The decision of the Court of Appeals, stopping Federal Express Pacific Inc. from operating locally due to Constitutional restrictions, may lead to the airfreight forwarding industry’s “shake-down,” industry sources and a seasoned stock analyst said.

Eagle Securities president Joey Roxas said this would set a bad precedent to local airfreight forwarding firms, which were planning to go after their international competitors.

“What if other local firms start filing cases against any other international airfreight companies in the future? It would be setting a bad precedent that could lead to industry shakeup,” he said.

Records showed that on May 2, the Civil Aeronautics Board issued a five-year permit to FedEx to operate as an international airfreight forwarder.

Two local companies, Merit Freight International Inc. and Ace Logistics Inc., questioned before the appellate court the FedEx application in the CAB, citing that under the Constitution, only Filipino citizens could operate public utilities.

Industry sources, however, said the rule on nationality did not apply to public utilities engaged exclusively in international commerce.  “Therefore, foreigners can own and operate air and sea carriers engaged exclusively in the foreign transport of passengers or goods or both, to and from Philippine airports and seaports,” they said.

The Justice Department, in various opinions as far back as 1946, with the latest one being issued in 2011, interpreted the Constitutional provision requiring Philippine nationality for public utilities as not covering airfreight forwarders exclusively engaged in international commerce.

The court decision is seen to have put at risks the licenses of more than a dozen international airfreight forwarding firms in the Philippines, including UPS, DHL, FedEx, TNT, Ecu Line, Expeditors, Kintetsu, Konoike, Logwin Air, MIQ Logistics, Mitsui-Soko, Nippon Express, NNR Global Logistics, and Scan Global Logistics.

Other international air and sea transport companies operating in the Philippines that could be indirectly affected by the CA ruling are Maersk, Mitsui OSK Lines, Air Asia, Air China, Air Niugini, All Nippon Airlines, Asiana Airlines, Cathay Pacific, China Airlines, China Eastern Airlines, China Southern Airlines, Delta, Dragon Air, Egypt Airlines, Emirates, Etihad, Eva Air, Gulf Air, Hawaiian Airlines, Hong Kong Express, JALWays, Japan Airlines, Jeju Air, JetStar, JetStar Asia, KLM, Korean, Kuwait, Malaysia Airlines System, Qantas, Qatar Airways, Royal Brunei, Saudia, Singapore Airlines, Thai Airways, Tiger Airways, United, etc.

Source From: Manila Standard Today

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