LCC Wars has Began

Air Philippines joins fruit bandwagon
for LCC Supremacy

March 22, 2010

In a counter-offensive mode to regain market dominance, Philippine Airlines low cost subsidiary, Air Philippines is expected to relaunch jet service this month branding a new orange look and a newer airbus jet to seriously compete with top budget carrier Cebu Pacific Air and fast growing Zest Airways in the low cost market.

“We shall give our competitor a hard time” says David Lim, Air Philippines newly appointed President who replaced Capt. Edilberto Medina for the post.

Air Philippines earlier announced a new management team appointed to implement the airline’s new business model using a leaner workforce.

The airline's jet incorporates an orange livery, a marketing strategy indicating its no-frills service, from a color choice made famous by Europe's first Low Cost Carrier, Easyjet.

The first to incorporate orange underlinings is Cebu Pacific, with its distinct yellow smile introduced in 2005. Next is Zest Air, the erstwhile Asian Spirit airline that changed its color in 2008 to be more representative of its new owner, also famous for marketing the orange drink. Now, Air Philippines wants a piece of the 18 million domestic and growing market now ruled by Cebu Pacific with more than 9 million passengers carried.

Air Philippines "Express" brand will start operating on March 28 using Airbus A320 jets leased from Philippine Airlines which the latter ordered in 1992.

“Air Philippines would have its own brand called Air Philippines Express just like Philippine Airlines have PAL Express,” says Lim.

“The Express extension denotes a service being offered by the airline” added the official.

Air Philippines and Philippine Airlines are two separate company owned by the Lucio Tan Group with 99% ownership to the former and 95% to the latter.

Both airlines simplified its LCC flight operations for seamless connection of its passengers, and they are looking to further solidify its market share in the low cost market by launching aggressive pricing and encirclement strategy that could potentially put the minor airlines out of business.

“We are relaunching the airline so it will give a serious competition to Cebu Pacific, Zest Air and Seair,” says PAL Chief Finance Officer and Air Philippines Chief Operating Officer Cesar Chiong.

The airline will fly to Iloilo, Bacolod, Puerto Princesa and Cagayan de Oro on its initial run using two A320's, and progressing to more domestic destinations as it take delivery of four more A320s in the coming months.

“We will start operating the Airbus A320 by the end of March because its the start of the summer season where traditionally we have plenty of passengers.” says Chiong.

“Our plan is to add one A320 in November, and one in December in time for the holiday rush, and two more is expected to be added next year,” the airline executive said.

Another four A320 will also be added to the fleet in the next two years with planes leased from PAL after it retires the old ones on its fleet replacing it with new aircraft ordered from Airbus. PAL is expecting delivery of two more A320s in 2010, and three more planes for delivery in 2011.

“All aircraft will be purchased from PAL on a lease-to-own basis” adds Chiong.

Air Philippines intends to fly back to Hong Kong, Singapore and other regional destinations in the next two year when its domestic network is firmly establish.

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