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Going the low-cost way with Philippine Airlines

30 Apr 2008 by Ciprian Hirlea

Philippine Airlines (PAL) has hopped onto the low-cost carrier bandwagon and launched PAL Express, a new budget-fare unit consisting of turbo-propeller aircraft. It will be based in Cebu and operate to mostly domestic island points.

This is the first time in the carrier’s 67-year-old history that it is creating a sub-brand. “PAL Express will meet the growing demand of the travelling public for a high-quality carrier offering low fares,” said PAL president Jaime J Bautista. “At the same time, it supports the Philippine government’s efforts to promote trade and tourism, particularly to our many small islands, providing a much-needed lift to the local economy of these communities.”

PAL will acquire nine turbo-props – three Bombardier Q300s and six Q400s – to comprise the budget airline’s initial fleet. PAL Express will primarily fly intra-regional routes in Visayas and Mindanao (two of the Philippines’ three main islands) from its Cebu hub, as well as secondary routes to smaller airports in island provinces that are not able to accommodate PAL’s regular jet aircraft.

The development marks the return of PAL to the “missionary routes”. In June 1998, PAL entered receivership after a series of external and internal crises that led to significant losses, shutting operations to two weeks and pushing it to the brink of liquidation. The restructuring that followed led to a reduction of its route network. The slack was later taken up by other players like Cebu Pacific and to a lesser degree, Air Philippines (owned by some PAL stockholders) and Asian Spirit. PAL emerged last year from its rehabilitation programme earlier than expected due to improved performance and optimistic projected cash flows.

PAL Express will begin operations with eight daily flights between Manila and Caticlan, the jump-off point to the beach mecca of Boracay, which expects to get a Shangri-La resort late this year. Soon following these will be flights between Cebu and five points in Visayas and Mindanao.

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