Cebu Pacific Seeks FAA Permit For US flights


MANILA – While Philippine Airlines (PAL) is struggling over ownership issues, rival Cebu Pacific is expanding its footprint with a bid to fly to the US.

“We applied to FAA for our operating permit to fly to US,” Alex Reyes, head of Cebu Pacific’s long haul division, told

Cebu Pacifiic’s move to fly ito the US came after the Federal Aviation Authority upgraded the Philippines’ aviation rating to Category 1 last April.

Cebu Pacific already has clearance to fly to Guam, Saipan, Honolulu, San Francisco, and Los Angeles after the Philippine carrier bagged the approval of the US Department of Transportation.

According to Centre for Asia-Pacific Aviation (CAPA), Cebu Pacific’s first US route will be Honolulu-Guam.

“Cebu Pacific plans to launch Guam by the end of 2014 using its A320 fleet. Honolulu will take slightly longer to launch as Cebu Pacific first needs to secure extended range twin-engine operations (ETOPS) approval for its A330 fleet,” CAPA said.

CAPA said Honolulu will also be “challenging from a competitive standpoint” as PAL is increasing its Manila-Honolulu flights from four to seven a week ahead of Cebu Pacific’s expected entry into the Hawaii market.

“PAL’s response thus far to Cebu Pacific’s long-haul expansion has  been extremely aggressive. PAL also launched Dubai and Abu Dhabi at about the same time as Cebu Pacific entered Dubai and also has launched Dammam and Riyadh ahead of Cebu Pacific,” CAPA said.

By September, Cebu Paciifc will be flying to Kuwait and Sydney, Australia.

But despite the stiff competition in the long-haul market, “Cebu Pacific is prepared to weather the storm. If anything PAL is more likely to retreat as questions again surface over PAL’s future ownership structure,” CAPA said.

Recently, San Miguel Corp (SMC) admitted that it was in discussions for either divesting from PAL or buying out the Lucio Tan Group.

SMC, through wholly owned subsidiary San Miguel Equity Investments Inc, earlier entered into investment agreements with Trustmark Holdings Corp and Zuma Holdings and Management Corp, giving the food-and-beverage conglomerate a 49 percent stake in PAL and Air Philippines Express for $500 million. The remaining 51 percent of PAL remains with Tan.

The FAA upgrade also allowed PAL to expand operation to the US, particularly to New York, Chicago and Florida.

PAL operates a total of 26 weekly flights to the US, with frequencies to Los Angeles, San Francisco, Honolulu and Guam.

“Cebu Pacific is still too new to the long-haul low-cost game to determine if it will be a winner,” CAPA said.

Additional Aircraft Acquisition

According to CAPA, Cebu Pacific was already evaluating acquisition of the A350, 787 and the 777X.

“The latter is still several years away but would enable flights from Manila to the west coast of the US, which have traditionally been PAL’s largest and most lucrative long-haul markets,” CAPA said.

“We are always evaluating aircraft acquisition since we are in constant touch with airframe manufacturers,” Cebu Pacific’s Reyes said.

“As an airline we are continually studying opportunities for further growth,” he added.

At present, the airline has 50 aircraft and total remaining order book of 11 A320s, 30 A321 NEO, and2 A330s on operating lease, with 8 A320s for lease returns.

In the first six months, Gokongwei-owned Cebu Air Inc (CEB) reported a profit of P3.18 billion, up 124.7 percent from the P1.414 billion in the same 6 months of last year. In the second quarter alone, Cebu Pacific’s net income shot up to P3.01 billion from the previous year’s P257.34 million.

Revenue grew 23 percent to P26.72 billion in the first half from P21.73 billion last year. In the second quarter alone, top line rose to P14.95 billion from last year’s P11.18 billion.

Source: Darwin G. Amojelar,

Philippine Airlines To FLy Boeing 777 To US

Boeing 777-300ER to the US
Boeing 777-300ER to the US

MANILA, Philippines – The US Federal Aviation Administration (FAA) has allowed national flag carrier Philippines Airlines (PAL) to use its brand-new aircraft for flights to the United States.

PAL president and chief operating officer Ramon S. Ang confirmed the FAA approval in a text message to reporters.

The FAA’s green light to PAL came less than a month after it restored the aviation safety rating of the Philippines to Category 1 status.

This means that PAL can now use the newer and more efficient Boeing 777 for flights to the US instead of the Boeing 747.

Ang earlier said PAL could save at least $160 million a year – $100 million in fuel savings and $60 million for maintenance – by using the more efficient Boeing 777 for US flights.

PAL has 6 newly-acquired Boeing 777-300ER aircraft ready to ply the Manila-US route.

PAL currently operates 26 weekly flights to the US covering Los Angeles, San Francisco, Honolulu and Guam.

Ang said PAL will continue to use its new wide body Airbus A330-300s and single-aisle A320-200s for flights to Honolulu and Guam.

PAL is planning to resume flights to New York, which ceased in 1997 due to the Asian financial crisis, and to expand to Chicago.


