PAL to launch flights to Brazil before yearend

Flag carrier Philippine Airlines (PAL) plans to mount daily flights to Brazil before the end of the year—ahead of the football World Cup in South America’s biggest country next year.

Ramon S. Ang, president of both PAL and its parent firm San Miguel Corp., said flights to Sao Paulo would be mounted via Los Angeles in the United States. This follows the recent approval of new flight rights between Brazil and the Philippines last week.

“There is a lot of demand for those flights,” Ang told reporters. “There’s no doubt that this will be a profitable route.”

He said PAL intended to be able to pick up passengers from Manila and drop them off in Los Angeles. PAL will then be able to pick up passengers from the American city and fly them to Brazil.

The introduction of flights to Brazil is part of San Miguel’s plans to nurse PAL back to health. Ang said PAL currently loses a lot of money because the airline was not able to use its brand-new Boeing 777 flights to the United States, which account for its highest-revenue routes.

The company’s six Boeing 777s were delivered during the last five years but could not be used for flights to the United States due to the country’s standing category 2 status with the Federal Aviation Administration (FAA). This bars local airlines from expanding flights to the United States. It also bans local airlines from using other planes for existing US routes other than the ones already being used there before the downgrade.

PAL uses its Boeing 747 jumbo jets for its US flights. Ang said the Boeing 747s use up significantly more fuel than the newer 777s. Due to their age, the 747s are also more prone to frequent breakdowns, resulting in higher maintenance costs.

“Maintenance and fuel takes up as much as 60 percent of our sales revenues (for the 747s),” Ang said. He said once the country has earned its category 1 status with the FAA, PAL would start using its 777s for US flights, bringing the cost of fuel and maintenance down to 40 percent.

Ang said that if the Philippines would fail to gain back its category 1 status this year, PAL would lease out its 777s to other airlines in the region for as much as $20 million each. Ang said there was no way to make a profit using 777s without being able to use them for US flights.

The government expects the country to earn its category 1 status soon following the lifting of the International Civil Aviation Organization’s (Icao) “significant safety concerns” (SSC) on the Philippines. Similar to the FAA category 2 status, the ICAO’s SSC noted lapses in the Philippines’ aviation regulatory framework. The European Aviation Safety Agency (EASA) previously cited the Icao SSCs on the Philippines to ban local airlines from flying to Europe.