Philippine Daily Inquirer
May 13, 2012
By Paolo G. Montecillo
When Roxanne Lu bought a regular-price round-trip ticket from Manila to Caticlan, she did not imagine that a vacation in Boracay could end on anything less than a pleasant note.
On May 7, Lu went through what can be described as any traveler’s worst nightmare, short of a plane crash.
‘Bullying’
Lu chronicled her ordeal in a note titled “Airline Bullying” on Facebook.
According to her account, the airline—AirPhil Express—tried several times to move her to a different flight for reasons that were never adequately explained to her.
“There were at least two serious occasions where they blatantly lied to me just so they could bump me to a later flight,” Lu said.
At one point, the airline’s staff said she could not be rebooked on an earlier flight back to Manila because that flight was being rerouted to Masbate—a claim she later found out was a lie.
Bittersweet
Exasperated and after crying several times, Lu did finally get on her 8:20 a.m. flight back to Manila—the one that was supposedly rerouted to Masbate. But she said the “win” was bittersweet.
“Although I fought hard and ‘won,’ it doesn’t change the fact that I have been victimized by the cunning deception and unprofessional service of Air Philippines and (affiliate) Philippine Airlines (PAL),” Lu said in her note.
“I want them to own up to what they put me through and explain to me all the vague points/claims made. I would appreciate an apology, sure, but at this point, I just want the PAL management to know and learn from this case,” she said.
AirPhil probe
Jane Llanes, media affairs group vice president for AirPhil Express’ parent firm, San Miguel Corp., declined to issue a comment on the matter. She said the company was aware of the Lu incident, but would not give a reaction before completing a proper investigation.
Lu’s case came a day after the brawl between radio host and Inguirer columnist Ramon Tulfo and several men, including actor Raymart Santiago, at the Ninoy Aquino International Airport (Naia) Terminal 3. The brawl stemmed from Santiago demanding that Tulfo surrender the cell phone he used in taking photos of the former’s wife, actress Claudine Baretto, berating a Cebu Pacific employee for some off-loaded baggage.
Birthing pains
The brawl highlights, among other things, what many perceive as the insensitive business practices of local budget airlines.
For AirAsia Inc., the country’s newest budget carrier, such cases were part of birthing pains for the budget airline industry in the Philippines.
“I can understand the frustration of passengers,” AirAsia president and CEO Marianne Hontiveros said in an interview.
While not commenting on Lu’s ordeal—opting not to openly criticize a competitor—Hontiveros said passengers had become accustomed to a market that for decades was monopolized by the full-service flag carrier PAL.
Tourism’s driving force
Hontiveros said the budget airline industry, which made air travel more affordable for millions of Filipinos, was the single-biggest driving force for the domestic and international tourism industry over the last decade.
“If we didn’t have budget airlines, air travel and tourism would not be as robust,” Hontiveros said.
Data from the Manila International Airport Authority showed that 29.8 million passengers passed through Naia’s four terminals in 2011. This was up by more than half from the 18 million Naia passengers in 2007.
Complaints surge
This growth, however, has come at a cost.
The Civil Aeronautics Board (CAB) said it had seen a significant rise in passenger complaints this year—nearly all of them directed at budget airlines.
The regulator said most of the complaints involved flight delays, a result of congestion at airports, and denial of boarding of passengers who arrived late.
While full-service carriers like PAL tried to pamper their passengers as best they could, Hontiveros said budget carriers were more straightforward with their services.
“We are required to deliver safe, reliable, on-time travel for passengers who just want to get from point A to B. We want them to be safe and comfortable at the lowest cost possible,” Hontiveros said.
“But over and above that, if they want the flexibility of rebooking flights even if they miss their planes and other frills like that, they should go full service,” she said.
Lapses
The country’s largest budget carrier, Cebu Pacific, acknowledged that at times, it was guilty of lapses in terms of dealing with irate passengers.
