Air transport competed with politics for the main news headlines in the Dominican Republic press during the last week of June. At the week’s end, the government approved a fund that could provide upwards of US$3 million in promotional monies for the tourism industry based on sharing duties airlines pay for arriving charter passengers. The President also removed the head of the state aviation authority, and approved several new flights to transport visitors from Germany.
The aviation advisor to the President, lawyer José Luís Abraham also in an extensive statement reprinted here, advocated for open skies, under the argument that only the big airlines will survive. Other alternatives have been the merge of the moribund Dominicana Airlines with a major carrier in order to secure foreign transporters have competition, or to support the development of several small airlines with the participation of Dominican investors.
The advisor for aviation matters to the President, José Luís Abraham, in a press conference at Asonahores made the following statement:
Last week, politicians had to compete with aviation news for space in the press. The presidential candidates have been at a disadvantage in the number of headlines made there. This generous coverage shows the importance of commercial aviation and the press.being aware of this fact. It has also served the purpose of making the ordinary citizen aware of the necessary collaboration between both sectors.
I am making this statement following instructions from the President of the Republic who recognizes the importance of the tourist industry, which in romantic times was called “the industry without chimneys” and that of its principal ally, civil aviation.
The measures recently adopted by the President in compliance with the recent and past requests from this sector are proof of this.
Because of the value of these measures, it is necessary that while we comment their meaning and effect, we take advantage of the opportunity to point out some of the reflections that need examination which, in the near future, will become a common task.
The participation of the private sector in the government organization that is in charge of establishing the airline policy of the country cannot be more timely.
Timely because public opinion is currently debating the total liberalization of air transport; and such liberalization has its price.
There are three schools of thought:
One, those that advocate free access to our markets for all airlines, without limitation nor restriction, other than those for technical and security reasons.
Another, identifying with those who maintain the idea that air transportation in an island like ours should not be in the hands, and at the mercy, of foreign airlines, and would rather see a strategic balance and the commercial opportunity for a solid national transport industry.
These two trends have a common denominator: they are clear and the same as those that prevail in the international aviation community.
But there is a third school, our own, and as it is our own, it is very special; that in our endeavors to criticize whatever is done, be it good or bad, in favor of liberalization or in favor of national carriers, it has developed a new thesis – that of confusion.
The news media have in recent days echoed innumerable criticisms of the policies implemented by the Civil Aviation Board. We ask that you constructively reconsider these issues, in view of their complexity.
The press has criticized the winds of liberalization, when they do not recognize the strength of bilateral agreements. They consider the case of a U.S. airline, seeing it as a company that operates in the country with a kind of hegemonic monopoly. It would so appear to the ordinary citizen who is not cognizant of the complexity of the situation.
But the way those promoting air transport, who have been given much space in the press, reflect but a classic example of what that free market philosophy generates.
For those keeping records, in July of 1986, in the transition period between one administration and another, the Dominican government signed an Air Transportation Agreement with the United States of America, that was totally liberal in nature.
In the introductory text of that Agreement, the contracting parties committed to implement air transportation between both countries with a minimum of governmental interference.
That is, within the framework of liberalization, the aviation authorities of both countries agreed to forfeit the right to impose restrictions on the number of airlines permitted to operate on the routes indicated in the agreement. They also agreed to not restrict the number of flights, the capacity of their aircraft, and to not fix or impose fares.
The participation of the carriers in a regimen such as we have now with the United States is governed only by free market forces and competition. This system advocates that efficiency and competitiveness are the rule and discards all sorts of subsidies and governmental protection.
The primary interest of this liberal policy is that the traveler should benefit from as many choices as possible.
On the other hand, the news media have given coverage to the feelings of those groups that believe that the Dominican aviation authorities hurt tourism, when in their defense of national transporters and the well-being of regular flights, such as the kind of services that predominate with Germany; they denied a flight permit to a U.S. company that would have benefited the tourist market by carrying Germans and Dominicans, as was the case of World Airways.
But if permission is granted to this company and after two years it overtakes the market, just as other U.S. airlines have taken over the larger part of the ethnic market.that they originally shared with Dominicana de Aviación, then they would accuse the Board of supporting a monopoly by a foreign airline from a third country to the detriment of the interests of national airlines.
American Eagle had requested permission from the Civil Aviation Board to fly from Puerto Rico to La Romana. At the time the Board considered the request,in the same way it did with that from the U.S. company, World Airways, Inc., although it feared the effects on a Dominican company that served the same route. We refer to Dominair.
The reaction of the hotel industry came fast. The Civil Aviation Board, nevertheless, had serious reservations, but finally approved the request by American Eagle and, as a result, six months later, Dominair discontinued its La Romana flights.
That same company, American Eagle, has spent several years pursuing the approval of the right to fly to Puerto Rico from Santiago. Santiago, like La Romana, is not a destination included in the 1986 bilateral agreement, and therefore the Civil Aviation Board has turned down the request time after time. Result: Dominair continues to fly from Santiago to Puerto Rico.
But the people of Santiago, unlike those from La Romana, have not been given the opportunity to decide for themselves which airline service they prefer in an environment of market forces and free competition.
Let us agree to liberalize or not liberalize. There are no grey areas, because if there are, then we will then fall into the contradictions inherent in a system that is neither one nor the other. Each current has its good and bad points. If we want to marry both, I can assure you we shall be left with the bad things from both.
The above examples show, that despite the adverse effects of a liberal regime, when it is applied without demagoguery, its virtues are perceived: Dominicans today have open skies between the U.S. and the D.R. without more limitations and restrictions than those derived from free competition.
