AirAsia Philippines, one of the country’s top carriers, may face serious operational challenges as unpaid government obligations approaching P1 billion put its licenses and airport access at risk, the Civil Aviation Authority of the Philippines (CAAP) warned on Monday. InsiderPH reported that the regulator issued a final demand letter to the airline through President Suresh Bangah, covering P833.7 million in unsettled fees, with a strict five-day deadline to comply.
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Growing Debt Prompts Regulator Action
The airline, a key player in domestic travel alongside Cebu Pacific and Philippine Airlines, is part of the regional AirAsia Group, led by Malaysian entrepreneur Tony Fernandes. The outstanding obligations include unpaid air navigation, landing, and parking fees, as well as domestic passenger service charges (DPSC) collected from travelers.
“Despite repeated written demands, reconciliation meetings, and follow-ups, the foregoing obligations remain outstanding as of date. This continued non-compliance is a matter of serious concern to the Authority,” CAAP stated, highlighting the gravity of the situation.
An insider familiar with the matter explained that the debt has been accumulating over the years, prompting CAAP to take a firmer stance after prior efforts to allow staggered payments. Including interest, the airline’s government debt may reach or exceed P1 billion, the source added.
With the busy Holy Week travel season approaching, the regulator expressed concern over potential passenger inconvenience. “We don’t want the passengers to bear the inconvenience,” the insider noted, adding that CAAP may implement targeted measures such as restricting access at certain CAAP-managed airports. The situation comes amid rising jet fuel costs due to the US-Iran conflict, further straining airline operations.
Licenses, Access, and Legal Implications
CAAP has outlined potential sanctions, including withholding services and accounting clearances, suspending or not renewing licenses and permits, and revoking facility access passes. The authority may also pursue civil and criminal remedies to recover the unpaid sums with penalties and interest, InsiderPH reported.
Another contentious area involves DPSC collections, including funds from expired or unused tickets. “It is emphasized that such collections constitute trust funds held for the benefit of CAAP and must therefore be properly accounted for and remitted in accordance with existing regulations and the provisions of the Memorandum of Agreement,” the regulator added.
AirAsia Group appointed Bangah as president and general manager of its Philippine operations in July last year. Under his leadership, the airline operates 15 Airbus A320 aircraft, servicing both domestic and international routes.
The unfolding situation could directly impact travelers across the Philippines, particularly those relying on AirAsia for affordable domestic flights, as any suspension or restriction may limit travel options and disrupt schedules during peak holiday seasons.
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