“I’m not saying that we are perfect. There are lapses sometimes,” said Candice Iyog, Cebu Pacific vice president for marketing and distribution.
But in most cases, what most people considered insensitivity on the part of the airline, the company saw only strict and fair adherence to corporate rules. Iyog noted that many complaints of passengers being denied boarding pinned the blame on the industry practice of overbooking of flights.
“That’s a misconception. Most of the time, it’s because passengers come in late for their flights. In those cases, we have to be firm with our rules,” Iyog said.
In 2009, Cebu Pacific implemented a set of rules that said passengers who arrived late for their flights would forfeit their tickets.
The company explained that allowing the rebooking of tickets of passengers who missed their flight, at little to no extra cost to that passenger, would mean selling two seats on different planes for the price of one.
Seats highly perishable
“But we treat seats as highly perishable products,” Iyog said. “People have to understand that it’s really hard to make money in this business. The common joke is that owning an airline would make you a millionaire—but only if you start off as a billionaire,” she said.
She said being firm in the implementation of rules was vital for any airline that hopes to sell affordable tickets to the public.
When passengers are bumped off from flights because of overbooking—which is done to compensate for “no-shows” expected on most flights—Cebu Pacific always tries to make up for its mistakes, Iyog said.
“We book passengers on the next available flight. On top of that, we also give them a round-trip ticket free of charge to make up for the inconvenience,” she said. If passengers opted not to be rebooked on the next flight, their tickets were refunded, Iyog said.
She said the practice of overbooking was not applied to all flights. “We have revenue management people who look at historical load trends and behavior of passengers on certain days to determine which flights can be overbooked and which ones cannot,” she said.
“For example, we know that for early morning flights, there are some passengers who fail to wake up. But we also know that on weekend flights to popular destinations like Caticlan, everybody shows up. So, those flights are rarely overbooked,” she said.
Read fine print
Part of the blame, Iyog said, should be pinned on the failure of most passengers to read the fine print when buying their tickets.
She said passengers should take time reading the terms and conditions of plane tickets they buy.
“We put those conditions in our print ads. And whenever passengers buy tickets online, we require them to accept these terms. But I think a lot of people just click the ‘accept’ button without reading the terms,” she said.
Hontiveros agreed, saying that passengers, too, have a duty to keep themselves informed. She said budget airlines could not afford to make compromises that would put further pressure on their already slim profit margins.
(Paolo G. Montecillo is an Inquirer reporter covering the transportation and communications beat.)
Showing posts with label Opinions. Show all posts
Showing posts with label Opinions. Show all posts
Sunday, May 13, 2012
Friday, November 4, 2011
No one wants to buy PAL?
The Philippine Star
Demand and Supply
By Boo Chanco
November 4, 2011
It now seems that Lucio Tan will not be able to sell PAL to anyone any time soon. Not to a Filipino group anyway. Manny Pangilinan just said it would be awkward for him to buy PAL now that the Gokongweis of Cebu Pacific are his partners at PLDT. I had lunch with San Miguel’s Ramon S. Ang last week and he said, he can produce better results and faster in San Miguel’s other businesses with the billion dollars needed to rehabilitate PAL. (San Miguel is still waiting for government final approval for their unsolicited bid to build MRT-7 to Bulacan and a reaction from DOTC to their offer to rehabilitate PNR, extend it to Laoag and to Sorsogon at no cost to government.)
RSA told me he understands the problems of PAL, being a pilot himself who is familiar with aircraft operations. PAL’s aircrafts are either on lease or even those that the airline owns are beyond their service years or will soon be. An investor, he explained, can’t make money flying aircrafts that consume 30 percent more fuel than the latest models PAL’s competitors use. In so many words, RSA is virtually saying there is nothing to buy in PAL for an investor like him.
