MANILA, Philippines - Shares of national carrier Philippine Airlines (PAL) and Cebu Pacific soared on Thursday, after the US Federal Aviation Administration (FAA) said it upgraded the Philippines' civil aviation status to let its airlines operate new direct flights to the United States.
An upgrade to Category 1 status allows airlines from the Philippines to expand and mount additional flights to the United States.
PAL and Cebu Pacific shares surged to one-month highs at the Philippine Stock Exchange. PAL shares closed 2.42% higher at P5.51, while Cebu Pacific closed 3.3% higher at P48.55.
Overall, the PSE index is at a near-8 month high. The main index closed 0.78% higher at 6,638.89 on Thursday.
The upgrade to category 1 status by the U.S. Federal Aviation Administration (FAA) follows a downgrade to category 2 in 2008 because the Philippines lacked oversight laws for air carriers and fell short of international safety standards.
The Philippines created an independent regulatory body in March 2008, soon after the FAA downgrade, and pulled its standards into line with international norms set by a U.N. body, the International Civil Aviation Organisation.
All Philippine carriers may now apply for flights to the United States, said Capt. John Andrews of the Civil Aviation Authority of the Philippines.
"There are no more restrictions," he said in a television interview. "We are now world-class as far as the aviation industry is concerned."
For example, PAL will be able to launch more routes, and step up its flight frequency in the United States, particularly on the East Coast.
PAL has 28 flights every week to four destinations in the United States - San Francisco, Los Angeles, Honolulu and Guam, carrying 27,000 passengers. There are plans to open new gateways to the U.S. East Coast using Boeing 777-300s.
Tony Fernandes, chief executive of low-cost carrier Air Asia AIRA.KL, welcomed the FAA upgrade.
"Great news Philippines they have got back category status from FAA," he said on social media site Twitter. "Means Air Asia Philippines can now have access to routes."
The FAA said the Philippines had to maintain its category 1 rating by sticking to safety standards set by the ICAO, a U.N. technical agency that establishes international standards and practices for aircraft operations and maintenance.
The Philippines also expects the European Union to lift a ban on Cebu Air imposed in 2010 over the ICAO's concerns about local aviation safety standards. It allowed Philippine Airlines back to European skies last year. -- With reports from Reuters and ANC