ANALYSIS: Philippines On The Verge Of Tourism Boom After Aviation Upgrades

Central Business District of Makati City, Philippines

MANILA – With local carriers cleared to expand in the US and Europe, the Philippines is on the verge of a tourism boom.

After more than six years in Category 2, the Federal Aviation Administration earlier today announced the Philippines’ return to Category 1 safety rating, allowing local airlines to mount more flights to the US.

Hours later, the European Union delivered the day’s second good news: Cebu Pacific can now fly to Europe.

Brussels’ decision comes months after it allowed Philippine Airlines (PAL) to resume flights following a three-year absence, and almost a year since the International Civil Aviation Office (ICAO) lifted the significant safety concerns on the Philippines’ main international gateway, the Ninoy Aquino International Airport (NAIA).


Tourism Secretary Ramon Jimenez Jr. told that the latest two certifications are going to have a “massive” impact on Philippine tourism.

“Connectivity and accessibility are crucial to growth. We are ecstatic with these developments.  We are back on track,” Jimenez said.

He said the Department of Tourism (DOT) may revise its targets because of the upgrades even though there’s “not enough data yet to change projections.”

“We shall see how travel operators react and then we will know,” he said.

To be sure, the government hasn’t been waiting on the sidelines for tourists to come.

The DOT has been promoting the country through a campaign dubbed as “More Fun in the Philippines,” which has won international plaudits and allowed tourist arrivals to hit fresh records.

Last year, the country attracted 4.68 million foreign visitors, up 9.56 percent year-on-year.

For this year and next, the government is aiming for 6.8 million and 8.2 million, respectively, so that by the end of President Benigno Aquino III’s term,  arrivals would have reached 10 million, with receipts of P455 billion.

The top visitors so far have been the Koreans, Chinese and Japanese – the result of the Philippines’ efforts to liberalize the country’s airspace, allowing local carriers to fly across Asia and Asian airlines to enter more points in the country.


Optimal connectivity

The aviation safety upgrades from the US and EU would further open these markets. Data from DOT show that visitors from the US reached 674,564 in 2013, up by 3.36 percent year-on-year, while those from European markets like the United Kingdom and Germany reaching 122,759 and 70,949 arrivals, respectively.

Rosanna Tuason-Fores, president of the Tourism Congress of the Philippines, said the country’s Category 1 status and the removal from the EU blacklist would provide more optimal connectivity in the trans-Pacific region.

“This will also allow us to be competitive as a route not just in the Philippines but also in the whole Asian region. We believe that with this new development, there will be a marked increase in the number of tourist arrivals both from the USA and Europe,” Fores said.

Carmelo Arcilla, executive director of Civil Aeronautics Board (CAB) said the FAA upgrade and the removal from the EU blacklist would benefit the riding public, who will have improved options for air travel that are world class.

“It will also be a boost to our tourism efforts, because it will open up foreign markets for new and expanded services by Philippine carriers, not only in terms of direct services, but also for other cooperative arrangements like code sharing and interline,” Arcilla said.

Apart from ushering a new era in its trans-Pacific service, the upgrade will also allow PAL to explore possible airline partnerships with foreign carriers in order to maximize its growth potential, said the flag carrier’s president Ramon S. Ang.

“This latest development allows us to deploy our modern and fuel-efficient Boeing 777-300ER fleet to the US, and enables us to explore new destination opportunities in one of the Philippines’ largest passenger markets,” Ang said.


“Back on global aviation map”

Transport Secretary Joseph Emilio Abaya said the upgrade will have significant economic dividends, as carriers mount more direct flights, boosting not only tourism, but also trade and business relations between the Philippines on the one hand, and the US and the EU on the other.

For example, “Philippine air carriers can now open more flights to the United States and have additional routes such as flying to the East Coast,” he added.

Henry J. Schumacher, vice president for external affairs of the European Chamber of Commerce of the Philippines, agreed.

“Tourism will definitely benefit creating more direct connections. Business travel will also gain with more direct flights – that will lead to more business activities between Europe and the Philippines,” Schumacher said.

“This is a great day for Philippine tourism,” he added.

Ang said the FAA upgrade means the Philippines has joined an elite group of only 79 countries that meet the US safety standards.

“This country is definitely back on the global aviation map,” he said.

Following the re-classification, the flag carrier would deploy six Boeing 777-300ERs, acquired at a cost of $1.2 billion, for US flights within a month’s time.


More infrastructure needed 

But while increasing connectivity is important, the Philippines still has its work cut out in terms of improving infrastructure.

“Building better airports for those flights to arrive at and many other improvements are needed before the full potential of tourism in the Philippines is realized,” John D. Forbes, American Chamber of Commerce of the Philippines (AmCham) senior adviser told

He said “latent demand” stands at 12 million, thus “continued improvements in policies, infrastructure, and promotion are essential.”

Tourism Congress of the Philippines’ Fores agrees: “Infrastructure development must be accelerated.”

“More airports must be made available to international flights; more hotel rooms must be on hand to accommodate the increase in tourist arrivals,” she added.

