Bombardier delivers the first out of 12 new generation Q400s ordered by PAL
TORONTO—Inside Bombardier Aerospace’s vast manufacturing hub in the suburbs of North York, it’s not rare to meet Filipino-speaking mechanics working on a new aircraft. One out of five workers in this Canadian factory is of Filipino descent.
“Kabayan!” they greeted with a warm smile.
The day a group of Filipino journalists toured the facility, the mood was especially festive. Bombardier’s sales team performed well at the recent Paris Air Show. Flag carrier Philippine Airlines (PAL) has also purchased a dozen of Bombardier’s new generation regional commuter aircraft Q400 and the first one has recently been completed and delivered.
Last December, PAL placed an original order for five Q400s and had acquired purchase rights for seven more. During the Paris Air Show, PAL announced it was exercising this right. Based on Bombardier’s published price list, one Q400 is worth about $32.2 million.
The acquisition is part of PAL’s $2-billion fleet modernization program, seen crucial to the airline’s goal to regain market share in the domestic aviation industry and become a 5-star rated airline within four years.
PAL president Jaime Bautista flew in to accept the first Q400 turned over by Bombardier in an elaborate turnover ceremony on July 20.
“We are much honored to have Philippine Airlines as the launch operator of the world’s first dual class, 86-seat Q400,” said Bombardier Aerospace’s vice president for commercial operations Ross Mitchell.
PAL’s new aircraft was configured to house economy and premium economy class seats with 29-inch and 33-inch seat pitches, respectively. A seat pitch is the distance between two seats in a row.
“[PAL]—the first commercial airline in Asia—has revolutionized air travel and we are proud to have such an innovative airline as our brand ambassador for our Q400 aircraft,” Mitchell said.
Today, more than 500 Q400 aircraft made by Bombardier fly around the world, supporting connectivity and economic growth.
The next Q400 will be delivered to PAL in August, and the others will arrive one after the other starting September until November. The seven additional Q400s will be delivered next year starting March.
“I’m especially grateful to all the Filipinos who work at Bombardier for their part in putting together this aircraft for Philippine Airlines,” Bautista said during the turnover ceremony.
“When we were deliberating which aircraft to purchase, whether Q400 or the competition, one of the criteria we considered is that if we buy the Q400, we will be supporting the Filipino community in Canada because we know that 20 percent of the workers in this factory are Filipinos,” he said.
Philippine folk dance numbers entertained guests including Tobias Enverga Jr., Canada’s first senator of Philippine descent, Canadian Parliament member Michael Levitt, Philippine Ambassador to Canada and Philippine Permanent Representative to International Civil Aviation Organization (ICAO) Petronila Garcia, Philippine Consul-Generals Eric Gerardo Tamayo and Rosalia Prospero, and Mitsui & Co. Ltd. Philippine general manager Noriyuki Moriyama Mitsui.
Mitsui, along with Cathay United Bank of Taiwan, funded PAL’s first three purchases of Q400.
Why Q400?
Besides the Filipino story behind the production of the turboprop, the Q400 is a sightly and efficient commuter aircraft that PAL is proud to have. It is seen crucial to its aspiration to regain market share in the competitive domestic passenger business.
The new Q400s will be used for new domestic routes, particularly out of the Cebu and Clark regional hubs.
“We will also be able to expand inter-island operations so we can reclaim our domestic market position,” Bautista said.
“Our turboprop refleeting program sends a strong message that we want to reassert our dominance in the domestic market. An aircraft with a spacious cabin, complemented by warm and caring service, is the formula that will take us to that goal.”
Once all the Q400s have been delivered, PAL’s domestic passenger capacity would increase by at least 20 percent, PAL senior vice president Angelito Alvarez said.
The Q400 aircraft—pitched by Bombardier as the pinnacle of a modern turboprop—is seen suitable for an archipelagic country like the Philippines, where connectivity across islands is needed to fuel economic growth and develop regional centers that will provide air traffic to the major hubs.
“It is very, very fast. You have the option to speed up to recover your schedule. If flying below 25,000 feet, the economics are fantastic on the aircraft. There’s low fuel burn per person per trip,” said Paul Thompson, general manager of Q400 operations at Bombardier.
