Philippine Airlines continues resurgence under Bautista

Philippines Airlines has reported softer profits this year compared with 2015, but the airline’s chief operating officer and president, Jaime Bautista, is far from discouraged as he plans a network expansion.

by TOM BALLANTYNE REPORTS FROM MANILA  

December 1st 2016

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Philippine Airlines (PAL) president and chief operating officer will report lower profits for his airline this year compared with the carrier’s net profit of $129 million in 2015. Read More » But a seven per cent revenue increase, to $2.4 billion, will ensure 2016 will be a good year for PAL, Jaime Bautista said.

“We have flown more passengers and operated more flights this year, but the yields went down,” Bautista said. “Other airlines in the region are experiencing the same problem. Air fares have dropped. Yield declines have been in double digit figures. Our capacity grew by 17%. Passenger numbers grew by almost the same amount, but our revenue is almost flat.”

Despite the yield decline, PAL has expanded its fleet and added to its network, he told Orient Aviation. Back in charge at the airline after tobacco tycoon, Lucio Tan, repurchased the carrier from Ramon Ang’s San Miguel brewery empire, the PAL boss has taken delivery of four A321s and one B777-300ER. Another B777 will arrive in Manila this month.

The inauguration of its latest B777 will bring the carrier’s fleet, a mix of B777-300ERs, A340s, A330s, A321s and Bombardier Q400s and Q300s, to 81 aircraft. The ageing A340s will be phased out as the airline accepts delivery of six A350s from March 2018 to mid-2019.

The new aircraft means the carrier can extend its European network beyond London. “When we complete the A350 orders we are looking at possibly Frankfurt and Paris,” said Bautista.

PAL also wants to identify a European partner. It does not have any code share agreements in Europe that allow it to transit its London-bound passengers onto inter-European flights under a PAL code. Bautista said “our people are working with some European airlines” to remedy this situation.

In North America, the airline has increased its flights to Los Angeles to a B777-300ER double daily service and will add capacity to Vancouver and Honolulu. “That will be made possible by the reconfiguration of more than half its fleet of A330s”, Bautista said. Eight of the type are 414-seat single class planes and seven are fitted with a three-class 368 seat configuration.

“Those with 414 seats are relatively new so we will reconfigure them to a little over 300 seats with Business, Premium Economy and Economy and a state-of-the art IFE system with wireless connectivity,” he said. “They will fly Manila-Sydney, Manila-Honolulu and to Japan, a very lucrative route, and possibly South Korea and Bangkok.”

Not surprisingly, China is high on PAL’s agenda. It flies to Beijing, Shanghai, Guangzhou and Xiamen as well as Hong Kong and Macau. “We’re looking at Chengdu as a destination and working with some travel agents about establishing charter agreements from cities in China to Cebu, Boracay and Puerto Princesa,” Bautista said.

“More Filipinos are travelling. We believe with the growth in the market and the increase in the spending power of the Filipinos there will be more travel between the Philippines, ASEAN, the United States and Europe.”

This year, PAL unveiled a corporate vision structured to achieve five star airline status for PAL in five years. It is centred around the intrinsic charm of Filipinos that “can only come from the heart of the Filipino”.

Bautista’s major challenge remains the strictures on the carrier’s growth at its metro Manila home base. “It’s very difficult to acquire additional slots. So our growth will be in Cebu, in Davao and Clark – which is 100 kilometres from the Philippines’ capital. In Manila, we will bid for available evening slots,” he said.

To add to the network while attractive slots remain unavailable at Manila’s Ninoy Aquino International Airport, PAL has begun increasing its flights from secondary cities. It inaugurated a Cebu-Singapore service this month, which will be followed by additions to its regional network from airports elsewhere in the Philippines in the second or third quarter of next year.