But RSA was once interested in acquiring PAL. He sent his investment bankers to do due diligence on the airline. That’s why he knows what financial resources are needed to make PAL really fly. Some of RSA’s aides told me he once told them PAL was a done deal but he changed his mind once the numbers came in. RSA said it would be better to start a new airline using the low cost carrier model than to try to rehab PAL, a legacy carrier.
RSA also told me that Philippine skies have now become extremely competitive. Even Cebu Pacific has started giving up margins and that has now affected their bottom line because of the cut throat pricing of AirPhil Express and Zest Air. Then there is Air Asia Philippines that is authorized to fly the Philippine domestic routes. Maybe, he surmised, it is not the time to start a new airline, much less buy a dinosaur airline like PAL.
Lucio Tan is apparently stuck in PAL in the foreseeable future. For as long as he is alive, he may feel the need to continually put money to finance its losing operations due to sheer ego considerations. His heirs may not be as disposed to throwing good money after bad.
International aviation is in a difficult situation too… witness the Qantas strike that was settled only after a court order was issued. And yes, Singapore Airlines just inaugurated another budget carrier a low cost long haul airline called Scoot. That’s in addition to Tiger Airways that Singapore Air already partly owns. Scoot will fly to China and Australia, countries PAL already flies to.
Demand and Supply
By Boo Chanco
November 4, 2011
It now seems that Lucio Tan will not be able to sell PAL to anyone any time soon. Not to a Filipino group anyway. Manny Pangilinan just said it would be awkward for him to buy PAL now that the Gokongweis of Cebu Pacific are his partners at PLDT. I had lunch with San Miguel’s Ramon S. Ang last week and he said, he can produce better results and faster in San Miguel’s other businesses with the billion dollars needed to rehabilitate PAL. (San Miguel is still waiting for government final approval for their unsolicited bid to build MRT-7 to Bulacan and a reaction from DOTC to their offer to rehabilitate PNR, extend it to Laoag and to Sorsogon at no cost to government.)
RSA told me he understands the problems of PAL, being a pilot himself who is familiar with aircraft operations. PAL’s aircrafts are either on lease or even those that the airline owns are beyond their service years or will soon be. An investor, he explained, can’t make money flying aircrafts that consume 30 percent more fuel than the latest models PAL’s competitors use. In so many words, RSA is virtually saying there is nothing to buy in PAL for an investor like him.
But RSA was once interested in acquiring PAL. He sent his investment bankers to do due diligence on the airline. That’s why he knows what financial resources are needed to make PAL really fly. Some of RSA’s aides told me he once told them PAL was a done deal but he changed his mind once the numbers came in. RSA said it would be better to start a new airline using the low cost carrier model than to try to rehab PAL, a legacy carrier.
RSA also told me that Philippine skies have now become extremely competitive. Even Cebu Pacific has started giving up margins and that has now affected their bottom line because of the cut throat pricing of AirPhil Express and Zest Air. Then there is Air Asia Philippines that is authorized to fly the Philippine domestic routes. Maybe, he surmised, it is not the time to start a new airline, much less buy a dinosaur airline like PAL.
Lucio Tan is apparently stuck in PAL in the foreseeable future. For as long as he is alive, he may feel the need to continually put money to finance its losing operations due to sheer ego considerations. His heirs may not be as disposed to throwing good money after bad.
International aviation is in a difficult situation too… witness the Qantas strike that was settled only after a court order was issued. And yes, Singapore Airlines just inaugurated another budget carrier a low cost long haul airline called Scoot. That’s in addition to Tiger Airways that Singapore Air already partly owns. Scoot will fly to China and Australia, countries PAL already flies to.
Tuesday, October 18, 2011
Chaff from the Grain
Manila Bulletin
By Former Press Secretary HECTOR R.R. VILLANUEVA
October 18, 2011, 2:54am
AIRLINE DISPUTE
Meanwhile, without taking sides on the convoluted issues between PAL and FASAP/PALEA, the airline labor unions, the history of airline disputes and strikes had always ended with the airline surviving the crisis while families, marriages, and children suffer the most from broken homes, financial dislocation, marital separation, job opportunity loss, ostracism, interrupted schooling, loss of accustomed opulent lifestyle, generous privileges and benefits.
