Friday, December 09, 2011

On Airport Terminal Fee

I fly at least 5x a year, 3x international (mainly to attend conferences and seminars) and 2x domestic (visit our folks in Negros Occ. and Iloilo). So I pay the government many taxes and fees related to flying, like travel tax for international trips, and airport terminal fee for either international or local trips.

This Christmas holiday season, many people will fly. Like me, they will pay lots of terminal fee in Philippine airports -- P750 for international trip and P200 for domestic trips. And the airport does not even have a single drinking water fountain, passengers have to buy bottled water from the shops.

If the government is more sensitive and less extortionist, it should provide more services to the passengers after it has collected so many taxes and fees from them. See my earlier discussion on travel tax, Migration and Freedom 13: Travel Tax Robbery, December 06, 2011.

I am reposting my two articles written six years ago.

(1) On Terminal Fees

November 15, 2005:

On top of many types of taxes such as personal and corporate income tax, value added tax (VAT), there are dozens of regulatory fees from various government agencies, national and local. Among these are business permit fee, inspection fee, permit fee, registration fee, processing fee, fines and penalties fee, franchising and licensing fee, clearance and certification fee, laboratory fee, land registration fee, notarial fee, filing fee, fire code fee, market and post-mortem fee, terminal fee, and so on.

If you travel domestically, whether by plane or boat or bus (via roll-on roll-off or RORO boats), you will pay a number of terminal fees in various ports of departure.

If you fly from Manila domestic airport, the previous P100 per passenger terminal fee has been hiked to P200 effective September this year. The amount is big as airlines already pay certain fees to the airports authority, shops inside the departure lounge pay high rental fees, and the services given to passengers -- a plain air-con departure lounge with tv and toilet -- are not really extra-ordinary. Me thinks the hike has something to do with servicing an ever-bloating government expenditures and public debt.

This is counter-productive to the domestic airlines which get passengers at the airport. Domestic airlines compete for passengers not only with other airlines, but also with shipping lines and bus lines that ply their routes in provinces in the Visayas and Mindanao. So airlines would not want to further hike their fares as passengers can easily shift to boats or buses if the fare differential is big. But government, through the airport authority, would hike the terminal fee which would be reflected in the passengers' computation of their total travel expenses.

Terminal fee at Manila international airport (NAIA) at the moment remains at P550 or US$10. I have heard from friends that once NAIA 3 opens, the terminal fee is about $20! If you have travelled abroad, you might wonder why bigger, more beautiful airports in Hong Kong, Singapore, Japan, US, European and other rich countries, do not charge terminal fee, while Manila's small and not-so-beautiful international airport is charging $10 per passenger.

Third week of September 2005, I took a bus to Caticlan, Aklan (via RORO), on my way to Boracay. While airlines (2 small airlines fly there from Manila) would charge you then P2,100 one-way for air fare + fuel surcharge and taxes, I paid only P810 for an ordinary, non-air con bus (it's a night trip anyway), from Cubao to Caticlan. The P810 total fare is composed of P400 bus fare, P385 for 2 boat rides (Batangas - Calapan, Or. Mindoro; then Roxas, Or. Mindoro - Caticlan), P10 terminal fee in Batangas port, P15 terminal fee in Roxas. Buses are charged P440 terminal fee one-way at Batangas port. I do not know how much are buses' terminal fee in Roxas. From Caticlan, the boat fare to Boracay is P19.50 + P2 terminal fee per passenger.

The charging of terminal fee by local government units (LGUs), normally by the municipality or city where the port is located, looks nonsense and extortionary. For instance, when our bus entered the big Batangas port, the driver paid the P440 bus terminal fee, then headed towards the RORO boat. We got off the bus, and went straight to the boat's passenger section, as our bus prepares to enter the boat. We were charged P10 per passenger for stepping onto Batangas port for a few steps on our way to the boat. But the port, through the Philippine Ports Authority (PPA, a national government agency) and the Batangas City government, has already charged the boats, buses and cars that enter and park inside the port, so why charge further the passengers? The same experience in Roxas, Oriental Mindoro port. We got off the bus, walked straight to the boat, and we were charged P15 per passenger.

Cubao to Batangas is about 130 kms., then Calapan to Roxas is 126 kms. Total distance travelled by the bus is only around 256 kms., but the bus company charge P400 for non-air-con bus (and about P575 for air-con bus). At P1 per kilometer fare, the fare from Cubao to Caticlan should only be P256, so there's a P144 surcharge to passengers by the bus company to cover (a) bus terminal fees, and (b) roro's bus fees. In addition, those boats pay docking fees at those ports. Hence, charging passengers with extra terminal fee is plain rent-seeking by LGUs.

In Caticlan, Jetty port's terminal fee is P2 per passenger; this seems reasonable because the fee is small and the port is big and spacious. But during monsoon, boats do not dock at the port because of the big waves, so they dock at another place where there is no port. Passengers walk through stones and sands onto a waiting boat and still they are charged P2 terminal fee. Here, the terminal fee is unjustified because there is no corresponding service given to the passengers.

