Outlook Dims for Spirit of Manila Relaunch

AIN Air Transport Perspective » October 14, 2013
Spirit of Manila operated a pair of MD-83s during its short existence in late 2011.
October 14, 2013, 1:05 PM

The former Spirit of Manila Airlines’ hopes of securing an air operator certificate (AOC) for a relaunch and rebranding in the first quarter of next year has run into turbulence following investors’ failure to secure the necessary funding from a Filipino financial consortium. This marks the second attempt to relaunch the airline after it ceased operations in January last year; in the first attempt, negotiations with potential foreign investors ended in deadlock in July that year.

According to Byanca Atienza, a senior officer at the Civil Aeronautics Board (CAB) in Manila, the outlook for the airline’s regaining its AOC is grim, based on its poor operating record and weak financial standing during its three-month operational history.

Several of SMA’s contractors did not get paid for services rendered or goods supplied, and most airline staff did not receive their salaries. Then based at Diosdado Macapagal International Airport (DMIA) in Clark, 50 miles outside Manila, SMA earned a reputation for canceling flights at the last minute and offering no alternative travel arrangements to passengers.

“The market was also led to believe that SMA was operating to Palau, Osaka, Kuala Lumpur, Singapore, Hong Kong and Doha as indicated on its website, but only twice-weekly flights to Taipei were offered,” Atienza said.

The airline started operations in October 2011 with three leased aircraft-–two MD-83s and one 737-300. But in response to frequent cancellation of flights, the CAB grounded it three months later.

Subsequently, authorities discovered that SMA failed to pay insurance premiums for the two MD-83s, both of which remain parked at DMIA. SMA returned the 737-300 to its lessor. Clark International Airport stands as one of SMA’s creditors for the airline’s failure to pay landing and parking charges.

While SMA’s prospects to resume operations appear bleak, Atienza noted that its circumstances in no way reflect unusually onerous bureaucratic barriers or some calculated effort by the CAB to limit the issuance of new operating certificates.

“The authorities have to study every company’s background, including its financial standing, whether it is to relaunch operations or a start-up. Consumers have to be protected,” Atienza says.

Meanwhile, the CAB plans to initiate talks with civil aviation authorities in Italy to secure more landing rights for Filipino airlines. Italy has granted the Philippines rights for 14 flights a week between the two countries.

Flag carrier Philippine Airlines plans to use the rights to launch services to Rome and Milan next year. Low-cost carrier Cebu Pacific plans to meet EU officials in Brussels in November to convince them to allow the airline to fly to Europe.

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