Travel Impact Newswire
Edition
36
August 4-11, 1999
Distinction
in Travel Journalism
By
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In this
dispatch:
1. TAKING ON
THE BIG BOYS (3,294 words)
Summary: As
the crisis-hit Asia-Pacific Travel & Tourism industry
struggles to
regain a firm footing, it is running smack up against two
major
problems: Airline access and irresponsible media coverage.
Rising
tempers are leading to calls to action and industry leaders are
venting their
frustrations.
In this
dispatch, I reproduce two powerful statements by the President
of the Hotel,
Resort and Restaurant Association of the Philippines and
the Chairman
of the PATA Bali Chapter, respectively against protection
of a national
airline and irresponsible coverage of the Indonesian
situation by
news networks.
Both are problems faced by tourism industries worldwide, especially
hotels which,
unlike airlines, cannot simply pack up and leave when
trouble hits.
No longer willing to take things lying down, industry
leaders are
hitting back. This dispatch is intended to ensure their
message gets
heard well beyond their borders, as it deserves to be.
-0-
1. TAKING ON
THE BIG BOYS (I)
The
Unfriendly Philippine Skies -- And why we need a ''tourism first''
policy
By Emmanuel
Gonzalez, President, Plantation Bay Mactan
President,
Hotel, Resort, and Restaurant Association of Cebu
(This paper
was originally prepared for presentation at the
Philippines
Tourism & Transportation Summit, June 22-23, 1999)
Last week,
all the major Philippine newspapers, as well as the Asian
Wall Street
Journal, reported that Philippine Air Lines has again
demanded that
foreign flights should be more severely restricted, ''so
as not to
subject PAL to unnecessary competition''.
This is an
outrage. It is time that the Philippines stopped killing
its own
tourism industry by blindly protecting an airline which has
never
returned the favor. ''Protection'' has not helped PAL over the
years. On the
contrary, it has choked off the growth of the Philippine
tourist
industry, which has in turn choked PAL itself.
This is a
very important thought, so let's walk through it slowly:
- PAL is
''protected'' by restricting or preventing other airlines
from flying
to the Philippines. In practical terms, this means that we
''protect''
PAL by turning away tourists. Yes! We ''protect'' PAL by
turning away
tourists.
- The
tourists go to other countries, whose tourism business thrive,
attracting
yet more tourists. Over the years, more and more people who
might have
been coming to the Philippines, at least some of them on
PAL, choose
other destinations.
- Philippine
tourism stagnates, lagging far behind its neighbors. The
misguided
''protection'' for PAL has choked its only market, and
therefore
choked PAL itself.
PAL is the
biggest fish in a very small pond - so small that it cannot
even sustain
the fish. The solution is not to make the pond smaller,
but to make
it bigger.
TOURISM, THE
#1 INDUSTRY WORLDWIDE
International
economists are unanimous in agreeing that within a few
years,
tourism will be the world's largest industry - larger than oil
and
petrochemicals, larger than automobiles, larger than computers and
software.
This is a
trend which the Philippines cannot afford to miss out on. We
need to attract
more flights into the country, not cut back the ones
that exist.
We should have more competition and lower plane fares,
attracting
more visitors, not less competition so that exorbitant
fares can be
maintained, discouraging tourists from coming.
Tourism is a
''high-multiplier-effect'' industry - it employs large
numbers of
people and requires large amounts of local inputs for
ongoing
operations. When tourism grows, the whole country benefits.
Many other
countries - from Thailand to Mexico to Italy -- have
demonstrated
the benefits of a ''Tourism First'' policy. They focused
their
energies on brining in more tourists, not on coddling their
airlines. As
a result of their common-sense policies, the benefits
generated by
the tourism industry quickly spilled over to other parts
of their
economies.
BUT THE
PHILIPPINES IS MISSING THE BOAT - AGAIN
Instead of
following the successful examples of other countries, what
are we doing?
We are repeating the same mistakes we have been making
for the past
50 years.
