PAL sees tougher times ahead

MANILA, Philippines—Flag carrier Philippine Airlines (PAL) sees more dark clouds ahead as high fuel prices and challenging industry conditions pose risks to the company’s growth this year.

In a statement on Tuesday, PAL noted several bright spots in the industry that had all local airlines post healthy gains in the first quarter of the year.

It said government data showed the Lucio Tan-led carrier remained the country’s top international airline based on passenger volumes and revenues.

PAL said it “bested its local competitors in international passenger traffic” as it flew a total of 1.06 million passengers—up 7 percent from 942,144 passengers in the same period last year. First-quarter figures from the Civil Aeronautics Board (CAB) show that PAL’s inbound passengers stood at 477,039 and outbound, 529,212.

Translated into Revenue Passenger Kilometers (RPK) or number of passengers multiplied by distance traveled, PAL registered 5 billion RPKs for the first three months of 2011.

Of this number, 4.25 billion RPKs represented PAL’s international traffic, while the domestic sector accounted for the balance.

PAL attributed the first-quarter performance to enhanced marketing and promotional strategies and the market’s renewed appetite for travel.

“While these are bright spots for PAL, it remains cautious in view of volatile fuel costs; slowdown in Japan traffic due to tsunami disaster in March, and the Category 2 status of the country imposed by the US Federal Aviation Administration (FAA),” PAL said.

FAA’s category 2 status on the Philippines bars local airlines from expanding operations in the US.

Earlier, the authoritative Airline Business magazine ranked PAL as the world’s 61st largest airline. The ranking is based on RPK, which is considered the true measure of airline passenger traffic. For the last two years, PAL recorded an average RPK of 17.8 billion in the World Airline Rankings.