Further, except for a few lucky ones, major airlines tend to be wary and suspicious in hiring strikers and union members.
Think of your family first.
By Former Press Secretary HECTOR R.R. VILLANUEVA
October 18, 2011, 2:54am
AIRLINE DISPUTE
Meanwhile, without taking sides on the convoluted issues between PAL and FASAP/PALEA, the airline labor unions, the history of airline disputes and strikes had always ended with the airline surviving the crisis while families, marriages, and children suffer the most from broken homes, financial dislocation, marital separation, job opportunity loss, ostracism, interrupted schooling, loss of accustomed opulent lifestyle, generous privileges and benefits.
Further, except for a few lucky ones, major airlines tend to be wary and suspicious in hiring strikers and union members.
Think of your family first.
Wednesday, October 12, 2011
There is more to PAL’s outsourcing program
Mirror Image
Business Mirror
by Maria Victoria P. Tibon, DBA
ON top of the business news recently was Philippine Airlines’s (PAL) implementation of its outsourcing program amid protests. Since October 1, the company began outsourcing its noncore business functions of catering, ground handling and call-center reservations to external service providers.
According to PAL management, it is a part of the company’s efforts to restructure operations to ensure its long-term survival. Through outsourcing, operations will be more efficient and can give the company savings of around $10 million to $15 million annually.
At the backdrop are those who think that the practice is against human dignity, job security and union rights. Regular workers will become contractual workers; their wages and benefits will be cut by half and there will no longer be job security. Undoubtedly, the issue of PAL’s outsourcing program has become controversial. It is timely and worthwhile to take a closer look at the practice of outsourcing, in general, so as to make an educated assessment of PAL’s case.
Outsourcing is an arrangement between a company and an external service provider, where the latter performs a business function/s previously carried out by the company. The relationship is governed by a contract that specifies the exchange of services and payments. It started as a practice during the Industrial Revolution but declined in importance as 20th century business saw the rise of the large, vertically integrated corporation. It has gained back its prominence in the present age in the light of intense competition, flattening of organizations, the need for flexibility, technological advances and emphasis on core competencies. PAL, as a large, vertically integrated corporation operating in this kind of environment, is embarking on an outsourcing program in this light.
PAL’s main competitor is Cebu Pacific. Cebu Pacific’s strategy is anchored on cost leadership, while PAL competes mainly on the basis of differentiation. It seems, however, that the strategy of differentiation can only go so far. While PAL enjoyed $72.5 million in profits last year, it has already incurred $10.6 million this year. Despite its improved management techniques, PAL’s achievement of optimum efficiency is being challenged. To better cope with competition, it does not intend to leave any stone unturned in its pursuit of efficiency. Outsourcing should be tried at this point. Outsourcing is PAL’s mechanism for differentiation and cost leadership. It is a way to improve its ability to meet cost-discipline demands and respond to customer demands for higher quality.
Indeed, companies outsource primarily to achieve greater economies of scale and save on overhead costs. They divest themselves from what is not core to their business so as to focus on what is “core.” These “noncore” business processes are usually of a commodity status. These are what PAL management has been harping on to explain their position. These arguments, however, do not seem sufficient to affected workers.
There are, however, other compelling reasons that could lead us to accept that PAL has to embark on this outsourcing program. It is a way to achieve best practice. Managers can improve their cost discipline and control skills in the process. It can improve service quality and enable management to focus on the core competencies of the company. The company can also gain access to new technology and skills.
Outsourcing can also have a positive effect on the nature of jobs in the company. Work arrangements will be more flexible. While it runs against job security, it can allow more work-life balance in terms of being able to give more time for the family. After all, employment has really changed these days. No one is assured of lifetime employment with a single company anymore.
