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The Civil Aeronautics Board issued a cease and desist order and plans to file economic sabotage charges against online travel agent AirAsia Move for alleged overcharging of fares on Tacloban-Manila flights
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CAB said AirAsia Move “engaged in the unauthorized sale of airline tickets for carriers in the Philippines at prices exceeding the approved fare structures established by the CAB”
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AirAsia Move noted the discrepancies in fare displays for certain routes, including domestic flights operated by Philippine Airlines, were caused by temporary data synchronization issues with flight pricing partners
The Civil Aeronautics Board (CAB) has issued a cease and desist order and plans to file economic sabotage charges against online travel agent (OTA) AirAsia Move for alleged overcharging of fares on Tacloban-Manila flights.
In a cease and desist order dated May 26, CAB said it had determined that AirAsia Move “has engaged in the unauthorized sale of airline tickets for carriers in the Philippines at prices exceeding the approved fare structures established by the CAB.”
“Such actions violate the fare regulations and policies set forth by the CAB,” the Board added.
AirAsia Move (formerly AirAsia Superapp) is under MOVE Digital, the digital arm of Malaysia-based Capital A Berhad (operating as AirAsia).
The alleged overpricing comes as the temporary weight limit restriction at San Juanico Bridge that started in May impacts transport connectivity between the provinces of Leyte and Samar, leading to exploration of alternative travel options.
CAB executive director Carmelo Arcilla, in a press briefing on June 2, said “it is very clear to us that there is a confluence of two factors that point to price gouging, because price gouging is a situation where a provider or an entity unreasonably increases the prices of services on account of shortage, scarcity or high demand for the product on account of certain abnormal situations like weather disturbance…and this increase is not justified by the supply and demand process and this is beyond the cost of operating the service…”
The order bars AirAsia Move from offering, promoting, or selling tickets of other Philippine carriers at prices that exceed the approved fare structures established by the CAB.
CAB said failure to comply may result in further regulatory action, including, but not limited to, fines or legal proceedings as permitted under applicable laws and regulations.
In a response letter to CAB dated May 29, AirAsia Move said the owner and operator of the MOVE website and mobile application has implemented measures to ensure compliance with the cease and desist order.
It noted however, that “notwithstanding, we respectfully submit that CAB’s jurisdiction under R.A. [Republic Act] No. 776 [The Civil Aeronautics Act of the Philippines] applies to air carriers, not foreign-based OTAs, and that any regulatory action must be predicted on express statutory authority.”
Arcilla noted, however, that “there is such a thing as a doctrine of necessary implication,” wherein it’s not only about the person or entity, it is also the jurisdiction of the subject matter.
He explained that since CAB sets the ceilings for airfares on domestic flights as required by law, “when that ceiling is violated by an entity, even if they are not defined under our jurisdiction, they come within our enforcement proceedings so jurisdiction can be implied under the doctrine of implied jurisdiction and necessary implication.”
In a press briefing on June 2, Transportation Secretary Vince Dizon said they were made aware of the alleged overpricing by Leyte representative Richard Gomez, who bought from AirAsia Move on May 29 two one-way economy tickets from Tacloban to Manila via a Philippine Airlines flight totaling more than P77,000. In comparison, fares from the PAL website for the same day were only more than P12,000.
Moreover, Dizon said he was contacted by Office of Civil Defense administrator Ariel Nepomuceno saying they have been receiving reports on the alleged overpricing of airfares following the temporary weight limit restriction at San Juanico bridge.
Nepomuceno had also asked DOTr, CAB, and Civil Aviation Authority of the Philippines to probe the alleged increases in passenger and cargo air fares in Eastern Visayas, particularly affecting routes to Tacloban, Catarman and Ormoc City.
“Any immediate intervention to control the purported air fare and cargo fare increases would truly help diffuse the frustration of our fellow Filipinos in Region VIII and stabilize the local market and economic conditions,” Nepomuceno told Dizon in a letter.
Dizon said he has asked CAB and the Department of Transportation Aviation Group to file an economic sabotage case against AirAsia Move and to investigate other online platforms that are doing the same not just for flights to and from Tacloban, but for destinations as well.
He also called on the public to purchase tickets directly from the air carriers instead of other platforms.
In a statement on June 2, AirAsia Move said it “affirms its full cooperation with the Philippine government to uphold transparent and fare pricing and consumer protection.”
AirAsia Move also clarified that it does not manually set or manipulate airfares in light of the fare discrepancy issues.
As an OTA, AirAsia Move said it displays flight inventory and pricing data as provided by its authorized upstream suppliers, including third-party aggregators and Global Distribution Systems (GDS).
The discrepancies in fare displays for certain routes, including domestic flights operated by PAL, were caused by temporary data synchronization issues with flight pricing partners, AirAsia Move said.
“This technical discrepancy caused by the third-party provider is not isolated to MOVE as it also affected other booking platforms across the industry, including Agoda, Kiwi.com, and Traveloka,” it added.
As a matter of due diligence, upon identifying the issue, AirAsia Move said it took immediate steps and brought up the matter with the third-party pricing provider for immediate resolution. It also “took steps to further enhance safeguards to prevent any future recurrence.”
AirAsia Move said it has been working closely with relevant authorities and is fully compliant with all regulatory requirements applicable to OTAs operating in the Philippines.
“MOVE welcomes the opportunity to proactively engage with relevant authorities to provide clarity on the issue and asks for due process to take its course for the benefit of all passengers booked via the platform,” it said.
Arcilla said a hearing on the alleged price gouging is scheduled on June 5.
READ: CAB warns against price gouging related to San Juanico Bridge reduced capacity
