Philippine Airlines – a tough lesson

Philippine Airlines has cancelled an order for five Airbus A330-300 aircraft that was part of a multi-billion dollar order announced in 2012 involving the acquisition of 64 new aircraft from Airbus. Although Airbus recorded cancellations last month from Philippine Airlines, it compensated for the loss with a new order from PAL for 8 A321neo aircraft. This is in addition to the existing order for 10 A321neo aircraft placed in August 2012.

Philippine Airlines had to learn a tough lesson. Already in 2013 Philippine Airlines should have woken up and should have reconsidered their expansion plans . Flights to FRA , PAR, MXP , FCO and MAD are likely to remain dreams. Maybe a conditional lifting of the FAA Cat. 2 could come,  so that PAL could replace their A340 and B744 fleet against B77W, but they won’t get an increase of flight frequency.

The wishful thinking of PAL and so many others will probably not go into fulfillment .

The reasons are obvious :

1. No full upgrade from FAA Cat. 2 to Cat. 1
2. No overflight rights. Russia is much too expensive.
3. Not enough space at NAIA-T2 to park all aircraft.
4. The service profile in their business class. Actually  it is the business class that earns money. But PAL is miles away from their competitors ( SQ , EK , QR, CX )
5. The airline can not offer international connecting flights since neither the airport nor the airline are ready.
6. The Philippines market is too small to provide international long-range connections compared with foreign competitors
7. The airspace over the Philippines is crowded and for “Approaches to MNL – a lot of money is burned in the air”.

[GARD]

The Philippines government is of course also responsible for the fact that the Philippines are so far behind in international competition

The government and its agencies missed:

1. A consistent and clean planned infrastructural connection of CRK and the metropolitan area of ​​Metro Manila including a “Dual Airport Declaration of MNL and CRK”. This declaration accumulates dust since mid-2013 on the desk of the president.
2. The extension of NAIA Terminal 2. (The PAL terminal).
3. An increased number of aircraft movements at in the NAIA, by the introduction of modern technology. The displacement of RWY 06 /24 of at least 40 meters towards the east, to comply with the minimum distance between TWY and RWY .
4. A fully operational RWY RWY 13/31 with extension  to the Paranaque River. The land between T4 and the Paranaque River belongs to the government ( the predecessor of the CAAPs – ATO).
5. Opening of Laoag , Subic , Iloilo , Bacolod , Kalibo , Puerto Princesa , Davao, GenSan for 24hrs weather operation with full CIQ and without exorbitant fees of CAAPs for overtime!
6. Full opening of Laguindingan International Airport for international operations. Currently only VFR approaches are possible and only in good weather conditions.
7.  Extension of Boracay’s Godofredo P. Ramos Airport
8. New construction of the South Luzon airport , Bohol Airport , and many more.

All these factors now play a big role in the future development of PAL. 4 billion pesos loss in the first year of Ramon Ang, there is not much room for further losses. PAL Holdings ends 1st year under SMC with PHP 4-billion losses and the opening of the LON route  also has produced only losses so far.

Airline insiders are wondering that Lucio Tan , who still owns 51% of PAL, remains so quietly watching. The PAL shares have continuously dropped from PHP 8.35 to 5.37  since the sale of 49% stake to SMC.

PAL has now to establish and defend its market. Otherwise one should remember what happened on 23 September 1998!

A joint venture of Tiger Airways/Cebu Pacific  and a fully merged AirAsia/Zest are all ready to go into the routes of PAL!

[GARD]