To date, the NAIA has already exceeded it maximum annual capacity of 30 million passengers.

The government is well aware of this challenge.

It is looking at building a new international airport either in Sangley Point or Laguna de Bay. PAL also plans to put up a $10 billion airport near Manila – albeit the Department of Transportation and Communications (DOTC) said it won’t entertain unsolicited proposals.

Big-ticket projects are being pursued under the Aquino administration’s Public-Private Partnership (PPP) scheme, but this has been slow to take off amid technical and other difficulties.

The government last week awarded its largest PPP airport project to date: the P17.2-billion upgrade of the Mactan Cebu International Airport, which next to NAIA is the country’s second biggest international gateway.

Already delayed, the project is now faced with a legal challenge, after a senator asked the Supreme Court to void its award. Whether the High Tribunal would oblige, remains to be seen.

Source: Darwin G. Amojelar,

Philippine Airlines Sees Bottom Line Turn Around in 2014

Flag carrier Philippine Airlines (PAL) is on its way to improving its bottom line starting this year after incurring huge losses in 2013.

“2013 was a clean-up year for PAL as we go through the costly, yet necessary, fleet renewal process but we are on track with our goals and we remain committed to improving your airline’s financial and operational performance,” president and chief operating officer Ramon S. Ang said in an e-mailed statement Tuesday. 

Image Source: Darryl Morrell,
Image Source: Darryl Morrell,

Owner and operator PAL Holdings Inc. incurred P9.12 billion in losses in the fiscal first nine months ending Dec. 31, up P6.38 billion from P2.74 billion a year earlier.

“PAL reported comprehensive loss amounting to $229.7M for the first nine months of 2013, following a one-off expense of $261M covering the retirement of its aging jets,” the company said.

“With the significant one-off expense out of its way, PAL is confident it will end 2014 healthier with a more efficient fleet planning program from the deployment of its various new aircraft, an expanded network and further upgrading of service standards on the ground and in the air,” it added.

With the Philippines now back in the Category 1 status of the US Federal Aviation Administration, “PAL can now deploy its new planes to the US and explore vast opportunities, including network expansion and partnership with other airlines, in one of the Philippines’ largest passenger markets,” the company noted, the airline now expects to generate substantial yearly savings from lower maintenance and fuel costs.

PAL will own one of Asia’s youngest fleets at 3.5 years with the completion of a modernization program that involves, among others, the replacement of 20 aging aircraft with modern, fuel-efficient planes that are will reduce costs amid expected productivity gains.

“The retirement of PAL’s old fleet is part of a turnaround strategy aimed at transforming the flag carrier into Asia’s airline of choice through a simple game-changing program of fleet modernization, network expansion and service innovation,” the airline said.


Source: GMA News

Philippine Airlines & Cebu Pacific: Poised to Expand in US Following Category 1 Upgrade

Photo Credit: Kaoru Kojima, Planespotters.Net

The US FAA upgrade of the Philippines to a Category 1 safety rating opens up short-term expansion opportunities for Cebu Pacific Air and Philippine Airlines (PAL), brightening the outlook for both carriers. The upgrade removes the previous freeze on new entrants or adding capacity.

The Category 1 rating enables PAL to immediately replace ageing A340s and 747-400s with more efficient 777-300ERs on existing services to Los Angeles and San Francisco. PAL also plans to add within the next year new destinations in the continental US, giving it a potential alternative to the more risky planned expansion of its European network.

Cebu Pacific is likely to launch services by the end of 2014 to Guam and Hawaii with A320s and A330s, matching PAL on each route. Hawaii and potentially Europe, which is also now an option for Cebu Pacific as the carrier has joined PAL in being removed from the EU blacklist, gives the LCC an opportunity to slow down Middle East expansion and diversify its new long-haul operation.

Philippine Authorities Secure Category 1 Rating 

The US FAA announced on 10-Apr-2014 the upgrade of the Philippines from a Category 2 to Category 1 safety rating. The Philippines has been stuck in Category 2 since early 2008, prohibiting PAL from adding flights or changing gauge on any existing frequencies in one of the carrier’s most important markets.

Transitioning trans-Pacific flights to more efficient widebody aircraft and expansion in the US has been a key component of the PAL business plan for over six years. PAL initially committed in 2007 to acquiring six 777-300ERs with the expectation of operating the type to the continental US, including existing and potential new routes. But just a few months later the US FAA downgraded the Philippines to Category 2.

Frustratingly for PAL, the Philippines remained in Category 2 when the 777-300ERs were delivered, starting with two aircraft in 2010 and followed by another two in 2012 and the final two in 2013. As a result PAL was forced to find other markets for its 777-300ERs, some of which like Australia proved to be less than ideal.

In 2011 PAL, under its prior management and ownership, even took the unusual step of hiring and paying for a consultant to help Philippine authorities meet Category 1 standards. While Philippine authorities over the last few years have repeatedly expressed confidence in an upgrade, a Category 1 rating particularly appeared imminent since Mar-2013, when ICAO concluded that Philippine oversight authorities were again in compliance with international safety standards.

