Regional feeder operations are becoming increasingly important in the Philippines, with the latest development being the launch by flag carrier Philippine Airlines of a turboprop unit dubbed PAL Express.
Second-tier carrier Asian Spirit has meanwhile undergone an ownership change as it faces new competition from larger players, while another small regional, Seair could follow the same path.
Turboprop operations were limited in the Philippines until last year, when PAL's sister carrier Air Philippines ordered Bombardier Dash 8 Q300s and rival Cebu Pacific ordered ATR 72s to fly alongside their jet aircraft. Until then only Asian Spirit and Seair operated turboprops on secondary domestic routes.
Now PAL has entered the regional market with PAL Express. The new unit began operating early in May, having taken over the turboprop operations of Air Philippines. It started with the three Q300s initially operated by Air Philippines but has also acquired six used ex-SAS Q400s, all of which will be placed into service by the end of August.
PAL Express will help feed PAL's jet operations, which have limited room to grow domestically given that about 45 of the country's 70 airports cannot accommodate Airbus A320s or Boeing 737s. This includes Caticlan airport near Boracay island, the most popular international tourist destination in the Philippines.
The Caticlan market has historically been by far the biggest market for Asian Spirit and Seair. Air Philippines broke this duopoly in December and Cebu Pacific began serving Caticlan at the end of February. PAL Express took over the Caticlan service of Air Philippines in May with its three Q300s mainly operating on the busy Manila-Caticlan route, which accounts for about 90% of all flights from Caticlan.
The expansion by the major carriers into turboprop operations has put intense pressure on the smaller players, leaving them looking for funds to boost their financial positions. Asian Spirit in March was taken over by local businessman Alfredo Yao. Until then it was owned by a co-operative and new funds may be used to modernise the carrier's fleet.
Yao also has his sights on Seair, with a view to taking it over and merging it with Asian Spirit. Seair says Yao is one of several potential new investors.
Source: Airline Business
