Business World
July 21, 2010
FLAG CARRIER Philippine Airlines (PAL) wants to mount direct flights to India for the first time and add a flight to South Korea amid continued restrictions on local airlines in the United States and Europe.
The Lucio C. Tan-led airline will focus on expanding operations in neighboring countries in Asia in the meantime, PAL President and Chief Operating Officer Jaime J. Bautista told BusinessWorld.
“Korea is a developed market already but India is really a huge market considering its population of more than a billion,” he said.
PAL, Asia’s first airline, expects to wrap up a deal with Indian authorities ahead of the Koreans.
“We are still finalizing our study because initially, we wanted to fly Manila to Bangkok to India. But we are having difficulties in getting landing rights in Bangkok so we are thinking of flying directly from Manila to Bombay or Manila to New Delhi,” Mr. Bautista said.
“Normally it will take you three to six months to do all the market studies, prepare for the operations, and get maintenance providers, caterers, and ground handlers,” he added.
PAL only has a general sales agent in India. For now, PAL clients in Manila must pass by Singapore, Hong Kong or Bangkok through other airlines to get to India.
Mr. Bautista said the feasibility study would be completed in a “few weeks.” The flag carrier will then seek slots from airport operators in India and an approval from the Indian Ministry of Civil Aviation, he said.
PAL is aiming to capture India citizens living in the Philippines and tourists, he said.
PAL is also studying the expansion of operations in Korea, where the airline has twice daily flights. “We can add one more flight a day,” Mr. Bautista said.
The airline may also fly bigger planes to Korea.
PAL flies from Manila or Cebu to Incheon and Busan with the 302-passenger Airbus A330-300 in the afternoon, and the 150-156-seater Airbus A320-200 in the evening.
“It is easy to add another flight if there is additional traffic ... what we only need is to get a slot in the airport,” Mr. Bautista said in Filipino.
“We are experiencing some improvement in the market,” Mr. Bautista added.
The focus on Asia stems from restrictions in the US. In 2008, the US Federal Aviation Administration downgraded the Philippines to Category 2 from Category 1 because of concerns over aircraft safety.
In April, the European Commission decided to ban Philippine carriers from European airspace.
“Under Category 2, we cannot have additional flights to the US, we cannot fly to new destinations, and we cannot add to the list of planes that can fly to the US,” Mr. Bautista said.
This was a setback “considering the US is one of our biggest markets,” he said.
PAL is the only local airline that flies to North America.
“We will concentrate on domestic and regional [destinations] in Asia, Australia, Japan and India,” he added.
PAL is expecting another net loss for the fiscal year ending March 31, after carrying more than nine million passengers.
With heavy losses due to the global economic downturn that started in 2008, PAL was forced to retrench 3,000 employees and outsource three non-core operations.
PAL reported a net loss of $40.2 million for nine months of its fiscal year, narrower than the $330.2 million recorded the previous year. Revenues rose by 15% to $1.08 billion but expenses reached $1.1 billion.
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