''Important
substitution'' was the Philippines' philosophy of the
1950s and
1960s. This was a euphemism which meant protecting local
industries,
however inefficient, at any cost. Does this sound
familiar? It
is exactly what PAL is asking for, again.
The utter
folly of this kind of thinking is demonstrated by the fact
that, in
1950, the Philippines was the richest country per-capita in
Asia (far
ahead of Japan, Hong Kong, and Singapore). Today, it is one
of the
poorest, behind even Indonesia.
After decades
of ''protection'', PAL is not a strong airline, but a
dying one.
And after decades of being sacrificed for the sake of PAL,
our tourism
industry is one of the most backward in the region. Are we
such morons
as a people that we will stick with what is obviously a
losing
strategy?
POLICY
FOUNDED ON FALLACY
The
Philippine civil aeronautics policy is based on four fallacies.
Fallacy #1:
The function of the Civil Aeronautics Board (CAB) is to
defend PAL.
Wrong. The
function of the CAB is to serve the public. It should do
this by
regulating airlines, to promote passenger safety and public
convenience.
The CAB instead spends its energy engaging international
spitting
matches, which boil down to this:
''PAL doesn't
have the resources to fly this route. So you can't fly
it either.''
or this:
''PAL can fly
this route. So we don't need you to fly it'' (Clever,
no?)
Of course,
one will never see such statements in print. CAB
''consultations''
either drag on indefinitely, or foreign carriers are
quietly
pre-intimidated not to even bother applying. (The official
term is
''consult with our flag-carrier'', the effect is ''veto''. To
make sure the
CAB gets the point, PAL currently has a court case
against a
former CAB commissioner, his ''crime'' was to authorize a
certain
airline to add capacity and bring in more tourists.)
Fallacy #2:
We're doing foreign airlines a favor by letting them fly
to the
Philippines.
Tragically
wrong. They are doing us a favor - by bringing in tourists.
Take, for
example, Korean Air Lines, whose proposed Seoul-Cebu-Davao
flight has
been ''under consideration'' for over a year already (while
pro-tourism
countries routinely grant approvals in a few months). By
freezing this
request, we are not hurting the Koreans, sooner or later
they will get
fed up and just go to Phuket. We are hurting ourselves,
by turning
away cash customers.
We need
foreign flights more than they need us. Is this so difficult
to
understand?
Fallacy #3:
Those foreign airlines don't want to fly here anyway.
When dealing
with creditors and the government, PAL talks in plain
language
about protection from competition. At the public-relations
level,
though, its executives vehemently deny that any such protection
exists.
''We have
never stopped anyone from flying'', they will say, citing as
proof of this
the fact that some approved routes are not even being
used. What
they won't tell you is that those approvals either have
absurd
restrictions that make them commercially impractical, or were
deliberately
handed out to the wrong airline (which cannot exploit the
route
profitably), as a result of some elaborate multi-party
negotiation.
A popular
variation on this theme is ''No foreign carrier is
interested in
this route.'' Bullshit. Carriers are interested, but
know how
tedious the application process is, and how slim the chance
of approval,
so they don't even bother.
Last year,
Korean Air Lines applied for added Seoul-Manila flights,
and spent
heavily on promotion, relying on initial favorable
indications.
However, the application never got acted on.. KAL lost
money, and
lost face with its Korean customers. Add to this the
inaction on its
Cebu-Davao application, and what will you get? An
airline which
indeed won't want to fly here anymore -- because it is
fed up with
dealing with a CAB and a flag carrier which don't seem at
all
interested in developing tourism.
Fallacy #4:
Manila is the Philippines. The Philippines is Manila.
When all
other excuses fail, Philippine authorities fall back on the
final
fallacy: ''Never mind if there's not direct flight to Cebu or
Davao. The
passengers can always pass through Manila (aboard PAL, of
course).''
This kind of
hick-town arrogance ignores the most basic elements of
common sense.
