PAL poised to capture bigger slice of US market, firm says

Flag carrier Philippine Airlines is poised to strengthen its position in the United States with the acquisition of new long-haul aircraft, aviation consultancy firm CAPA-Center for Aviation said in a report.

CAPA outlined strategies PAL may pursue after the carrier announced last week that it would buy six Airbus A350-900 planes in a deal that carries an option to acquire six more.

Its first A350 will be delivered in 2018 and will add to PAL’s existing long-haul fleet of Boeing 777-300 ERs, Airbus A340s and Airbus A330-300s.

PAL, which plans to retire its aging A340s with the delivery of A350 planes, is in a good position to capture a bigger slice of the US market, CAPA said.

Expansion in the United States has resumed since the Philippines’ category 1 safety status was restored by the US Federal Aviation Administration in 2014.

Using more efficient planes to ply these routes is the next step, CAPA said.

US routes are being served using PAL’s B777s and A340s.

The A350 will allow the carrier to mount non-stop flights between Manila and New York in 2018.

“PAL’s load factor to the US is generally high, an indication that the market can support an increase in capacity. Its average load factor to Los Angeles and San Francisco is generally above 80 percent most of the year, and in peak months is often above 90 percent,” CAPA said.

“The Philippines-US market will likely grow at least modestly over the next several years. PAL should also be able to increase its Philippine US market share as it adds nonstop capacity,” it added.

PAL already has between 6,500 and almost 9,000 non-stops seats to the US during the year, through Los Angeles and San Francisco.

It will launch flights between Cebu and Los Angeles next month, which will add 10 percent more seats, CAPA said.

CAPA noted that the A350 also makes it attractive for PAL to launch a new route in Europe, but it said the flag carrier was better off expanding in the US as this would provide “better returns” due to limited competition from Gulf carriers.

Bigger planes like the A350 also provide other benefits due to slot limitations in Manila’s Ninoy Aquino International Airport.

“The A350-900 is another example of upgauging as PAL phases out smaller A340-300s. PAL can continue to grow its long haul operation at Manila by upgauging aircraft and redeploying slots now used for short haul flights,” CAPA said.

With the decision on long-haul planes settled, CAPA said PAL can turn its attention to “renewing and expanding” its regional aircraft fleet, which consists of older nine Bomardier Dash 8 turboprops.

New turboprop planes will be needed by PAL as not all airports in the country can handle larger aircraft, CAPA said.