Fifteen years after incorporation, Air Philippines enters the budget carrier market and vows to offer serious competition while at it
What do The Artist Formerly Known as Prince and P.Diddy have in common with a Philippine airline? A name change.
Changing names might sound more like a gimmick, but it does seal the deal for many businesses and entertainers who want to gain a wider audience.
Relaunching itself under the brand AirPhil Express for its rebirth as a budget carrier last March, Philippine Airline's low-cost partner plans to expand its fleet to further cater to the local air travel market.
According to AirPhil Express president David Lim, the company will buy 20 new aircraft in the next four years. The company marked its relaunch with the operation of two newly leased Airbus A320-200, ordered from the Airbus manufacturing plant in Toulouse, France.
The two new 177-seater, narrow-body jets flew from Manila to Iloilo, Bacolod, Puerto Princesa, and Cagayan de Oro, to mark the low-cost carrier's relaunch. Four more jets will be added to the fleet between September and November this year.
"The modernization of our fleet will hopefully enable us to increase market share while the industry braces for the eventual rebound,” Lim said.
Not only does AirPhil Express plans to widen its route network, but it also dares to compete with industry giant Cebu Pacific. In recent news, an AirPhil Express official said that the company will "pretty much" grab Cebu Pacific's market. But how will AirPhil Express manage to do that?
“We are taking several steps to expand our business, but ultimately, it is our goal to provide more options at lower cost to our customers,” Lim explains. “We expect to be competitive with the incumbent carriers with the expansion of routes, procuring of new aircraft, our friendlier and more flexible brand, complemented with our relentless drive to reduce our costs.”
The carrier will not compete with Philippine Airline's PAL Express, which it currently operates. Operations of PAL Express flights have been turned over to Air Phil Express last October 2009. PAL Express's main hub is in Manila but it operates mostly in the Visayas and Mindanao.
AirPhil Express currently offers flights to Tuguegarao, Naga, San Jose (Mindoro), Busuanga, Boracay (Caticlan), Catarman, Calbayog, Tacloban, Ormoc, Iloilo, Bacolod, Cebu, Surigao, Dipolog, Cagayan de Oro, Osamis, Zamboanga, Davao and Masbate.
The expansion move shows much optimism, considering that the IATA (International Air Transport Association) officials called 2009 a challenging year for the now leaner aviation industry. The year before that also saw a dramatic decline in revenues because of massive oil price hikes. In the United States alone, the airline industry experienced a US$10-billion dip in revenues.
To cope with the crisis, airlines fought back by resizing their capacities to meet consumer flight demand. Aircrafts that were older and less fuel efficient were replaced with newer, more economical models. By the end of 2008, the number of new aircraft exceeded the number of those that were mothballed.
Some airlines like US Airways even resorted to cutting jobs. The airline industry was caught, in the words of IATA chief executive officer Giovani Bisignani, "in one of the deepest recessions since the 1930s."
In his annual report, Bisignani asks in what shape the airline industry will emerge after companies are done reshaping their operations. Because of the recession, he saidm "air transport will be a smaller industry for the next few years."
At the local level, Lim saw the global financial crunch and its effects on travel as an opportunity to look at consolidation and innovation. “It made us look at all the ways we needed to make our operations more efficient, business units and partnerships,” he adds.
Cost-cutting measures such as maintaining an optimal workforce, operating turboprops to provide inter-island connections while grounding its B732 aircraft, and business process re-engineering are just some of the things AirPhil Express changed for its business operations.
In 2008, the Philippines had 18 oil price hikes in the first half of the year alone. The country finds itself in the wake of oil price surges yet again in the first quarter of 2010 as the price of oil on the Asian market rose to US$82 a barrel.
Despite that, AirPhil Express says that it will expand its route network after the new jets are delivered. The new passenger carriers will be joining AirPhil Express's fleet of Bombadier Q400 and Q300 turbo-prop aircraft. AirPhil Express also plans to go regional to increase its aircraft utilization, says Lim.
By any other name, it surely is a sign that the airline is keeping its hopes up despite the storm clouds of the economic recession.
Print ed: 05/10