PAL plans to start flights to Bali in March

Business Mirror
February 20, 2012
By LENIE LECTURA

FLAG carrier Airlines (PAL) expects to start servicing direct flights to Bali, Indonesia, its first new destination for the year.
PAL President Jaime Bautista, in an interview last week, said the flag carrier has already applied for a permit to operate the new route.

Aviation officials from Indonesia, however, have yet to approve this.  “In fact, there was already a technical inspection here conducted by them. Once it is issued, we will work on our marketing plan. We are looking at March to hopefully fly there,” he said.

If allowed, Bali will be PAL’s second route in Indonesia. The flag carrier already mounts direct flights to the Indonesian capital, Jakarta.

PAL will deploy an Airbus A320, which can transport over 150 passengers, to service the direct flights to Bali, said Cesar Chiong, Executive Assistant to the President. Initially, the flag carrier is looking at mounting thrice-weekly flights.

“Preferably, we may service the Bali route at night because this is the time when some of our A320s are not being utilized,” added Chiong.

Asked how big the Manila-Bali operation can contribute to the airline’s revenue, Bautista said,  “It’s not considered yet a huge market but it is a developing market.”

Aside from Bali, PAL is looking at adding a new destination in China. Bautista said PAL may fly to Jinjiang this year. Jinjiang is a city in China’s Fujian province.

The PAL official said the Chinese government is looking at converting a military airport in Jinjiang into a commercial airport. “Chinese airlines already signified that they want to fly there and we would want also to fly there. There is an ongoing technical review now.”

PAL reported on Friday that it suffered a net loss in the third quarter of its fiscal year ending December 2011 mainly on account of skyrocketing jet fuel price and disruption in service brought about by the strike staged by its ground workers.

The flag carrier’s net loss stood at $33.5 million from October to December last year from a net income of $15.1 million in the same period over a year ago.

Revenues dipped by 3.8 percent to $386 million compared with $397 million reported from October to December of the previous year.

The slow takeup in passenger traffic as well as declining cargo markets are seen to have caused the weak revenues during the period.

“While there were improvements in yields for both passenger and cargo compared with the same period last year, load factors lagged behind,“ the airline said in a statement. No other details were provided.

Bautista earlier said a personnel strike also undermined the airline’s third-quarter revenues and profit performance during the quarter. “There was a time that our domestic was down 20 flights per day, but now we are back to normal” Bautista said. The airline normally stages 140 flights a day.

Now, PAL is now back to normal operations, with average flights of 130 to 140 a day, following the spinoff and outsourcing program last year.

Between September to November 2011, the airline’s load factor for domestic operation was a low 70 percent, while international operation was at mid-70 percent. “That’s why we protected the international market,” Bautista said, adding that international operations contribute about 70 percent of its passenger revenue and domestic operation, 30 percent.

PAL’s operating expenses reached $419.5 million, up by $34.8 million or 9 percent over the same quarter in 2010. Jet fuel costs continued to put pressure on the airline’s bottom line as fuel prices rose to $129.75 per barrel in October to December 2011 from an average of $100.96 per barrel in the same period the previous year.

Fuel accounts for about 50 to 60 percent of an airline’s operating cost per passenger, and is the second-highest expense next to labor.