News Backgrounder
Philippines returns to global skies
Two recent decisions will re-shape the strategy of the Philippines’ major carriers. In April, the U.S. Federal Aviation Administration (FAA) restored the country’s category 1 safety rating and the European Union (EU) lifted a ban on Cebu Pacific Airlines flying into EU airspace.
May 1st 2014
"This country is definitely back on the global aviation map,” declared Philippine Airlines (PAL) president, Ramon Ang, in April when the U.S.’s Federal Aviation Administration (FAA) announced it had restored the Philippine’s category 1 safety rating. Read More » “We now join the ranks of the important aviation nations in the world, made up of 79 countries that meet the U.S. safety standards,” he said.
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| Lance Gokongwei, president of Cebu Pacific Airways: “lifting the EU ban means we are about to get even bigger with more than 50 new aircraft coming to us by 2021”. |
Ang wasn’t the only Philippines’ airline boss who was celebrating. Lance Gokongwei, president of budget operator, Cebu Pacific Airlines, received clearance to operate to Europe, a decision EU officials revealed shortly after the FAA decision was made public.
“We welcome this development, a testament to Cebu Pacific’s commitment to safety and full compliance with international aviation safety standards,” said Gokongwei. “This enables Cebu Pacific to continue flying to where Filipinos are. With nearly a million Filipinos working in the EU, we look forward to offering CEB’s trademark lowest fares and the most extensive route network in the Philippines. Lifting of the EU ban means Cebu Pacific is about to get bigger with more than 50 aircraft delivered to us by 2021.”
The removal of the EU ban and the restoration of FAA category 1 status for Philippine Airlines is a huge fillip to the country’s aviation industry, which has been operating under the twin pressures of rapid growth constrained by the FAA’s seven-year long downgrade and the EU black listing.
In the case of the U.S., the Philippines was reduced to a Category 2 rating in 2008.
The regulatory body blow meant that Philippine Airlines, the only carrier flying to the U.S., could continue operating there, but was not permitted to change aircraft type, add capacity or new destinations across the Pacific to North America while the downgrade was in place.
Philippines Civil Aeronautics Board (CAB) executive director, Carmelo Arcilla, said: “The U.S. market is our number two source of traffic. Three million Filipinos live in the U.S, of whom the bulk are Filipino-Americans. Philippine airlines do not even operate to the U.S. East Coast and it is a centre for Filipino communities as well.”
Europe placed a black ban on all Philippine carriers flying into its airspace in 2010, but exempted PAL from the ban in July last year.
Cebu Pacific has become the second airline allowed to fly into Europe.
The EU Charge d’Affaires at the Delegation to the Philippines, Julian Vassallo, said the European Commission is likely to mount another EU assessment mission to the Philippines later in the year “with the prospect of lifting the ban on Philippine aviation as a whole”.
Philippines airlines were not to blame for the black listings. The bans were put into place because the country’s aviation regulators did not meet International Civil Aviation Organization (ICAO) standards for safety systems and oversight.
The U.S. decision will have a huge impact on PAL’s bottom line. Until now, PAL has had to fly decades-old B747-400s and also A340-300s on international routes; aircraft designed and built long before the spike in fuel prices made them less attractive to cost-saving airlines.
Ang said these aircraft will be replaced “within a month” by newer and more fuel-efficient B777-300ERs, which will produce “big fuel savings” at the carrier. PAL operates 26 flights a week to Los Angeles, San Francisco, Honolulu and Guam.
The B777s will service Los Angeles and San Francisco, but PAL will continue to fly its A330-300s and A320-200s to Honolulu and Guam, respectively.
PAL plans to expand its network from Manila to New York, Chicago, Florida and several other major U.S. cities within a year. Ang said the fleet upgrade would allow PAL to explore airline partnerships with foreign carriers that will maximize growth potential.
Cebu Pacific launched its first low-cost, long-haul service last October, from Manila to Dubai, using A330-300s. It plans to launch five more routes in 2014: four to the Middle East and one to Australia. “We have not yet made a definitive decision on where to fly, but definitely we’d like to serve the one million Filipinos in the EU,” said Gokongwei.
