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United States upgrades Philippine civil aviation rating

MANILA (Reuters) - The U.S. aviation regulator upgraded the civil aviation status of the Philippines on Thursday to let its airlines operate new direct flights to the United States while the European Union lifted a ban on the biggest Philippine airline.

The U.S. Federal Aviation Administration's upgrade to category 1 followed a downgrade to category 2 in 2008 because the Philippines lacked oversight laws for air carriers and fell short of international safety standards.

National carrier Philippine Airlines continued to fly to the United States despite the 2008 downgrade, but it has been limited to 28 flights a week to four U.S. destinations and only with certain aircraft.

Hours after the FAA announcement, the European Union took Cebu Pacific Air, the country's biggest carrier in terms of passenger numbers, off a list of banned airlines

"The good news doesn't end there," Julian Vassallo of the European Commission told a news conference in Manila.

"The European Commission is likely to mount another assessment mission to the Philippines later in the year to assess Philippine aviation as a whole, including internal aviation, with the prospect of lift the ban on Philippine aviation as a whole."

Philippine Transportation Secretary Joseph Abaya said in a statement the FAA upgrade "cements a landmark era in the Philippine aviation sector".

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. agency, the International Civil Aviation Organisation.

Abaya said the upgrade would have a significant impact on the Philippines' economy by allowing its airlines to add direct flights with the United States, boosting tourism and trade.

SHARES RISE

All Philippine carriers may now apply for flights to the United States, said 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, Philippine Airlines will be able to launch more routes, and increase the number of its flights to the United States.

Shares of Philippine Airlines rose as much as 2.9 percent, while low-cost operator Cebu Air Inc climbed as much as 4.3 percent in early trade after the FAA announcement.

Cebu Pacific Air carries more than 40 million passengers a year to domestic and several Asian destinations.

"With the lifting of the EU ban, this network is about to get even bigger," said Lance Gokongwie, Cebu Pacific Air president and chief executive.

Gokongwie said Cebu Pacific Air would take delivery of about 50 Airbus aircraft up to 2021, to allow the airline to add more destinations, open more routes and increase its flights.

The FAA said the Philippines had to maintain its category 1 rating by sticking to safety standards set by the ICAO, which sets international standards and practices for aircraft operations and maintenance.

(Reporting by Manuel Mogato and Siegfrid Alegado; Editing by Clarence Fernandez and Robert Birsel)

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