Xennials and older millennials may still remember GrandAir from the late 1990s. Grand International Airways, better known as GrandAir, launched in March 1995 and became the first major new challenger to Philippine Airlines after the government opened domestic air travel to more competition. Why did the airline last less than four years?
President Fidel Ramos signed Executive Order 219 on January 3, 1995. The order encouraged at least two operators on domestic routes and provided for at least two carriers to be designated as official international carriers for the Philippines.
GrandAir belonged to the Panlilio family, whose hospitality businesses included the Silahis International Hotel along Roxas Boulevard, the Philippine Village Hotel beside Manila’s airport, and Puerto Azul in Cavite. Their airline aimed to attract passengers through service and comfort.
GrandAir used Airbus A300B4 widebodies, including RP-C8881 and RP-C8882, on flights linking Manila with Cebu and Davao. Boeing 737-200s later helped it expand to destinations such as Cagayan de Oro and Tacloban. Across its operating history, GrandAir used four 737-200s.
The airline followed a full-service approach, offering Business Class and Economy Class aboard its A300s, along with hot meals. Passengers had another carrier to choose from, including one offering a twin-aisle aircraft on domestic flights.
GrandAir expanded internationally in 1996, with services to Hong Kong and Taipei. It also operated Hong Kong flights through Subic Bay. On June 16, 1996, a GrandAir Boeing 737 operated Clark’s first international commercial passenger flight to Hong Kong.
Financial problems had already developed before the Asian Financial Crisis. GrandAir recorded losses of about ₱92 million in 1995 and ₱91 million in 1996, followed by about ₱150 million in 1997.
The crisis added financial pressure in 1997 as the peso weakened against the US dollar. Expenses charged in dollars, including aircraft leases, became more expensive when paid using pesos. An airline earning much of its revenue locally needed more pesos to cover the same dollar payment.
In July 1997, Netherlands-based lessor ING had two GrandAir A300s seized in Hong Kong after a delayed lease payment. GrandAir said administrative and communication problems had caused the delay. Losing access to those aircraft disrupted its operations after it had expanded internationally.
GrandAir announced in February 1998 that it would suspend its Hong Kong and Taipei services as the regional crisis affected its business. Later that month, on February 28, Republic Act 8583 became law, granting the airline a 25-year franchise subject to regulatory requirements. Its financial problems continued despite receiving the franchise.
The Air Transportation Office suspended GrandAir’s flights in August 1998 over safety violations. Its domestic passenger numbers had also declined, from about 480,000 in 1996 to about 180,000 in 1998.
GrandAir ceased operations in early 1999, less than four years after its launch.
Considering how Philippine domestic air travel has changed since then, do you think another full-service Philippine-based carrier offering hot meals on short domestic flights could survive today?
