CIMENI, JOY JO OMANDAM, NOGENE VAN R.

DADOLE, JANUS B. RONDINA, IRISH VANESA A.

PORTER’S GENERIC STRATEGY OF

AIRLINE INDUSTRY IN THE PHILIPPINES

Air fares in the Philippines are relatively cheap. If you book early, you may avail of promo fares.
The fares for hops between the islands are from 99 to 4000 Pesos depending on the season, on the
airline and the route.

PAL EXPRESS (Cost Leadership)

PALexpress (short for Philippine Airlines Express), formerly Air Philippines, is the low-cost

regional airline brand of sister airline Philippine Airlines. After operating as PALexpress for a while, the
airline transformed again the brand into Airphil Express. However, in March 2013, the company's CEO
announced its re-branding into PALexpress. As a brand of Philippine Airlines, PALexpress will be
operating as a full service carrier with low-cost management.

PAL Express is Philippine Airlines' answer to Cebu Pacific Air's dominance in the low-cost travel
market in the Philippines. It has allowed PAL to focus on the premium market, where domestically PAL
does not have competition. It operates extensive domestic scheduled services in the Philippines from
Manila, Cebu, Davao and Zamboanga as well as two international flights from both Cebu and Manila to
Singapore. Airphil Express gained a significant increase in passengers following its launch as a low-cost
carrier. The airline is currently in fleet acquisition mode to support its planned domestic and
international route expansion plan. Airphil Express currently holds the no. 3 position among Philippine-
based airlines, with 19% market share.

AIR ASIA ZEST (Focus Cost Strategy)

AirAsia Inc., operating as Philippines AirAsia Zest is a low-cost airline based at Clark International
Airport in Angeles City. Philippines AirAsia has integrated Zest Airways, in 2013. It is the youngest and
still smallest airline in the Philippines.
 Aligned with its mission statement, AirAsia's business strategy is centred on cost leadership.
However, its business strategy targets specific markets; price sensitive customers (including first-time
fliers) needing short-haul flights. In Porter's generic strategies, AirAsia's business strategy can be
categorized into focused cost leadership; quadrant 3A.

AirAsia makes the low fare model possible and create values through the implementation of the
following key strategies:
1. Safety First Partnering with the world's most renowned maintenance providers and
complying with the world airline operations.
2. High Aircraft Utilization Implementing the regions fastest turnaround time at only 25
minutes, assuring lower costs and higher productivity.
3. Low Fare, No Frills Providing guests with the choice of customizing services without
compromising on quality and services.
4. Streamline Operations Making sure that processes are as simple as possible.
5. Lean Distribution System Offering a wide and innovative range of distribution channels to
make booking and travelling easier.
6. Point to Point Network Applying the point-to-point network keeps operation simple and
lower costs.

AirAsia builds and sustains its competitive advantage by providing services at a price that is
simply lower than competitors' price. Operation effectiveness and outstanding efficiency are two main
characteristics of low cost businesses including AirAsia. The central objective is to achieve bigger cost
advantages than the rivals by continuously searching areas for cost reduction along its value chain. By
further analysing AirAsia's value chain, one can actually determine how AirAsia creates cost advantages
along its value chain. These cost advantages constitute AirAsia's order winner in competing with its rivals
as they enable AirAsia to provide the lowest possible price to the price sensitive customers. 

PHILIPPINE AIRLINES (Differentiation Strategy)

PAL is located in Quadrant 1, which means that the company is experiencing a rapid market
growth and strong competitive position. This indicates that the company is in an excellent strategic
position that makes it unique and attractive than its competitors. Philippine Airlines maintains aircraft
with the highest degree of airworthiness, reliability and presentability in the most cost-effective
manner; and conduct and maintain safe, reliable and cost-effective flight. It continues to achieve on-
time performance on all flights it operates, as well as providing safe, on time, quality and cost effective
in flight service for total passenger satisfaction.

Philippine Air Lines also known as PAL, is the flag carrier and national airline of the Philippines.
Headquartered in the Philippine National Bank Financial Center in Pasay City, the airline was founded in
1941 and is the oldest commercial airline in Asia operating under its original name. Out of its hubs at
Ninoy Aquino International Airport of Manila and Mactan-Cebu International Airport of Cebu City,
Philippine Airlines serves nineteen destinations in the Philippines and 24 destinations in Southeast Asia,
Middle East, East Asia, Oceania and North America.

