Even with money to buy planes, PAL can’t just take off

Flag carrier Philippine Airlines (PAL) is banking on capacity expansion in Manila’s Ninoy Aquino International Airport (Naia) to help sustain growth.

PAL president Jaime Bautista is hoping the government will soon approve a private sector proposal to expand and operate Naia, which suffers from perennial congestion on its runways and passenger terminals.

The plan—offered by seven tycoons including PAL owner Lucio Tan and the Gokongwei family behind Cebu Pacific Air—will see design capacity in the airport double to about 65 million passengers annually and aircraft movements increase by a third in a few years.

Expansion in Naia is crucial for PAL and other carriers that are seeking to grow their operations while waiting for new alternatives, such as San Miguel Corp.’s Bulacan Airport, which is still undergoing a competitive bidding process.

Bautista said they were in talks with US plane maker Boeing on potential orders of next-generation 777X aircraft to replace older planes. Congestion in important gateways such as Naia can also lead to the “possible” delay of Airbus plane deliveries in its existing pipeline

“We will look for destinations where we will fly these airplanes considering it’s difficult to get slots in Manila. That is why we are reviewing our orders when we will decide on the delivery,” Bautista told reporters in a recent interview.

PAL’s operator, PAL Holdings, listed the group-wide fleet at 97 planes at the end of the first quarter of 2019.

PAL Holdings said in its first quarter filing that 13 Airbus 321Neos would be delivered between 2020 and 2024.

To address the lack of passenger capacity, Bautista said the plan was to build an annex building for Naia’s Terminal 2, a more than two-decade-old structure where PAL exclusively operated domestic and international flights.

“Terminal 2 is designed for domestic operations but we are operating international flights here,” Bautista explained. “That’s why we need a T2 annex designed for international operations.”

Improvements are expected to start later this year after the Department of Transportation endorsed the private sector proposal to the National Economic and Development Authority (Neda).

The NEDA board, chaired by President Duterte, would have the final say on the proposal, which was offered by Naia Consortium in February 2018.

Apart from Lucio Tan’s Asia Emerging Dragon and the Gokongwei family’s JG Summit Holdings, consortium members include Aboitiz Equity Ventures, Ayala Corp., Alliance Global Group Inc., Filinvest Development Corp. and Metro Pacific Investments Corp. Its technical partner is Singapore’s Changi Airports International.