In terms of benefits, some companies handled the situation by offering a change of employer but the same contract. The very least is redeployment with new terms and conditions. PAL has offered a good retirement package. Moreover, the affected employees are skilled and can definitely find alternative employment.
Outsourcing is beneficial to PAL but it is also risky. It has been noted that many companies that have tried outsourcing are actually dissatisfied with it. Companies that are dissatisfied with outsourcing complain that competitive advantage is not achieved due to the wrong choice of partners and ill-defined relationships with them. The choice of partner is, therefore, key to the success of outsourcing. Choosing several service providers spreads out the risks. PAL has chosen several good and reputable service providers.
Certainly, there are risks involved. However, there are also numerous benefits. There is definitely much more to PAL’s outsourcing program than just cost control. These have yet to be reaped in due time.
Dr. Tibon is an assistant professor of the Decision Sciences & Innovation Department of De La Salle University’s Ramon V. del Rosario College of Business. She teaches various business-related subjects and is the graduate program coordinator of the department.
“Mirror Image” is a rotating column featuring writers from the DLSU Professional Schools Inc.
Business Mirror
by Maria Victoria P. Tibon, DBA
ON top of the business news recently was Philippine Airlines’s (PAL) implementation of its outsourcing program amid protests. Since October 1, the company began outsourcing its noncore business functions of catering, ground handling and call-center reservations to external service providers.
According to PAL management, it is a part of the company’s efforts to restructure operations to ensure its long-term survival. Through outsourcing, operations will be more efficient and can give the company savings of around $10 million to $15 million annually.
At the backdrop are those who think that the practice is against human dignity, job security and union rights. Regular workers will become contractual workers; their wages and benefits will be cut by half and there will no longer be job security. Undoubtedly, the issue of PAL’s outsourcing program has become controversial. It is timely and worthwhile to take a closer look at the practice of outsourcing, in general, so as to make an educated assessment of PAL’s case.
Outsourcing is an arrangement between a company and an external service provider, where the latter performs a business function/s previously carried out by the company. The relationship is governed by a contract that specifies the exchange of services and payments. It started as a practice during the Industrial Revolution but declined in importance as 20th century business saw the rise of the large, vertically integrated corporation. It has gained back its prominence in the present age in the light of intense competition, flattening of organizations, the need for flexibility, technological advances and emphasis on core competencies. PAL, as a large, vertically integrated corporation operating in this kind of environment, is embarking on an outsourcing program in this light.
PAL’s main competitor is Cebu Pacific. Cebu Pacific’s strategy is anchored on cost leadership, while PAL competes mainly on the basis of differentiation. It seems, however, that the strategy of differentiation can only go so far. While PAL enjoyed $72.5 million in profits last year, it has already incurred $10.6 million this year. Despite its improved management techniques, PAL’s achievement of optimum efficiency is being challenged. To better cope with competition, it does not intend to leave any stone unturned in its pursuit of efficiency. Outsourcing should be tried at this point. Outsourcing is PAL’s mechanism for differentiation and cost leadership. It is a way to improve its ability to meet cost-discipline demands and respond to customer demands for higher quality.
Indeed, companies outsource primarily to achieve greater economies of scale and save on overhead costs. They divest themselves from what is not core to their business so as to focus on what is “core.” These “noncore” business processes are usually of a commodity status. These are what PAL management has been harping on to explain their position. These arguments, however, do not seem sufficient to affected workers.
There are, however, other compelling reasons that could lead us to accept that PAL has to embark on this outsourcing program. It is a way to achieve best practice. Managers can improve their cost discipline and control skills in the process. It can improve service quality and enable management to focus on the core competencies of the company. The company can also gain access to new technology and skills.
Outsourcing can also have a positive effect on the nature of jobs in the company. Work arrangements will be more flexible. While it runs against job security, it can allow more work-life balance in terms of being able to give more time for the family. After all, employment has really changed these days. No one is assured of lifetime employment with a single company anymore.