Initially, the new aircraft will be based in Cebu but it will also fly from Clark. It will fly to many destinations like Caticlan, the main gateway to Boracay, so that PAL can fully utilize the aircraft. The fifth would then be based in Manila, to be flown to destinations like Basco and Busuanga—two domestic destinations where flights are most expensive.
“One of the reasons for buying this aircraft is for us to be more efficient. And if we are efficient, we should be able to share savings to our passengers. We should be able to extend attractive rates to passengers,” Bautista said.
But before reaching the Philippines from the factory, each Q400 will have to fly through the North Pole via nine airports. From Toronto, it will fly to Goose Bay (Canada), Iceland, Paris, Malta, Egypt, Dubai, India and Thailand. This means nine stopovers in five days before reaching the Philippines. “It’s a world tour,” Bautista said.
Tobias Enverga Jr., Canada’s first senator of Filipino descent (third from left) and PAL president Jaime Bautista (6th from left) with some of Bombardier’s Fil-Canadian workers.
PAL’s $2-billion refleeting
PAL currently has 81 airplanes in its fleet. By the end of the year, the five Q400 purchases and two Boeing 777-300 ERs that will be delivered in December will bring the number to 88.
PAL will also take delivery of six more Airbus 350s—four next year plus two in 2019—as well as a A321neo commercial aircraft.
PAL expects to build a fleet of 100, also one of the youngest among its peers.
In the last few years that oil prices have gone down, PAL has taken the opportunity to use the savings from aviation fuel to boost its fleet.
PAL also aims to beef up its international flights. The acquisition of A350s, for instance, will allow PAL to operate nonstop flights from Manila to New York and Toronto in the future. Currently, PAL stops over in Vancouver before flying to New York and Toronto. The first of these A350s is scheduled for delivery by June next year.
“It will take us one or two months to prepare its entry into service to New York so we’ll use it first for regional operations. But if everything is already in order, maybe after one or two months, we’ll start flying to New York nonstop,” Bautista said.
With the larger aircraft, PAL also plans to open new routes to the US such as Chicago and Seattle. In Europe, PAL is also looking at Rome, Paris and Frankfurt. The flag carrier already started flying to Europe via London for the first time in 15 years last 2013.
5-star airline
PAL, rated as a 3-star airline by rating firm Skytrax, aims to graduate to 4-star status by the end of this year and obtain the highest rating of 5-star in four years, Bautista said.
The 5-star status is awarded to only nine airlines: Qatar Airways, Singapore Airlines, Cathay Pacific Airways, Asiana Airlines, Hainan Airlines, ANA All Nippon Airways, Garuda Indonesia, EVA Air and Etihad Airways. The rating recognizes the quality of service and products provided to customers, including consistent and efficient frontline staff service.
“They conduct an audit of the airlines, see to it that experience of the passengers will be good from the time they check in, enjoy the cabin amenities, cabin service and from the time they get their baggage in the carousel. It’s a total customer experience,” Bautista said. “That will involve beautiful lounges, good service, excellent food selection, content of in-flight entertainment and of course, the warmth and good service of the cabin crew.”
Meanwhile, the flag carrier aims to sustain profitability this year amid cutthroat competition and fluctuating aviation fuel prices.
In 2016, PAL Holdings posted a net profit of P3.53 billion attributable to equity holders of parent compared to P5.77 billion in 2015. In the first three months of this year, it incurred a net loss of P1.13 billion compared to a net profit of P2.93 billion in the same period last year.
“What’s happening in the market is there’s stiff competition. We are selling tickets lower than the yield of last year and price of fuel has gone up compared to last year. But because of competition, we have carried more passengers, flown to more destinations and added flights. The capacity has increased by almost 18 percent but our revenue increased only 5 percent because of the low yields as price of fuel has gone up,” Bautista said.
Still, he said the goal would still be to become profitable this year.
Discussions are likewise still underway for PAL to get a strategic partner. “It may happen this year or next year,” Bautista said.
Industry sources said PAL would most likely get an Asian airline as strategic partner.