The ICAO conclusion led to the EU removing PAL from its blacklist of carriers in Jul-2013. Japanese authorities also quickly lifted restrictions that had blocked PAL and all Philippine carriers since 2008 from expanding to Japan. The Philippines had to wait longer for the US to follow as the FAA first needed to schedule and conduct a new audit of Philippine authorities, which was completed in Mar-2014.

 PAL Will Finally Operate 777-300ERs on US Routes

PAL stated on 10-Apr-2014 that 777-300ERs will take over within the next month its existing flights to Los Angeles and San Francisco. PAL now operates ageing 747-400s on its daily flight to San Francisco and a combination of 747-400s and A340-300s on its 11 weekly frequencies to Los Angeles. PAL also operates five weekly flights to Guam and three to Honolulu, which the carrier says will continue to be operated with A320s and A330-300s respectively.

PAL currently uses its six 777-300ERs to operate three of its 14 weekly flights to Tokyo Haneda, its five weekly flights to London and its seven frequencies to Vancouver with three continuing to Toronto, according to OAG data. Sydney had also been flown with 777-300ERs until early Feb-2014, when A340-300s were placed back on the ManilaSydney route.

The 777-300ER will significantly improve the efficiency of PAL’s operation to Los Angeles and San Francisco and also enable the carrier to eliminate a fuel stop on the westbound leg. The 747-400 and A340 are able to operate non-stop from Manila to California but often have to make a stop on the longer return leg.

PAL Needs To Acquire More Widebody Aircraft

The 777-300ER is the ideal aircraft for PAL’s trans-Pacific operations, as the carrier envisioned in first selecting the type in 2007. But PAL will not have enough 777-300ERs to cover all its North American flights. Based on current schedules all 25 weekly frequencies to Los Angeles, San Francisco and Vancouver would require a fleet of at least seven aircraft.

PAL will also need more 777-300ERs to add new destinations in mainland US, which it plans to launch within the next year. The carrier served Las Vegas until 2012 and previously looked at serving San Diego, which has one of the largest Filipino populations in the US. But at this point PAL’s management team seems more keen to go further east with Chicago and New York both likely destinations by early 2015.

PAL has been looking at acquiring more widebody long-haul aircraft, including additional 777-300ERs. With the green light now to change gauge and expand in the US, the acquisition of additional 777-300ERs through leases or new orders becomes more likely as it remains the preferred type for US routes. (787s or A350s could also be acquired but PAL would likely need to wait longer for delivery slots, making these types potential replacements for A340s on European routes.)

Category 2 prevented PAL from completing renewal of its widebody fleet as the carrier had no choice but to continue operating 747-400s and A340s on its US routes. PAL currently operates five 747-400s, which are 19 to 20 years old and are only used for Los Angeles and San Francisco. PAL also has been operating some of its US flights since 2008 with four long-standing A340-300s, which are 16 to 17 years old.

In addition to taking its last two 777-300ERs, over the last year PAL added five ex-Iberia A340-300s under a lease agreement with Airbus. The newly acquired A340-300s, which are 12 to 15 years old, will likely be used to operate to London (and at least some of the Vancouver frequencies) as PAL looks to free up 777-300ERs for the US market.

PAL also has taken delivery over the last year of eight A330-300s (including one at PAL Express) which were part of a large order placed in 2012 with Airbus. PAL has another 12 A330-300s on outstanding order, all of which are slated to be delivered by the end of 2015, according to the CAPA Fleet Database.

PAL has been using the A330s to expand regionally within Asia-Pacific and to the Middle East. PAL recently reduced its A330-300 order book by five aircraft in a swap for eight more A320neos, raising it A320neo commitment to 18 aircraft.

Philippine Airlines fleet summary: as of 12-Apr-2014

The PAL group has been ambitiously pursuing expansion in the Middle East, where it added five destinations in 4Q2013 using new A330-300s. PAL also launched the Manila-London Heathrow route in Nov-2013, quickly taking advantage of its removal from the EU blacklist.

See related reports:

 US Expansion More Attractive Than Continental Europe

PAL has also been preparing over the last several months to add services in continental Europe, with Amsterdam, Frankfurt, Paris and Rome all cited as potential routes. PAL had been looking at launching multiple European destinations in 2014 and still has a sufficient number of A340-300s to potentially launch one or two. But new US destinations could become the priority over continental Europe.

It would be logical for PAL to focus on the US and catch up on the six years it has not been able to grow in the US market. (In fact PAL slightly reduced capacity to the US as in 2012 it dropped Las Vegas, which it served as a tag with Vancouver on three of the seven weekly flights to Vancouver. Dropping the tag allowed PAL to switch its Vancouver service to an all-777-300ER operation and add Toronto. Service to Las Vegas is not likely to be restored as the focus is instead now on the eastern US.)

