Lesser Options in Flying Domestically Due to Airline Mergers

When San Miguel Corporation took over the helm of managing PAL and PAL Express (then Airphil Express), they decided to merge the operation of the two airline companies. Though the two airlines have been long-time sister companies, they have operated almost independently until Lucio Tan sold his majority stake to San Miguel.

PAL Express was named Airphil Express before San Miguel acquired PAL

The result of the consolidation is immediately evident. First, Airphil Express changed its name to PAL Express. Second, PAL Express stopped all flights that are common with PAL (e.g. Manila-Cebu). Then just recently, PAL Express suspended 35 Express inter-island flights leaving inter-island travelers with no other choice but Cebu Pacific.

Mergers and acquisition was the trend in local airlines nowadays. Just last year, almost at the same time as that of PAL-PAL Express acquisition and consolidation, AirAsia Philippines acquired Zest Air and gave birth to AirAsia Zest. It's quite evident that one of the purpose of the acquisition is for AirAsia to gain access to the congested Ninoy Aquino International Airport. Few months after the transaction, AirAsia Philippines left the Clark Airport and moved all operation in NAIA.

Cebu Pacific, the largest airline in the country will not standby and not move. In a deal early this year, the low-cost airline leader acquired Tigerair. So today, local passengers have only three airlines to choose from: PAL, AirAsia Zest and Cebu Pacific.

Mergers Kills Competition

Many experts say that the aviation industry is a "red ocean", very competitive. This is on top of the volatile oil prices and currency exchange rate. While mergers creates stronger companies that can weather these challenges, it can somewhat kill competition. Consumers have less options. For example, if you want to fly directly from Cebu to other parts of the Luzon, Visayas and Mindanao, you only have Cebu Pacific to fly with. Otherwise, you can take the old method: sea travel which takes a lot of time.

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