The amounts stated above would seem too small for some of us. But if you multiply such terminal fees with the thousands of passengers that go through those ports everyday, the total collection is big. Government mandatory fees like terminal fees are very undemocratic and appear to be extortionary. Passengers travelling to the Visayas and Mindanao cannot complain or contest the municipal or city resolutions in Batangas and Oriental Mindoro charging those terminal fees, then hiking them later on. Unlike in market exchange between sellers and buyers, a buyer cannot be forced to give his P10 to the seller of a pack of fried peanuts if he thinks the merchandise is too small or of bad quality. In government transaction, such option is absent as citizens are forced to pay the mandated fee since the service (a port, a license, etc.) is monopolized by government.

One can argue that even with those imposed passenger terminal fees in Batangas and Roxas, the bus fare is still lower compared to plane or Super-ferry fares. It's true, but it's also possible that a small portion (say, 5%) of potential passengers did not push through with their trip because of those additional fees. A family of 4 will have to shell out an additional P100 (P25 each) in terminal fees, and if that family is really poor, P100 of extra expenses is already big for them.

Like multiple taxes and other government mandatory fees, multiple charges are distortionary. Once airlines or shipping lines or bus lines are charged with their own terminal and related fees, they automatically pass those expenses to their passengers in the form of higher fare. Charging the passengers with additional termnal fee, especially if the rate is high, is plain extortion, even if these are legally backed up by LGU or national government agency resolutions and orders.

(2) Airport Police and Terminal Fee

May 11, 2006

During holy week last April, the plane of the person I was supposed to meet at the Manila domestic airport was soooo delayed. I didn't bring any reading material because I never thought I would be waiting for hours. What I did was observe the people around me, like the many Koreans in the arrival waiting area who were waiting for their fellow Koreans arriving from Boracay and I dont know where else.

Among the other people that caught my attention were the airport police. I saw about 5 of them just milling around; they were generally big guys, tall (at least 5'7""), have fair to white complexion (meaning they don't get burned under the sun), have big bellies, in the 30s to 50s. I was observing what's the job of an airport police. Basically they were doing almost nothing! They were walking around in uniform, guns tucked in their waists, either talking to each other and other airport staff, or texting. I saw 2 of them talking to young, pretty and boobsie ladies, then one of them escorted the 2 young ladies to "only authorized persons allowed" in the arrival waiting area and further chatted with them.

Meanwhile, private security guards (yes, not government employees protected by security of tenure) are the ones who check coming vehicles for any security threats, checking departing passengers for their tickets, etc. They are generally shorter, have burned skin (they get all the sunrays in the field), very few have big tummies.

So there. Public servants (aka airport police) who live off on taxes are practically doing nothing while drawing their regular monthly salaries and allowances, waiting for some "rackets" in the airport perhaps, and waiting for handsome retirement package someday. While private security guards who do not enjoy the perks of those "public servants" are the ones who are on the frontline protecting the airport and the lives and properties of departing and arriving passengers.
The Manila International Airport Authority (MIAA) has hiked domestic terminal fee from P100 to P200 per departing passenger since late last year. So what are the services that a government agency like MIAA gives to passengers in exchange for their P200? Not much except the x-ray machines, airport security personnel (again, mainly the private security guards), and an air-con departure lounge with TV. No welcome drinks, though the CR is clean. But the malls can give the same amenities at zero cost to peoplle who enter their premises.

On peak travel season like Holy week and Christmas holidays, the line of departing passengers is so long, many of them are queuing under the sun. No extra tent or cover for passengers under the sun, no electric fan to mitigate the hot climate. They feel the air-con only when they are inside the terminal building.

MIAA already earns from various sources; among them:
a) Rental fees to the various shops (food and coffee shops, books and massage shops, etc.) in the departure lounge,
b) Space rental from advertisers who put their ads on airport premises;
c) Landing and airplane parking fees from the private commercial airlines;
d) Franchise fee from airport taxis;
e) Parking fee of P35/car in the parking area across the terminal building (and there are not enough space since airport taxis occupy a big portion of the parking area);
f) Other revenue sources.

So, it's clear that the hike in domestic terminal fee (or domestic terminal tax) is unjustified given the small services given to departing passengers, and MIAA already earns from various sources connected with the departing and arriving passengers. The hiked terminal tax, like travel tax and value-added tax and amusement tax and many other taxes by national and local governments, are meant mainly to sustain a bloated government bureaucracy and whims of many politicians in power, and not to provide services to the paying public

1 comment:

Anonymous said...

I would like to inform you that most, if not all, airports outside of the Philippines also charge such a terminal fee/tax.

For example, each passenger departing HKIA actually pays a HKD120 terminal fee. You just don't realise it because it's included in your airline ticket price. (Visit the link below for proof.)

Now the travel tax is a separate topic altogether!