9/11 made Philippine airlines more efficient, cost-effective

MANILA, Philippines—Exactly a decade after the country woke up to the new realities of the post-9/11 world, the hard-hit local airline industry claimed it had already recovered from the massive adverse effects of that fateful September 11 event.

According to airline executives, carriers like Philippine Airlines and Cebu Pacific have emerged stronger in the 10 years since the day that the landscape of air travel was changed forever.

But there is no denying the fact that the effects of the terror attacks on the United States continue to be felt to this day even by Filipino travelers embarking on the shortest of trips.

“The most obvious change for the industry is that it has become more expensive for everyone,” said Philippine Airlines president and COO Jaime Bautista.

In the wake of the 9/11 attacks, the international aviation industry was faced with the need to implement a major overhaul of security procedures—from installing bulletproof cockpit doors secured by electronic locks to acquiring more x-ray machines and hiring more people to man them.

According to Bautista, the impact on PAL was estimated to have cost an additional $20 million a year over the last decade. Some of these costs were borne by the passengers, while the rest had to be absorbed by the airline.

“We were able to pass on maybe around $10 million to our passengers through additional fees, but the rest we had to absorb,” he said.

The “additional costs” included higher insurance premiums that airlines had to pay for their aircraft, passengers and “third party liabilities” that could arise out of any terrorist-induced event.

“There was even a time when airlines were asking for governments to issue guarantees to insurance firms who refused to insure aircraft after 9/11,” Bautista said.

To help cushion the blow of the higher fees to passengers—at least psychologically—Bautista said airlines had to resort to the practice of “unbundling” where airline tickets would give a detailed breakdown of every single expense for clients to see.

The practice of unbundling also helped PAL save on the commissions it paid to travel agents, who would get paid based only on their airfare and not on other fees like insurance and fuel surcharges.

Cebu Pacific vice president for marketing Candice Iyog said the country’s largest budget carrier was now unbundling its fees and charges as a common practice.

“When you book on Cebu Pacific nowadays, it is automatically [set] for zero bags. But you have the option to buy baggage allowance,” Ms. Iyog said.

“If anything, we have become more efficient over the last few years,” she added.

However, for a carrier like PAL, it had to make some investments for things that would normally be shouldered by the government, such as equipment for security.

Additional costs notwithstanding, both executives from PAL and Cebu Pacific agree that 9/11 helped the industry become more efficient and cost effective—traits that helped them survive in the face of high fuel prices.

“There are positives and negatives after 9/11,” Bautista said. “But because of it, we are better prepared for the challenges.”