The US represents a better opportunity than Europe as the US has by far the world’s largest population of overseas Filipinos. There are over 3 million Filipinos living in the US while there are about 700,000 Filipinos living in Europe. The European population is also spread out, making it easier for Gulf carriers to penetrate the Philippines-Europe market as they are able to offer a wider array of destinations in Europe, particularly as PAL does not currently have a European partner.

The Philippines-US market is also competitive but PAL does not have to contend with the Gulf carriers and has an advantage as it is the only carrier with non-stop service. Delta and United serve the Philippines but neither operates non-stops. Delta currently serves Manila via Nagoya and Tokyo in Japan while United operates from Guam, where it has a small base.

Several North Asian carriers also serve the Philippines-US market on a one-stop basis including All Nippon Airways, Asiana, Cathay Pacific, China Airlines, EVA, Korean Air and Japan Airlines. But PAL has a strong position with its exclusive non-stop product along with brand loyalty as overseas Filipinos generally prefer flying with PAL.

Despite offering an outdated product on ageing aircraft, PAL’s load factor to Los Angeles and San Francisco in recent years has been consistently above 75% except during the off peak months of September to December.

PAL’s position in the US should strengthen further as its transitions its California flights to its flagship product, the 777-300ER. About half of the Filipinos living in the US reside in California.

Expansion of the network to the east should allow PAL to be able to further grow its overall share of the Philippines-US market. There are currently about 200,000 Filipinos living in the New York City area and about 100,000 in the Chicago area. This segment of the community is generally flying with North Asian carriers as there is no convenient PAL option.

Cebu Pacific Poised to Enter Guam and Hawaii 


Cebu Pacific also is keen to serve the US market but currently does not have the aircraft with the range to reach the mainland US. The LCC is expected to initially focus on Guam and Honolulu with both routes likely to be launched by the end of 2014.

Cebu Pacific has long been interested in serving Guam with its A320 fleet but has been precluded by Category 2 restrictions. The carrier even previously looked at wet-leasing aircraft from a US carrier to serve Guam but ruled out that option as it was cost prohibitive.

Manila-Guam is currently served by United with 10 weekly 737-800 flights along with the five weekly A320 flights from PAL. With LCC stimulation the Manila-Guam should be able to support a significant increase in capacity.

Guam has been keen for some time to attract LCC service from the Philippines. The Guam airport has seen the Korea-Guam market grow following the entrance of Jeju Air, which is the only LCC currently serving Guam.

The Honolulu-Manila market has only been served by PAL since Hawaiian Airlines dropped Manila in mid-2013 after five years on the route. Cebu Pacific should be able to be more successful than Hawaiian at stimulating demand as the Honolulu-Manila market is price sensitive – as are most Filipino expatriate markets.

Hawaii has the second largest Filipino community after California among US states, with about 300,000 residents.

The opening up of the US market comes at an ideal time for Cebu Pacific as the carrier has not yet decided on routes for the three A330-300s it is adding in 2014. The carrier’s new long-haul unit took delivery of its first two A330s in 2013, one of which was used to launch service to Dubai in Oct-2013 with the other aircraft used for regional services to Seoul and Singapore. Cebu Pacific has been using its third A330 in the domestic market since taking the aircraft in Feb-2014.

Hawaii Gives Cebu Pacific The Option Of  Slowing Down Middle East Expansion

With another A330 delivery expected in May-2014 followed by one more in 3Q2014, Cebu Pacific needs to quickly move forward with selecting additional long-haul routes. Australia is under consideration and Sydney will likely be launched by the end of 2014. As CAPA previously reported, Cebu Pacific also has been considering two destinations in Saudi Arabia as well as Kuwait, Qatar and Oman.

Hawaii represents a potentially more appealing option. The Middle East market has become extremely competitive as PAL also has launched services to Saudi Arabia, Qatar and the UAE. In addition several Middle Eastern carriers have large operations at Manila.

As Cebu Pacific’s initial performance in Dubai has been somewhat disappointing, the carrier’s long-haul unit could be better off focusing on a more balanced network featuring a mix of Australia, Hawaii and two or three Middle Eastern destinations. Previously the long-haul plan was for five to six destinations in the Middle East and one in Australia by the end of 2014. Cebu Pacific will still likely launch one or two additional Middle Eastern routes in 2014 but now has the option of deferring some of its Middle Eastern expansion until at least 2015 in order to free up capacity for Honolulu.

See related reports:

Cebu Pacific also now has the option of serving the EU as it was removed from the EU black list on 10-Apr-2014, ironically the same day it received good news with the US FAA announcement. But Hawaii is a more likely option for 2014 with services to Europe and potentially the continental US to be added later as new generation widebody aircraft are considered. Most European destinations are not within range of Cebu’s A330s without payload limitations although Moscow is an option and has been considered.

PAL and Cebu Pacific Improve as Japan Opens Up

US Category 1 along with the removal from the EU blacklist significantly improves the outlook for both main Filipino carriers. PAL and Cebu Pacific are also now pursuing rapid expansion in Japan, taking advantage of the lifting of restrictions by Japanese authorities.