For one thing, tourists in search of sun and water do
not want to
be subjected to Manila's traffic and pollution. And since
typical
visitors spend only 3 days in the country, they most certainly
do not want
to waste any of that time on unnecessary fares out of
Tokyo:
Tokyo-Cebu (4
½ hours): Yen 70,000 (about $600)
Tokyo-Phuket
(7 ½ hours): Yen 45,000 ($380)
Tokyo-Honolulu
(7 hours): Yen 40,000 ($340)
Tokyo-Los
Angeles (10 hours): Yen 35,000 ($300)
(Generally
available discounted prices, Data provided by Japanese
travel
wholesalers.)
Incredible
but true: Tokyo-Cebu, a route reserved exclusively for PAL,
is twice the
cost of Tokyo-LA! On a cost-per-mile basis, Tokyo-Cebu
costs 3 times
more than any other route! This is a practical
demonstration
of the effect of non-competition, i.e., the effect of
protecting
PAL. The other routes, where competition exists, are much
more cheaply
priced -- yet the airlines which fly these routes still
make money
because of the volume.
High airfares
= fewer tourists spending money on Philippine hotels,
restaurants,
museum admissions, scuba-diving, tour guides, souvenirs,
taxis,
shopping malls, karaoke bars, beer. Bad for the tourism
industry, bad
for the entire Philippine economy, and in the long run
also bad for
PAL.
A LOSE-LOSE
STRATEGY
The saddest
part about the Philippine tourist industry constantly
being bled
for the sake of ''protecting the flag-carrier'' is that,
ultimately,
neither PAL nor its owners or employees have benefited
from the
sacrifice (at least not in recent times). Let's look at the
following
list, which compares the Winners and Losers of a
''Protect-PAL-at-all-costs''
policy.
LOSERS
-- Foreign
tourist who are unable to come to the Philippines because
of lack of
flights, poor or unnecessary flight connections, or
expensive
airfares.
-- The entire
Philippine tourism sector, including hotels,
restaurants,
shops and many others, who get fewer customers.
-- PAL
itself. After years of ''protection'', PAL is on the brink of
bankruptcy.
(In contrast, Thailand made no special effort to protect
Thai Airways,
welcomed foreign carriers, and promoted low airfares.
Guess what?
Thai Airways is profitable and solvent. PAL is not.)
-- PAL's
creditors, who forgot that preferential treatment breeds
inefficiency,
not profits, and who now stand to lose much of their
exposure.
- PAL's
owner, Lucio Tan, has lost billions of pesos, and now has to
invest
billions more, to prop up an inefficient and uncompetitive
enterprise.
- 4,000
useful PAL employees, whose jobs are threatened.
- 5,000
excess PAL employees, who could be doing something useful with
their lives,
such as working for other airlines (if they were allowed
to fly freely
to the Philippines), instead of spending their time
figuring out
how to pilfer Belle Epoque from the first-class
provisions.
WINNERS
-- Thailand,
Indonesia, Malaysia, Guam, Saipan, Hawaii, and
California,
which are getting tourism business which might otherwise
have come to
the Philippines.
Our national
strategy has been to protect PAL from competition. The
result of
this strategy are clear and indisputable: Continuing losses
for PAL, a
stunted tourism industry, and missed economic opportunities
for the
entire country.
COMMONSENSE
FOR CHANGE
In view of
all the above, we strongly urge the following:
-- The
Philippine Government should issue an open invitation to all
foreign
airlines to open up new routes and flights to not only Manila
but also
Cebu, Davao, and any other airport they may be interested in
flying to.
Reciprocity be damned. The CAB should be ordered to approve
all new
applications in 60 days, all ''add-on'' applications in one
week. And no
''poison-pill'' approvals, either (approvals accompanied
by fine print
making them unusable, e.g, ''You can fly once a week,
but you are
allowed only 280 seats a week (less than and Airbus 300,
meaning they
have to fly a 737, which means they won't fly)''. To
protect the
CAB from undue influence (in whatever form), the
commissioners
should be subject to swift dismissal for non-performance
of their
duties.
