to recommend the closure of Boracay was due to the failure of the two water concessionaires and other stakeholders to commit support to the government’s rehabilitation effort.
“When the secretary spoke with the water concessionaires, he was dismayed because the water concessionaires could not give any assurance of fixing the sewer lines,” he said.
On the demolition of illegal structures, Leones said Task Force Boracay is banking on the cooperation of the concerned local government units — the provincial government of Aklan and the municipality of Malay.
Sought for reaction on allegations that the ongoing crackdown on Boracay will pave the way for foreign-funded, multibillion-dollar development projects, Leones assured that construction in Boracay will not be allowed unless the Task Force Boracay is done fixing the many problems besetting the island.
A six-month construction moratorium is now in effect on the entire island. As early as February this year, the DENR has ceased accepting online applications for environmental compliance certificate for projects on Boracay Island.
Leones, however, said he is not fully aware of the status of big-ticket projects that are in the pipeline on the island. “It is awkward to allow construction of new projects while we are demolishing in other areas.” However, Leones said that if a project will be constructed in a private land and will comply with various environmental laws, it will be allowed.
“The government has no right to stop construction, especially if it is on private land, as long as all environmental regulations are observed,” he said.
Two big development projects are currently in the pipeline targeting the world-famous tourist destination. Property developer DoubleDragon Properties Corp. is planning to construct a “green hotel” at a 2-hectare beachfront property on the island.
Based on news reports, Galaxy Entertainment and its local partner Leisure Resorts World Corp. are seeking regulatory approval for the $300-million to $500-million casino project in the country’s top tourist island.
Last week the Philippine Amusement and Gaming Corp. said the plan of the Macau-based casino operator and its local partner to build the integrated casino-resort on the island will proceed despite the impending closure of Boracay.
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In October 2008 (G.R. No. 167707), the Supreme Court ruled that there is no legal basis for private individuals to claim ownership of any property in Boracay. And even Justice Antonio Tirol Carpio, a member of the Tirol clan that is the biggest single landowner in the island concurred with the decision written by Associate Justice Ruben Reyes.
“The entire island is State property,” the high court ruled. There hasn’t even been a move to ask the court to reconsider its decision. For a land to be “alienable,” or subject to private ownership, the state must declare it as such. No such proclamation, executive order, administrative action, report, statute, or certification was presented to the Supreme Court.
So as there is no doubt that there is no private land on Boracay, no construction on any part of the island will be allowed during the construction moratorium? This is what the articles says, however, at the same time it seems to say the exact opposite!