See related report: Cebu Pacific, AirAsia Zest, Tigerair and Philippine Airlines race to add flights to Japan

For Cebu Pacific the opportunities in Japan and the US are particularly key as the carrier was previously limited to operating only three weekly flights to Japan while it was completely shut out of the US. PAL benefited in Japan and to a lesser extent the US as it was already in both markets with relatively significant operations.

Japan is currently PAL’s largest market, accounting for about 25% of its total international seat capacity while the US is its fourth largest market accounting for about 10%. On 30-Mar-2014 PAL significantly expanded its Japanese operation as it launched two daily flights to Tokyo Haneda, introduced a second daily frequency to Osaka and added two weekly frequencies to Fukuoka for a total of seven.

PAL Can Now Look for US Airline Partners

While it benefited from limits on Cebu’s expansion, PAL needed to grow in both Japan and the US as the carrier enters a new expansion phase under San Miguel, which acquired a majority stake in PAL in 2012 and has invested significantly in new aircraft. The Category 1 rating also allows PAL to pursue code shares with US carriers, which would give it domestic connections beyond its gateways.

While attracting a partnership with a US major may be challenging, Hawaiian Airlines, Alaska Airlines and Virgin America are all potential suitors which would provide sufficient offline access beyond the main PAL gateways of Los Angeles, San Francisco and Honolulu. JetBlue could also be a potential partner if PAL opts to launch services to New York.

PAL also has been discussing a potential partnership with ANA, which could provide access to some US points beyond Tokyo as well domestic connections in Japan.

Category 1 will offer a huge boost for PAL as it opens up online and offline opportunities in the US. While an ambitious PAL is still keen to grow further in the Middle East and Europe, where it did not have a single destination just six months ago, the US should now get priority.

CAPA employs a leading team of writers and analysts positioned around the world. Find out more about CAPA’s regional and global analysts.


FAA Announces the Republic of the Philippines’ Aviation Safety Rating (Back to Cat.1)


WASHINGTON– The U.S. Department of Transportation’s Federal Aviation Administration (FAA) today announced that the Republic of the Philippines complies with international safety standards set by the International Civil Aviation Organization (ICAO) and has been granted a Category 1 rating.

The country previously held a Category 1 rating until January 2008, when it was downgraded to a Category 2. A Category 2 rating means a country either lacks laws or regulations necessary to oversee air carriers in accordance with minimum international standards, or that its civil aviation authority – equivalent to the FAA for aviation safety matters – is deficient in one or more areas, such as technical expertise, trained personnel, record keeping or inspection procedures.

The return to Category 1 status is based on a March 2014 FAA review of the Civil Aviation Authority of the Philippines. A Category 1 rating means the country’s civil aviation authority complies with ICAO standards. With the International Aviation Safety Assessment (IASA) Category 1 rating, the Republic of the Philippines’ air carriers can add flights and service to the United States and carry the code of U.S. carriers.

As part of the FAA’s IASA program, the agency assesses the civil aviation authorities of all countries with air carriers that have applied to fly to the United States, currently conduct operations to the United States or participate in code sharing arrangements with U.S. partner airlines and makes that information available to the public. The assessments determine whether or not foreign civil aviation authorities are meeting ICAO safety standards, not FAA regulations.

In order to maintain a Category 1 rating, a country must adhere to the safety standards of ICAO, the United Nations’ technical agency for aviation that establishes international standards and recommended practices for aircraft operations and maintenance.  IASA information is at

EU Lifts Ban on Cebu Pacific, Announcement on April 10

Photo Credit: Nikki Pili

MANILA, Philippines – Budget airline Cebu Pacific of billionaire John Gokongwei Jr. is set to become the second local carrier allowed to fly to Europe.

Julian Vassallo, Chargè d’ Affaires of the European Union (EU), and officials of the Civil Aviation Authority of the Philippines (CAAP) are scheduled to announce in a press conference Thursday, April 10 the lifting of the EU ban on Cebu Pacific.

In July, the EU lifted the ban on Philippine Airlines (PAL), allowing the legacy carrier to fly to the 28-nation bloc again.

CAAP Director General Lt. Gen. William Hotchkiss III and CAAP Deputy Director General Capt. John Andrews will preside over the press conference Thursday. Cebu Pacific president Lance Gokongwei is also expected to attend the event.

The EU blacklisted Philippine carriers in 2010 after the International Civil Aviation Organization (ICAO) classified the Philippine aviation industry as “a significant safety concern.” CAAP failed to comply with safety standards that ICAO required.

ICAO scrapped this classification in March last year, prompting the EU to lift the ban on PAL. Jointly owned by tycoon Lucio Tan and diversified conglomerate San Miguel Corporation, PAL started direct flights to London in November.

The EU however kept other local carriers on its blacklist, saying “progress [was] still needed to reach effective compliance.”

EU Ambassador to the Philippines Guy Ledoux said then that accidents involving Cebu Pacific planes showed some weaknesses.