-- PAL's
Creditors (mainly US Eximbank and its British and French
counterparts,
who financed the safe of aircraft) should reject any
''solution''
which relies on further suppressing competition in the
region. Any
short-term benefit for PAL would bear an outrageous
price-tag in
terms of diminished business prospects for other
airlines, a
further-weakened Philippine tourist industry, and
eventually an
even-less-viable PAL. All these will mean lower future
sales for
Boeing and Airbus. PAL's creditors, consistent with their
mission to
help sell their country's airplanes, must not sanction
restraints on
free trade and open skies.
- PAL's Labor
Unions should support open skies as the best chance for
saving
airline jobs. Foreign airlines awarded new or expanded routes
will
naturally need to hire experienced staff -- from PAL. By allowing
more airlines
to open up new flights (which PAL can't handle anyway),
PAL can shed
some its excess employees quickly and at no cost. Those
who move will
be working for more solvent airlines. Those who stay at
a leaner PAL
will have a much better chance of the company surviving.
This is
Win-Win thinking. Rather than focusing on ''PAL jobs'', the
labor unions
should start thinking ''airline jobs''. A genuine
open-skies
policy will create many times more airline jobs than the
5,000 that
PAL must cut.
TOURISM FIRST
Finally, the
Philippine government should recognize the tourism
industry as
The Economic Priority.
All over the
world, places as diverse as Spain and Italy, Tunisia and
Morocco,
Thailand and Hong Kong, Hawaii and California, Mexico and the
Caribbean -
have developed tourism into their #1 industry, All these
places have
discovered that ''TOURISM FIRST'' works.
The
Philippine government should wake up and recognize that tourism
has the
potential to jump-start the whole Philippine economy- as it
has done for
many other countries around the world - if only it were
accorded
appropriate funding and sensible policies.
In fact,
never mind the funding. Just open the Philippine skies -
truly open
them - and watch what happens.''
-0-
TAKING ON THE
BIG BOYS (II)
Editor's
Note: The PATA Bali Chapter recently won the PATA New
Programme
Development Award for its Bali Update email newsletter,
which is
distributed to more than 10,000 subscribers. The Award was
picked up by
Jack Daniels, Chapter Chairman, the originator and writer
of Bali
Update. In this acceptance speech, he narrated how the
newsletter
had helped take the stick to the global news networks.
-0-
Ladies and
Gentlemen, the INTERNET changes everything
The Bible
tells the story of how a small and relatively weak man by
the name of
David managed to bring down the Philistine Giant, Goliath,
with only a
small stone and a slingshot. Well, I am certain that if
David were
alive today, he'd store the slingshot and buy a computer.
His e-mail
address would probably be david@rockemandrollem.com
You see. . .
The Internet changes everything
Back in March
of 1998, those of us in Bali's tourism industry were
faced with
steadily declining arrival figures and a national tourism
promotion
board that was technically bankrupt. Business was suffering
and was only
likely to get worse. We had a story to tell the world
that Bali was
safe and better than ever, but had no money to spread
that message.
Members of the Bali tourism industry started to exchange
opinions and
ideas on what might be done. Concepts were floated across
the Internet
at an amazing rate of speed and the idea of creating a
Bali Update -
an e-magazine was born.
Overseas
agents were hungry for clear, factual statements on what
really was
happening in Bali that that could be used to preserve
business
already in hand for Bali. Meanwhile, local agents were also
desperate for
a quotable authoritative source they could use in
replying to
worried tourists and their travel agents worried by
international
media reports and considering canceling their holidays
in Bali.
The first
edition of BALI UPDATE went out on March 26, 1998, assuring
that all was
calm and safe in Bali. To our surprise that message was
forwarded and
copied by agents and wholesalers. Requests for similar
news flowed
in at the rate of hundred every few days. And that is how
the BALI
UPDATE was born.
Our
circulation today - some 147 editions later, stands at over
10,000.
