PAL eyes 5-star rating by 2020

Philippine Airlines has firmed up a strategy that would make it a five-star, full-service carrier by 2020, a rating that puts it at par with global players like Singapore Airlines and Qatar Airways, its top official said.

The country’s flag carrier is forging ahead with this plan despite growth constraints at Manila’s Ninoy Aquino International Airport, PAL president Jaime Bautista said in a briefing yesterday marking the company’s 75th anniversary.

PAL is currently rated “three-star” based on the latest audit by Skytrax. PAL shares this score with several budget airlines and major US carriers.

Bautista said this would change as PAL rolls out more international destinations, improves its services and continues its refleeting program that most recently included an order of six next-generation Airbus A350-900s.

Bautista said PAL would also spend $80 million to reconfigure eight of its all-economy Airbus A330s, which would cut seats from 414 to just more than 300 seats. He said this would increase legroom in economy while allowing the airline to add higher-margin business-class and premium economy seats.

PAL’s management led by chair and controlling shareholder Lucio Tan decided on this strategy in November 2015, Bautista said, amid queries over its market positioning.

“We have to be differentiated from other airlines,” Bautista said at the sidelines of the press conference. “We revisited our mission-vision. That will drive our strategy.”

Bautista said the plans were in step also with growing its profitability and volume. He said PAL would end 2016 more profitable than last year, partly as its operating costs benefited from lower fuel prices. PAL also plans to carry 14 million passengers in 2016, up from 12 million last year.

He said the target was to achieve a passenger load of 75 percent this year, up from 71 percent in the previous two years.

The refleeting and subsequent route expansion were key components of PAL’s goal to become a five-star airline, he said.

The carrier, which has 75 planes, is taking delivery of five Airbus A321s and two Boeing 777-300s in 2016. It will also take delivery of two more A321s next year. Its long-haul fleet is mainly comprised of B777s, Airbus A340s and A330s.

PAL is studying more routes in Europe, which it serves through flights from Manila to London. In two years, PAL might launch flights to Paris, Amsterdam, Hamburg and Rome, pending the results of an ongoing study, Bautista said.

He said the airline was also keen on increasing revenue by tapping fifth freedom rights the Philippines has with counterparts in Asia, Australia and the Middle East. For example, PAL will start on June 25 this year daily services between Taipei and Kansai (Osaka, Japan). It opened last January flights between Dubai and Kuwait and Dubai and Jeddah.

“PAL has not been very active using 5th freedom rights, we will do what other airlines have been doing,” Bautista said.