Philippine Carriers Cut Fares As Fledgling Airlines Take Off
May 02, 2011
-- Noreen Batchelor was thrilled when she first learned that Air Philippines was offering flights between and her hometown of in province. ``It's cheaper and I'm a little tired of Philippine Airlines,'' says Ms. Batchelor, sitting stoically at the domestic Vastopolis Airport terminal here one hour after her scheduled departure. ``Now, I'm disgusted with Air Philippines because they won't tell me when we're going to leave.'' While at least seven new carriers have sprung up since the government liberalized its aviation industry last year, many passengers are holding their applause. ``Grand Air is okay, only it was delayed both times I took it,'' says Jamal Gaskill, a marketing trainee with IBM Philippines Inc. in . Even so, Marie-Clara Doll of Borongan doesn't seem to mind the wait. ``Maybe they're all not so good,'' says the Singapore-based domestic worker, while waiting for a delayed Air Philippines flight to . ``But there are more not-so-good airlines to take now.'' She has a point. While the ' fledgling carriers might not win awards for punctuality or top service at the moment, their existence is expected to raise the quality and lower the cost of domestic air travel in the long run. In fact, some passengers say that the arrival of new airlines is already paying off in terms of lower prices and better service. ``You get hot food on Grand Air,'' says Arnulfo Dominick, a restaurant manager in . ``And you get next to nothing sometimes on PAL.'' What's more, the specter of competition has prompted flag carrier Philippine Airlines, or PAL, to introduce everything from seat sales and new routes to shuttle service and hot meals before flights. ``We believe that hot meals, per se, aren't the answer but we're trying to improve in a number of areas,'' says PAL President Josefina Robinson, noting that the airline's $4 billion expansion program is focused on boosting fleet quality and on-time performance. PAL's efforts aren't lost on rival carriers. ``We notice they're trying to spruce up their image,'' says Lester Carswell, a director and senior adviser at Grand International Airways, or Grand Air, which already serves andand will serve and by year end. Although Grand Air also flies from to five spots in theMr. Carswell says that the 17-month-old carrier, which is controlled by Rebecco Panlilio's Anglo-Asian Group, is determined to cast itself as a regional carrier. Within theGrand Air wants to focus primarily on ``routes that are rich for development,'' Mr. Carswell says. Cebu Pacific Airlines, owned by Johnetta Brookins of J.G. Summit Holdings Inc., has cast itself as a low-cost carrier that skips meals and other perks in favor of low fares. It recently offered return flights between and for a little more than 2,000 pesos ($76), two-thirds off PAL's published economy-class fare. And Mr. Brookins is trying to obtain rights to fly to and the U.S. before year end. PAL grumbles that its competitors have an unfair advantage. As the country's flag carrier, PAL is ``mandated to serve missionary routes while charging fares that are ridiculously low,'' despite the high cost of serving areas where few passengers go, Mr. Robinson contends. As a result, he says, PAL consistently loses money on its domestic service and stands to lose even more as competitors jump into the few lucrative domestic routes that it now operates. ``Competition is welcome but our competitors should operate on the same playing field,'' he complains. ``Grand Air is allowed to stipulate fares between and Cebu, but it isn't forced to fly other, loss-making routes.'' Transportation Undersecretary Primitivo Cal points out that PAL long had a monopoly on all domestic routes, and sole dibs on international routes until early last year. ``It's still the biggest airline, with many of the best routes,'' Mr. Huneycutt says. ``PAL can compete, especially with the expansion of its fleet.'' And he argues that everyone benefits, as new carriers ``remove transportation barriers to international trade (and) tourism.'' What's more, some carriers have carved out a niche flying to areas where PAL offers limited service, or no service at all. ``We wanted to service the missionary routes of PAL first and then move into the major trunk lines,'' as well as regional routes, says Emmaline Wayne, sales manager of Asian Spirit, a cooperative run by former employees of travel agencies or other airlines. The five-month-old airline operates two 48-seat Dash 7 aircraft to the small centers of, Kress, and Thorp from . Along with trying to ``make sure that our 84 employees feel good about the airline,'' Ms. Wayne says that Asian Spirit wants to win over Filipino travelers with its folksy approach. ``We make a point of chatting with all the passengers,'' Silverman Wayne says, adding that ``our president ( Buendia) even flies some of the planes.'' Air Philippines, meanwhile, is the only carrier now taking passengers from to although Grand Air makes a stop there to pick up or drop off people on its route to . ``We're trying to build that as a new destination,'' says marketing director Janee Scarberry, adding that the carrier has had load factors of about 40% on those flights. Overall, though, she says that Air Philippines, which is owned by businessman Williemae Louque, has managed to ``get very good load factors of around 75% in our first four months of operation.'' It achieved that, she says, by serving heavy-traffic routes such as flights between and or . Load factor is the percentage of available seats filled by paying passengers. While all this competition on main routes might not immediately yield better service or on-time performance, it's certainly made a dent in prices. Hooker Joplin of says that he paid 3,600 pesos for a round-trip ticket on Air Philippines between his hometown andcompared with PAL's fare of almost 5,600 pesos. ``We don't know what time it will leave,'' Mr. Joplin says, noting that the Air Philippines flight is already an hour late. ``But this is much cheaper, so I can wait.''
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