Moreover, Bali Update has been cited and quoted by a number of
impressive
publications, including TIME Magazine and the International
Herald
Tribune.
The Internet
changes everything.
CNN hit new
depths in slipshod journalism in 1998 by telling the world
that smoke
from forest fires were blanketing QUOTE all of Southeast
Asia UNQUOTE.
In fact, the smoke was largely limited to peninsular
Malaysia,
Singapore and the Western Regions of Indonesia. Via our
UPDATES we
acted like modern day David's and took aim at Mr. Goliath's
-- I mean Mr.
Ted Turner's news empire -- asking them to exercise more
accuracy in
their reporting and made them aware of how broadbrush
statements
that were completely untrue were costing jobs in Bali.
Our readers
took up the cause and sent e-mails to Atlanta asking CNN
to shape up
and fulfill their stated role as an international media
by, for a
start, getting a better grasp of grasp of the subject of
geography. We
also secured support from Singapore Airlines and
installed an
Air Quality-measuring device in Bali and publish the air
quality
ratings via the Bali Update.
The Internet
does change everything.
Bali, because
of its deep Bali-Hindu religious traditions has remained
very calm and
relatively peaceful over the past 2 years of political
unrest in
Indonesia. We have been spared the riots and violence that
have occurred
in other parts of the country.
Unfortunately,
the international news media loves a good story even if
they must
sacrifice truth to make their point. When Peter Jennings of
ABC news
opened a broadcast saying ''Ladies and Gentlemen - Indonesia
tonight sits
on the verge of chaos'' we told the world, and told
Peter, to
hold on just a second, and to cut the hyperbole. Via our
updates and
hundreds of e-mails from our readers, we asked that he not
confuse the
awakening of new found democratic urgings with revolution.
When
international media misquote Indonesia officials, run film clips
of incidents
and unrest that do not match a current story giving a
non-contextual
impression, or just plain get the facts wrong - we use
our BALI
UPDATE to set the record straight and ask our readers to
express their
discontent with bad reporting directly with the media
concerned.
As something
of a self-appointed watchdog for truthful reporting on
Bali and
Indonesia - BALI UPDATE knows how to bark.
Bow Wow. .
and watch your ankles in case we bite. . . The Internet
changes
everything
When the U.S.
Government placed a travel warning on Bali, those of us
in Bali
screamed ''foul'' and ''unfair.'' Bali was unlike the rest of
Indonesia and
the lack of violence and unrest affecting tourists
qualified us
for consideration as a ''separate case.'' Via Bali Update
we organized
an international petition campaign to Bill Clinton and
secured
thousand of sympathetic signatures in less than 48 hours. Lo
and behold,
the travel warning on Bali was lifted a few days later and
other
embassies seemingly took note and began treating Bali as a
separate
case. Eventually countries began to change their approach.
They
cautioned about travel to other parts of Indonesia but stated
explicitly
that Bali remained safe for tourists. In some instances,
the
consulates even recommended that their nationals subscribe to BALI
UPDATE to
keep informed on local developments. Also, via our updates
we did not
forget to applaud those countries and used our ''separate
case'' status
to remind others on the island of how important it was
to maintain
the peace.
The Internet
changes everything.
The BALI
UPDATE remains essentially a one-man writing effort by a man
who has a
real full-time job. I am backed up by a very talented lady,
Melina Caruso
of Bali- Paradise on line, who administers the
electronic
aspects of our newsletter and handles our many subscribers.
Hotels and
Tour Companies across the island of Bali keep me informed
of new
products and special packages. I communicate with police
officials and
key government officials by e-mail and get instant
updates
during critical periods, such as during our elections in June.
Thanks to the
wonders of modern computing I have been able to write
Bali Updates
on board a ship in the South Pacific and, in fact,
edition
number 147 went out yesterday morning from my hotel room in
Macau.
Keep in
touch. Editor@visit-bali.com
Yes, indeed.
The Internet does change everything
========================
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