Philippine Air Can Boost U.S. Routes, Use Better Jets on Upgrade

Philippine Airlines Inc. may add new routes and fly more often to the U.S., while taking advantage of more fuel-efficient jets, after the nation regained the highest air-safety rating from the Federal Aviation Administration.

The upgrade by the U.S. regulator to Category 1 status “cements a landmark era in the Philippine aviation sector,” the Philippines’ Transportation and Communications Secretary Joseph Emilio Abaya said in a statement today. The FAA cut the Philippines’ rating to Category 2 in 2008 due to “serious concerns” about local regulation of airlines, the U.S. Embassy said in a statement at that time.

The new classification is expected to boost tourism as airlines expand operations and to improve trade and business relations with the U.S., Abaya said. It also opens the U.S. to other Philippine carriers including Cebu Air Inc. (CEB), he said.

“The country has made great strides in enhancing its aviation industry to one that is at par with the best in the world,” Abaya said.

PAL Holdings Inc. (PAL), which operates Philippine Airlines, rose 2.4 percent, the most in more than a month, to 5.51 pesos at the close of trading in Manila. Cebu Air advanced 3.3 percent to 48.55 pesos. The Philippine Stock Exchange Index gained 0.8 percent.

“PAL can finally be able to execute on future plans to expand its route network in the U.S., one of PAL’s biggest passenger markets,” company President Ramon Ang said in an e-mailed statement. “This country is definitely back on the global aviation map.”

EU Ban

The European Union lifted a three-year-old flight ban on Philippine Airlines in July, citing oversight improvements by aviation authorities and the carrier’s ability “to ensure effective compliance with relevant aviation safety regulations.” The EU has scheduled a media briefing on the air ban later today with officials of the aviation authority and Cebu Air, which remains on the blacklist.

The new FAA rating, given after a March review, means the Philippines’ Civil Aviation Authority adheres to safety standards of the United Nations International Civil Aviation Organization, the U.S. regulator said in a statement on its website.

A Category 2 rating means a country either lacks laws to oversee airlines or its aviation authority lacks expertise, trained personnel and proper inspection procedures.

To contact the reporters on this story: Norman P. Aquino in Manila at naquino1@bloomberg.net; Joel Guinto in Manila at jguinto1@bloomberg.net

To contact the editors responsible for this story: Frank Longid at flongid@bloomberg.net Terje Langeland, Clarissa Batino

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