On March 1941, Philippine Airlines (PAL) began to soar in the Philippine sky with one noble
mission: to serve as a factor in building a better nation. With this in mind, notwithstanding the threats of
World War II, PAL took off and became Asia’s first airline. Since then, with its every takeoff and
touchdown, PAL carries with itself the making of a world-class legacy. With almost 70 years of service,
PAL did not fail in becoming one of the world’s most respected airlines with its young and modern fleet
of aircraft and destinations that cover 31 foreign cities and 29 domestic points. Its excellent service and
world-class accommodation help PAL win the hearts of travelers worldwide and pierce those of its
competitors.

The Philippines Airlines offers services at reasonable, competitive prices, and at the highest level
of quality consistent with such prices. It meets the needs of the public for moving people, goods,
information, and in particular for safe and reliable travel, transport, communication, distribution, and
related services. The company’s products and services is the core company’s strength since these are
what they mainly offer and, in return, where the company generates its profit. On the other hand, the
decline in the number of the passengers carried placed the major weakness of PAL since the passengers
are relevant to the revenue the company could earn.

The Philippines has high levels of economic, political and financial system risk. This impressive
result continues the encouraging and positive trend reflects the Philippines Government’s impressive
efforts on fiscal management. Also, the public and international confidence will strengthen further and
provide confidence to the international investors that there is no economic risk of doing business in
Philippines.

SKYJET (Focus Differentiation)

Magnum Air (Skyjet) Inc., operating as SkyJet, is a full service airline based in Manila. It is owned
by entrepreneur Dr. Joel Mendoza. This company focuses on differentiation because it has unique and
attractive quality to costumers’ needs and wants. The airline begun as charter offering flights to group
travel in the Philippines. Traveling is now more easy and fast with SkyJet Airlines, the first boutique
leisure airline in Manila that offers great services at your own comfort. Well, value for money paid by
each and every customers is really worth it.

SkyJet Airlines started its operations in December 2012 launching charter flights to serve the
growing number of tourists in Batanes Island. In 2013, it also served charter flights to the exclusive high-
end and first class resort, Balesin Island. Last January 2014, a group of new investors took over and
launched its full blown domestic commercial operations flying to unique and exotic island destinations in
the Philippines such asBatanes, and Coron, Palawan. And just recently, SkyJet Airlines inaugurated
the Manila - Caticlan flight. Oh, Boracay Island is now 30 minutes away from Manila. Meanwhile, the
Civil Aviation Authority of the Philippines (CAAP) has awarded Magnum Air which is known as SkyJet,
incorporated the Airline Operator’s Certificate (AOC) as its license to operate as Domestic and
International Commercial Center.

CEBU PACIFIC (Integration Cost and Differentiation)

This airline has integrated its focus on cost and differentiation, because it is not just the leader in
low fares but also in innovation and creativity. In March 1996, Cebu Pacific entered the market with a
promise to give "low fare, great value" to every Juan who wanted to fly. After offering low fares to
domestic destinations, CEB launched its international operations on November 2001.

This airline lies on low cost market, CEB VP for Marketing and Distribution Candice Iyog, received
the Low Cost Leadership award in London on behalf of Cebu Pacific Chief Executive Officer and President
Lance Gokongwei. Gokongwei is the Low Cost Leadership awardee at the annual Airline Strategy Awards
2012, held in London. The event was hosted by Flightglobal publication, Airline Business. 

CEB or Cebu Pacific is a unique airline because it is the first local airline to introduce e-ticketing,
prepaid excess baggage and seat selection in the Philippines. Guests have also learned to anticipate a
uniquely upbeat flying experience with CEB, as this is the only domestic carrier that offers fun in the
skies with its games on board popularly known as Fun Flights.

REFERENCES:
 http://www.silent-gardens.com/air-airlines.php
 http://www.utiket.com.ph/en/flights/pal_express-pr.html
 http://www.thedailyposh.net/search/label/Boracay%20Island
 http://www.ukessays.com/essays/management/airasia-vision-and-mission-management-essay.php
 http://www.slideshare.net/sheilanorturingan/10-step-marketing-plan-for-cebu-pacific-air
 https://www.cebupacificair.com/about-us/pages/news.aspx?id=88
 http://unfortunatelysingle.tumblr.com/philippineairlines
 http://www.thedailyposh.net/2015/07/fly-in-style-with-manilas-boutique.html