PAL eyes long-range fleet expansion

Philippine Airlines is considering expanding its fleet of long-range planes with the lifting of restrictions to the United States, allowing the flag carrier to expand as well as switch to more fuel efficient aircraft, company president Ramon S. Ang said.

Ang said in a text message last week that the carrier was studying whether to acquire or lease additional US-made Boeing 777 planes, which has enough range to reach the mainland United States, or the newer long-range A350 aircraft by French manufacturer Airbus.

PAL’s main long-range fleet of six Boeing 777-300ERs were set to replace ageing Boeing 747-400s plying the Manila to San Francisco and Los Angeles routes, Ang said.

The Manila-US flights typically have strong load factors except during off-peak months, aided by the roughly three million Filipinos residing in the United States. This makes the country a key part of PAL’s international expansion strategy.

The move comes as the US Federal Aviation Administration restored the Philippines’ Category 1 air safety rating following reforms at the Civil Aviation Authority of the Philippines. The country was downgraded to Category 2 in 2008 due to safety concerns.

Since PAL acquired its B777s starting 2009, a year after the downgrade, it was forced to use the aircraft for other routes like Canada and Australia, instead of the original plan to fly the planes to the United States.

Ang said that switching to fuel-efficient B777s would result in about $160 million in annual fuel and maintenance savings in the near-term.

PAL, which is jointly owned by San Miguel Corp. and the group of taipan Lucio Tan,  flies 26 times a week to the mainland United States as well as Hawaii and Guam. But it would require more planes given its plans to add more flights, consultancy firm CAPA Center for Aviation.

The carrier earlier signed a $9.5-billion deal with Airbus to acquire 64 medium- and long-range planes slated for delivery from 2013 to 2019.

“With the green light now to change gauge and expand in the US, the acquisition of additional 777-300ERs through leases or new orders becomes more likely as it remains the preferred type for US routes,” CAPA said.

It noted that Boeing 787s and A350s could be acquired but PAL would need to wait longer for delivery slots.

Ang earlier said that PAL was keen on reviving flights to New York and Chicago within a year.

The FAA upgrade also opens up expansion opportunities for PAL’s sister firm PAL Express, Civil Aeronautics Board executive director Carmelo Arcilla said in a separate interview.

Since South Korea has also aligned regulations with that of international air safety regulators, including the FAA, the downgrade likewise halted the expansion of local carriers in the country.

With the restoration of Category 1, Arcilla said PAL Express would be allowed to use the 3,000 weekly seats it had sought to South Korea, he added.