It is a moment of extreme pride and joy for a Filipino to witness the blessing on September 27, 2013 of a brand-new Airbus A-300-300 wide-body jet and its turnover to its owner, Philippine Airlines direct from the sprawling Airbus factory in Toulouse, France.
“This is a milestone for Philippine Airlines,” beamed PAL President Ramon S. Ang from Manila. He didn’t join the trip as he has equally big or bigger things to attend to at headquarters. He runs five of the Philippines’ biggest companies – San Miguel Corp., Petron Corp., San Miguel Brewery, SMC Global Power, and PAL. Together, the San Miguel group has combined revenues of over P800 billion, making it the largest conglomerate locally.
PAL as a business has had a storied life. It nearly went bankrupt twice in the past 16 years and was unprofitable for many years, including the current one. Only the vision and guts of Ramon Ang have enabled PAL to fly to brighter skies so far.
“We now start the next phase of our fleet renewal, anchored on new generation A330-300s,” Ang said in a press statement. “This aircraft enables PAL to open up new frontiers in our rapidly growing network as well as in service innovations for our passengers.”
PAL Senior Vice President Ismail “Nikki” Gozon led a lean 40-member Philippine delegation in taking delivery of the new $230-million (list price) from Airbus out of Toulouse. The twin-engine behemoth took off at 4 p.m. Toulouse time on September 27 and landed in Manila 12 hours and 58 minutes later at the NAIA Terminal 2 at 11:20 am. September 28.
“This aircraft is a game changer for PAL,” Gozon enthused upon taking hold of the Airbus A-300.
PAL’s chief of operations related: “The last time PAL made a significant plane purchase was 35 years ago when we ordered our first A-300-B4, making PAL the second Asian airline and first in Southeast Asia to order Airbus aircraft. This was barely four years after the A300 went into commercial production, underscoring PAL’s faith in Airbus at a time when only a few airlines considered it good business to do so.”
The Airbus A-300 has 414 all-Economy seats–39 Premium Economy and 375 Economy. It is a volume passenger hauler to ferry passengers in big numbers. PAL has ordered 21 A330-300 jets plus 44 A-321s for delivery over the next six years. The 65 Airbus aircraft are worth $9.5 billion, the largest plane purchase in Philippine aviation history. The A321s are the cornerstone of PAL’s single aisle fleet—the backbone of any low-cost carrier operation.
PAL hopes to recapture its once huge and lucrative Middle East market before oil started escalating and rising to as high as $147 a barrel in July 2008 and stabilizing at $100 at present, and its European market before the Philippines to status quo when the US downgraded to Category 2 safety status. At the time Category 2 was imposed, PAL had ceased flying to Europe. With status quo, it could not return to Europe, until that ban was lifted July this year.
Fuel burned up to 47 percent of PAL’s operating costs forcing the carrier to give up its flights to the Middle East and settling for a code sharing agreement (with PAL collecting merely commissions on each ticket sold) with the cash-rich Arab airlines.
PAL wants those seats back by mounting fuel-efficient aircraft configured like volume haulers like the new all-Economy Airbus A-300-300. The carrier will match its rivals’ cutthroat rates, plus an unheard-of free baggage allowance of 30 kilos (50 percent above normal).
Between today, October 1, and December 4, 2013, PAL will be mounting up to 34 Manila-Middle East-Manila flights a week—five times a week to Abu Dhabi and back, five times a week to Dubai and back, four times a week to Riyadh and back, and three times a week to Dammam and back. At full capacity, PAL should be able to bring up to 7,000 passengers a week, one way, to the Middle East by January. At 80 percent load factor, the volume should hit 5,600 a week, one way.
PAL has a ready and captive market for its services—10.5 million overseas Filipinos, including more than two million in the United States. These are middle class and high-end Filipinos who want to come home to the Philippines every year as balikbayans. When they fly, they want PAL because once inside a PAL plane, they are home.
About 3,600 Filipinos leave the Philippines daily to work abroad. That’s on top of over a million Filipinos who go abroad as tourists and the 3.5 million foreign tourists who come to the Philippines for brief visits and leave after four days.
PAL has a large market. All that is needed is the right aircraft, the right service, and the right pricing. PAL already has the aircraft—100 planes are on order, including the 65 from Airbus. It has the legendary quality service and the experience of its pilots who are the best in the world. Pricing can be a problem though.
Qatar can bring you to Europe, business class, for only $2,200 with free stopover in Doha to experience its award-winning first class and business class lounge—hot meals, hot shower, sleeper lounges, and even a five-star hotel suite with two free meals, if your layover is over seven hours—free.
PAL is offering a promo business class fare to London for only $2,900, return. That’s competitive compared with the exorbitant rates of Cathay Pacific and Singapore Airlines but not against the predatory pricing of Qatar and Emirates.
PAL, however, intends to fight it out in the OFW end of the market. In 2012 alone, 1.435 million OFWs were deployed. Of that, 293,049 went to Saudi Arabia, 201,214 to United Arab Emirates, 101,340 to Hongkong, 87,000 to Qatar, 70,251 to Singapore, 53,010 to Kuwait, 36,866 to Taiwan, 15,434 to Bahrain, and 25,595 to Italy.
Except for Italy, all these routes are within the range of the Airbus A-300-300 all-Economy jumbo. The European routes like London will be serviced by the Boeing 777.
Congrats Ramon Ang for job well done so far.