But if liberalization is requested, then let us now complain of the destitute state of our government airline, that in our opinion, is moribund not only due to the effects of its managements, but above all, because of the effect of the implementation of a liberal air policy as contained in the 1986 bilateral aviation agreement with the United States.
If liberalization is sought, then let us not complain if American absorbs APA, nor if the latter, in order to survive, may have to continue playing ping-pong, switching partners from time to time.
It is a matter of resources, where the stronger will prevail. But the way the liberal thinking sees things, the prevailing criteria should be the benefit to the customer.
It is that price to which I refer. If liberalization is sought, then we only need air services, come from where they come, not airlines, call them what they may call themselves.
The Dominican aviation authorities have also been criticized for their handling of situations surrounding the so-called Dominican airline companies: Alas Nacionales and Air Ambar.
It so happens that those two companies were born precisely under the umbrella of liberal policies. But it can be said they are true national companies; it can be said that when the state issues route exploitation certificates it is doing so in favor of Dominican interests.
When the state issues this certificate it publicly commits itself to the international aviation community. That is, it endorses the technical, financial and managerial competence, and the commercial strength of that company. Is it worth it then to commit the responsibility of the nation to support air transportation services that carry flags of convenience?
The fragility of these companies and their identity with true national interests is precisely the only reason why the tourist industry has suffered the consequences.
If tourism is cheap, air transportation will be cheap, and what is cheap often turns out being expensive.
Let us not run the risk of confusing liberalization of air transport with libertinism of the industry, nor let us prostitute ourselves in the name of liberalization.
It appears that in the end, the same as Dominicans [an obvious reference to the forthcoming presidential election], the tourist industry will have to choose between two roads. We hope with the valuable presence of Asonahores on the Aviation Board that the right road will be chosen.
Another of the measures adopted last Friday by the President, perhaps the most important, responds to an old and constant claim by the tourist industry: the creation of a fund for the promotion of the Dominican Republic overseas.
The presidential decree provides that 50% of the income generated from the tariffs and aviation fees levied on passengers transported by charter airlines be placed in a fund, to be administered by the government and the Asociación Nacional de Hoteles y Restaurantes, Inc. (Asonahores) to finance international tourist promotion.
With this measure, the private sector becomes a partner of the government, generating the resources to provide the enormous investments needed to modernize the country’s aviation and airport infrastructure.
Of the monies the government receives under this scheme, half will go directly for the hotel industry and the other will be for its principal ally, air transport.
So that we have an idea of what this means, in 1995 the flow of arrivals and departures of travelers on charter flights was approximately 1,250,000. As the present rate referred to by the presidential degree has been US$5.00 per transported passenger, if the same number visit in the first year of the application of this measure, the private sector will receive through Asonahores US$3,125,000, or slightly more than RD$40 million that will assist in promoting Dominican tourism abroad.
I do not want to waste this opportunity to relate an anecdote. In 1988, the Civil Aviation Board proposed to the President the enacting of a tariff per passenger and cargo transported on regular flights and charters. On the occasion, it was US$5.00 for passengers on regular flights and US$2.50 for charter flights.
The President favored the recommendation. The press made such a stir that after a week the Minister of Tourism at the time was motivated to propose to the President of the Republic, together with the Administrative Secretary of the Presidency, that the measure be canceled, as it would be deadly for tourism. They so persuaded the President.
From 1988 to 1990, due to that storm, the country did not receive enormous sums and the necessary income for the development of its aviation and airport facilities. In 1990, nevertheless, this advisor was able to bring up the topic again with the President, and the measure was implemented.
From 1990, the year in which the President created the Special Fund 1940 for the promotion and development of aviation infrastructure, until May of 1996, some RD$1,553,649,418.30 and US$29,089,604.31 have been generated, with no adverse effect on the flow of tourists.
The investment of those funds is obvious: airports, runways, taxi ways, radar traffic control systems; land-air-air-land communication systems; air navigation systems, VOR, ILS, NDB; navigation lights, integrated communications systems, enhancement of salaries of traffic controllers and the personnel of the Civil Aviation Department, and, above all, the infrastructure that makes us one of the most complete tourist destinations in the Caribbean and Latin America.
It was not true then that the government action to secure these resources, which were needed for the development of its specialized areas, would prove fatal to tourism, and it is also not true today that the air transportation policies of the government, as executed by the Civil Aviation Board, and that are open and extremely flexible, and have been maintained for the last 10 years, are the culprits for the supposed or real decline of the tourist industry.
What is true is that tourism has declined and that has stirred it all up, because for a long time we were accustomed to constant growth, and that was only possible as a consequence of the torrent of authorizations for regular and charter flights coming from the authority that is now under so much criticism.
In 1986 the volume of passengers transported through the international airports of the country reached 1,829,260. In 1995, that volume reached the impressive total of 4,224,716 passengers, including arrivals and departures. A generous increase of almost 230%.
If these numbers are not sufficient to make the point, in 1986, our country’s airports, some 16,391 air operations took place. In 1995 these operations experienced a geometric progression, reaching 40,553 flights. Another generous increase of almost 250%.
What can we call what the government has done to benefit tourism in the past years? What can we call what tourism has done to benefit its principal ally, air transport – an unbreakable alliance, that does not admit separation and has only one road, to walk together towards consolidation.
It is sincerity that should prevail, because if we persist in deceiving ourselves with false clichés and taboos of interested parties, we will lose the true sense of our responsibilities and the marksmanship we need to launch our darts in the right direction.
I exhaust your patience by concluding that the President has contributed a lot to developing tourism. President Balaguer has an awareness of the “above and below” of his responsibilities in respect of this industry.
Thank you.