As the government weighs tighter controls on rising domestic airfares, economists and industry stakeholders warn in an interview with Context.ph that headline-grabbing fixes such as price caps and fare transparency risk treating symptoms rather than the deeper structural issues keeping tickets expensive.
The policy debate intensified after Tourism Secretary Christina Frasco confirmed that the Department of Tourism (DOT) is discussing regulatory options with the Department of Transportation, the Civil Aeronautics Board (CAB), and airline partners. Among the proposals on the table is the monthly publication of an airfare price index—intended to make pricing more transparent and, potentially, serve as a basis for the imposition of price ceilings on certain routes.
But John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies (PIDS), urged caution. While public frustration over high fares is understandable, Rivera said regulatory intervention should not ignore how airlines actually manage risk and profitability.
“Price controls are low-hanging fruit,” Rivera said, describing them as a knee-jerk response that could overlook the sector’s operational realities. Airline pricing, he noted, is already governed by existing mechanisms and shaped by long-term planning rather than short-term demand swings.
A key challenge is uneven demand. Typhoons and climate-related disruptions regularly depress travel during off-peak months, forcing airlines to smooth revenues across the year.
Higher fares during peak periods, Rivera explained, effectively subsidize weaker seasons and help carriers stay viable. Without addressing this imbalance—through climate-resilient tourism, diversified products, and better infrastructure—fares are unlikely to fall sustainably.
Industry groups echoed the warning. Philippine Travel Agencies Association president Jaison Yang said heavier regulation could distort competition without meaningfully lowering costs. “Pricing of airlines—supply and demand is one factor, fuel prices, taxes,” Yang said. “You cannot really put a published rate that airlines can follow.”
Yang pointed out that standard pricing is impractical in a market that includes both full-service and low-cost carriers. Instead, he argued, the real lever is capacity: more flights, better airports, and infrastructure that allows larger aircraft to operate.
This explains why destinations like Batanes and Siargao remain costly. Limited runways and facilities restrict airlines to smaller planes, pushing up per-seat costs. In contrast, hubs such as Cebu, Bohol, and Boracay benefit from frequent flights and larger aircraft, keeping fares more competitive.
Taxes and fees also weigh heavily. Unlike in many countries where airlines are subsidized, Philippine carriers face layers of charges—from travel tax to airport fees—that ultimately get passed on to passengers.
Seasonal fare spikes, Yang added, are not unique to the Philippines, citing cherry blossom season in Japan and fuel-driven increases in the United States.
Beyond regulation, connectivity remains the decisive factor.
Industry insiders point to regional peers where strong national carriers are complemented by aggressive low-cost operators, creating scale and seat capacity that support tourism growth. In the Philippines, Cebu Pacific’s planned acquisition of more than 150 aircraft and Philippine Airlines’ recent introduction of new widebody planes are seen as critical steps toward improving accessibility.
Frasco, speaking to reporters in Cebu, said the government remains hopeful that the CAB can act swiftly but prudently. She stressed that the DOT’s objective is to protect consumers without undermining airline sustainability.
The tourism chief also stressed that not all destinations are overpriced, noting that competitively priced routes already exist where capacity and infrastructure are adequate.
At the same time, she said the DOT continues to push for route development and better connectivity, arguing that long-term affordability depends less on caps and more on expanding access.
Without a deliberate buildup of seats and infrastructure, industry players warn that fare controls may win headlines—but not deliver cheaper travel.