A Cebu Pacific plane carrying 165 passengers overshot the runway of the Davao International Airport in June last year. No one was hurt in the incident, but several passengers complained it took a while before they were ushered out of the aircraft. Nearly two weeks after, another Cebu Pacific plane figured in an accident at the Ninoy Aquino International Airport.

Cebu Pacific worked on addressing remaining safety concerns, and was supposed to seek the EU’s green light to fly to Europe in November. It postponed the plan to give way to rehabilitation efforts following the devastation caused by Super Typhoon Yolanda (Haiyan).

In January, Cebu Pacific informed the Directorate General for Mobility and Transport of the EU in Brussels that it already complied with all outstanding safety concerns.

Aside from the lifting of the EU ban, regulators are pursuing the upgrade of the Philippine aviation safety status by the US Federal Aviation Administration (FAA). The US FAA downgraded the Philippines’ status to Category 2 from Category 1 in 2008 upon the recommendation of ICAO.

Category 2 prohibits Philippine carriers from mounting new and additional flights to the US. Airlines in Category 2 countries are also placed under heightened US FAA surveillance.

CAAP is confident an upgrade will be made soon. The US FAA is yet to release the results of an audit it conducted in March.


CAAP Flunks Anew to Regain Category 1


Source: Recto Mercene of Business Mirror (February 22, 2014)

PHILIPPINES aviation has failed anew to regain the Category 1 status that it lost seven years ago in 2007.

As in past attempts, the technical review team of the Federal Aviation Administration (FAA) thumbed down the efforts of the Civil Aviation Authority of the Philippines (CAAP) last month.

In its exit briefing, the FAA team left no doubt that the country remains stuck under Category 2, or on the “unsafe status” list, of the FAA.

Under Category 2, major Philippines carriers cannot mount new flights to the United States.

The FAA exit briefing was recorded, and this story is based on five pages of transcript provided by sources at the CAAP.

The sources said the CAAP was keeping the findings under wraps while waiting for the FAA to make its announcement in Washington. It was gathered that an FAA team would come back in March to conduct another review.

“Most of the FAA findings are doable, but nobody in the CAAP is actually doing the actual work to conform with regulations,” CAAP insiders said.

Gregory Michael, head of the flight standards district office and FAA team leader, said the CAAP “has not complied with the Article of the Chicago Convention with regard to Amendment 37 to Annex 6, Part I, issued on March 28, 2013, related to the approach ban provision.”

The findings run under the title Primary Aviation Legislation, which said: “The personnel of the CAAP airmen examination board are not trained to administer and evaluate written theoretical examinations.”

The FAA team included Aviation Safety Inspectors LP Vanstory and Louie Alvarez, Senior Attorney Beverly Sharkey and Senior FAA Representative James Spillane.

Their January 24 exit briefing was attended by three top CAAP officials­—Deputy Director John Andrews; Beda Badiola, head of the Flight Safety Inspectorate Service (FSIS); and Rodante Joya, chief financial officer.

Andrews had vowed to resign if the Category 1 status was not regained by the end of December 2013. “If that [upgrade] does not happen, the buck stops with me. If this does not happen before the end of the year, I will no longer be here. Wait until January, then you can have my neck,” Andrews told the media back then. Andrews is now reportedly on sick leave, but is scheduled to report for work on February 17.

On February 3 Caap Director General William K. Hotchkiss replaced Andrews with Joya but four days later, Joya was replaced by Artemio Orozco, a retired two-star military general who was chief of staff of Hotchkiss, who is currently attending the Singapore Air Show 2014.

According to the transcript, the FAA said: “Records indicate that only one out of nine employees has four initial trainings. There is no evidence of having correct training in almost all of the Caap’s development course. None has completed the formal training policy and programs for operations, and Airworthiness Inspectors are not sufficient on on-the-job training.”

Under the title Technical Guidance, Tools and the Provision of Safety, Critical Information, the FAA remarked that “the CAAP does not contain complete policies, procedures and standards.”

The FAA also said the CAAP oversight system of Aviation Training Organization failed to ensure compliance with the Icao.

CAAP sources said these failures constituted half of the “eight critical elements” that the FAA has been monitoring for “safety oversight” compliance by civil aviation authorities (CAAs) of Icao member-countries and based on a checklist by Icao safety standards.

FAA rules require that the CAAs of Icao members have to hurdle all the eight critical elements under its check list before they can be upgraded to Category 1, or “safe status.”

Philippine Airlines Acquires 15 Planes from Airbus

Photo Credit: Antonio R. Varela

Flag carrier Philippine Airlines (PAL) is acquiring 15 planes this year as part of a massive re-fleeting deal with France’s Airbus S.A.S. that will help bring down operating costs while the airline expands capacity, a company official said last week.

PAL senior vice president for operations Ismael Augusto Gozon told reporters that the airline was expecting the delivery of seven long-range Airbus A330s and eight mid-range A321s before the year ends.

PAL, jointly owned by the group of tycoon Lucio Tan and conglomerate San Miguel Corp., is in the midst of a $9.5-billion refleeting strategy involving 64 mid-range and long-range Airbus planes.

