PAL to battle Mideast carriers head on
Philippine Airlines intends to compete head on with Middle Eastern carriers in flights between Manila and major European cities that can begin as early as the fourth quarter of this year.
In an interview, San Miguel Corp. president Ramon Ang—who is also PAL president—said the flag carrier has inherent advantages that would help it wrest market share away from its more affluent competitors.
“Our main competitors will be flying via the Middle East. With this route it will take up to 24 hours from the time a traveler leaves his house to the time he reaches his hotel room,” Ang explained.
“But if he takes PAL’s direct flight, he can be in London in 13 hours,” he said, adding that the average airfare to Europe for both PAL and competitors that fly through their Middle Eastern hubs would be $1,200 per seat.
Since PAL will be deploying its newest wide-bodied aircraft—six Boeing 777-300ERs—for direct flights to Europe, it can also compete directly against similarly equipped Middle Eastern carriers.
“In terms of comfort, we will both have that full flat seats that feel like beds, for business class,” Ang said. “And if you’re a Filipino, you’ll want to experience the hospitality of Filipinos. In terms of food, I guarantee you our food is better than that of any Middle Eastern airline.”
Overall, he said that PAL’s cost per seat on flights between Manila and Europe would be lower than those of its competitors, ensuring profitability for the route.
PAL expects to start flying direct to London by October, and possibly to Amsterdam, Rome, Frankfurt and Paris before year’s end—all of which have estimated passenger traffic of both Filipinos and foreigners that would merit daily flights to Manila, Ang said.
Negotiations between PAL and European airport operators would take at least two months for the airline to be given landing rights, terminal slots and access to business-class lounges, among others.
During this time, PAL will also start pre-selling tickets for the planned European routes so that its seats will be substantially taken up by the time the flights are launched.
Ang said he was not worried about reciprocity issues with European carriers since their prohibitive costs, including labor, make it too expensive for them to mount direct flights to the Philippines.
More importantly, the PAL chief explained that the decision of the European Union to lift its three-year ban on the flag carrier after it passed a safety examination would relieve its current financial pressures caused by the presence of new aircraft that were not being maximized.
“On the average, PAL was losing $100 million a year. Sixty percent of this is from maintenance and fuel costs,” Ang said. “Why? Because PAL bought six Boeing 777s which could not be used on trans-Pacific flights (due to Category 2 restrictions imposed by US regulators).”
“So these aircraft were used for flights to Hong Kong, Singapore, Tokyo and elsewhere. This was costing PAL $20 million [in operating losses] per aircraft,” he said. “Once these aircraft are maximized, the losses will go away.”