It is likewise keen on expanding its presence in the region through partnerships with other carriers.

Last Friday, Hideaki Izumi, general manager of the domestic office of Japan’s All Nippon Airways, told reporters the company was open to exploring so-called special prorate agreements with Philippine Airlines to tap each other’s domestic markets.

PAL also started new flights to Japan Sunday and it now serves the North Asian economic powerhouse with 11 flights daily.

He added that the airline was also anticipating a United States Category 1 aviation upgrade.

US Federal Aviation Administration inspectors were in the Philippines last week for a validating visit in a development the Civil Aviation Authority of the Philippines said would finally pave the way for an upgrade after six years.


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Aviation Buzz: Philippines Failed Again US-FAA Aviation Upgrade?

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MANILA, Philippines (2nd UPDATE) – The Philippines failed to get a much-coveted aviation rating upgrade from the US Federal Aviation Administration (FAA), which still found the country “unsafe” in a recent audit, industry sources said.

This means Philippine carriers are still banned from opening new routes or mounting additional flights to the US.

In January, an FAA team visited the country to review compliance of the Civil Aviation Authority of the Philippines (CAAP) with international safety standards, and gave an unfavorable 5-page report, CAAP insiders said.

A copy of the report obtained from the sources showed CAAP did not comply with several requirements, retaining its Category 2 status and failing to move up to the Category 1 list.

CAAP has been working on getting the upgrade for 6 years now. It was confident it was going to get the upgrade last month, with Deputy Director-General John Andrews saying he’d resign if they didn’t.

The FAA downgraded CAAP’s safety rating in 2008 upon the recommendation of the United Nations’ International Civil Aviation Organization (ICAO). At the time, ICAO found “significant concerns” over CAAP’s ability to meet international safety standards.

Under Category 2, Philippine carriers may continue existing flights to the US, but they cannot launch new routes or additional flights. Category 2 also puts them under heightened surveillance.

Following the US downgrade, the European Union also imposed a ban on Philippine carriers in 2010 due to the same safety concerns.

But last year, ICAO gave the Philippines a passing mark in its audit, while the EU allowed legacy carrier Philippine Airlines (PAL) to fly to the 28-nation bloc again.

The US status is the only remaining negative rating against the country.

The FAA is expected to announce its latest findings in Washington soon.


CAAP sources said the regulator failed to pass in 4 of “8 critical elements” that the FAA has been monitoring for “safety oversight” compliance by civil aviation authorities of ICAO-member countries.

FAA rules require that the aviation authorities hurdle all 8 elements to be upgraded to Category 1 status.

The 4 elements where there were findings against CAAP include:

  • Primary Aviation Legislation
  • Technical personnel qualification and training
  • Technical guidance, tools and provision of safety critical information
  • Licensing, certification, authorization and approval obligations

Among the findings in the FAA report were:

  • CAAP has not complied with the Article of the Chicago Convention with regard to Amendment 37 to Annex 6 part 1 issued March 28, 2013 related to approach ban provision.
  • The CAAP Airmen Examination Board personnel are not trained to prepare, administer and evaluate written theoretical examination. Records indicate that only 1 out of 9 employees has four initial trainings. There is no evidence of having correct training in almost all of Caap’s development course. None has completed the formal training policy and programs for operations and Airworthiness Inspectors does not include sufficient on the job training.
  • CAAP Airworthiness Technical Guidance does not contain complete policies, procedures and standards.

One of the sources said, “Most of the FAA findings are doable, but nobody in CAAP is actually doing the actual work to conform with regulations.”

The FAA review was conducted from January 20 to 24 by a team of 5 people, led by Gregory Michael, head of Flight Standards District Office of FAA.

The exit interview on January 24 was reportedly attended by top CAAP officials, including Andrews and head of Flight Safety Inspectorate Service Beda Badiola.

Andrews is on leave and will report back for work on February 17. Director-General William Hotchkiss, on the other hand, is attending the Singapore Air Show 2014.

Andrews declined to comment on the FAA report, but he said someone was trying to discredit the efforts of the agency.

He added officials are still confident of getting an upgrade. “We are optimistic this is positive.”

In a phone interview, CAAP chief financial officer Rodante Joya also declined to confirm whether or not the Philippines got the upgrade.

He said, “It is the FAA that will announce that in Washington. We have not received any official communication if we failed or passed the review.”

Joya said the FAA is expected to make the announcement “65 days from the last day of the audit.”

Against expectations

In November, Andrews said he was confident the country would finally win an upgrade from US authorities this year.

“If it does not happen, the buck stops at me. If this does not happen… I will no longer be here. That is my commitment,” he said then.

Andrews drew confidence from ICAO’s move in February to give the Philippines a passing mark, as well as the EU’s decision to lift its ban.

Sources said the FAA will return in March for another CAAP audit.

Philippine carriers are banking on the upgrade as they plan on expanding in the US.

Currently, only PAL is allowed to fly to the US. Budget carrier Cebu Pacific has expressed desire to operate the lucrative route.

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