In terms of benefits, some companies handled the situation by offering a change of employer but the same contract. The very least is redeployment with new terms and conditions. PAL has offered a good retirement package. Moreover, the affected employees are skilled and can definitely find alternative employment.
Outsourcing is beneficial to PAL but it is also risky. It has been noted that many companies that have tried outsourcing are actually dissatisfied with it. Companies that are dissatisfied with outsourcing complain that competitive advantage is not achieved due to the wrong choice of partners and ill-defined relationships with them. The choice of partner is, therefore, key to the success of outsourcing. Choosing several service providers spreads out the risks. PAL has chosen several good and reputable service providers.
Certainly, there are risks involved. However, there are also numerous benefits. There is definitely much more to PAL’s outsourcing program than just cost control. These have yet to be reaped in due time.
Dr. Tibon is an assistant professor of the Decision Sciences & Innovation Department of De La Salle University’s Ramon V. del Rosario College of Business. She teaches various business-related subjects and is the graduate program coordinator of the department.
“Mirror Image” is a rotating column featuring writers from the DLSU Professional Schools Inc.
Saturday, September 24, 2011
PAL and the reality on the ground
Manila Standard Today
September 24, 2011
Back Channel
By Alejandro Del Rosario
Speculations are rife that Philippine Airlines is for sale. The business sections of Manila dailies are replete with stories of tycoons and taipans casting a covetous eye on PAL.
The airline’s problem with the employees’ union and its recent setback from a Supreme Court ruling reinstating dismissed members of the Flight Attendants and Stewards Association of the Philippines and awarding them back wages would be enough to make any businessman throw in the towel.
While taipan Lucio Tan would like to keep PAL afloat, good business sense dictates that he can only do so if he can cut losses by outsourcing the airline’s non-core jobs like catering, airport services and passenger reservations call centers. Some 2,500 employees would be affected by the outsourcing plan that has been upheld by Labor Secretary Rosalinda Baldoz. An appeal by the Philippine Airline Employees Association to Malacañang has been denied and the union has brought its case before the Court of Appeals.
Employees who will be retrenched by Sept. 30 this year have been given the option to accept jobs with the companies PAL contracted for the outsourcing work. It’s a bitter pill to swallow for the affected workers but the airline also has to bite the bullet as it has to pay the retrenched employees a hefty sum in compliance with a court ruling mandating a fair separation pay.
Some 400 union members have availed of the separation package plus the option to be hired by PAL’s contracted outsourcing company.
Taking the money and still having a job made sense to some of the employees. The hardliners in the union, however, decry the loss of their seniority if they agree to be contractual workers.
The reality on the ground though is that whoever takes over the national flag carrier would not keep the remaining workers. Hong Kong-based First Pacific Co. Ltd , reportedly told brokers of the deal that it favors outsourcing because it wants a “lean and mean” airline to be competitive with foreign carriers and domestic market rival Cebu Pacific.
Because of the staggering cost of maintaining and operating an airline, foreign carriers too have opted to merge and also outsource some of their non-core business. What PAL is doing is simply following market trends to survive stiff competition.
However, Ramon Ang, a close business associate of Tan, told reporters that the taipan is not selling and would prefer forging an alliance with a foreign carrier. Ang added that although Tan has no cash flow problem, he would welcome the entry of a new investor to pursue plans for the upgrade of its present fleet and acquisition of new planes.
Ang also clarified that conglomerate SMC is not looking to buy PAL “but it’s me who is personally looking at it.” This confirms his standing as a major player in Philippine business. He already owns the posh Diamond Hotel on Roxas Boulevard which he bought from a Japanese group.
Vic Agustin’s column Cocktales in the Manila Standard’s business section, seems to have the inside track on this latest wheeling and dealing for PAL . His reported sighting of First Pacific’s Manuel V. Pangilinan and PAL president Jaime Bautista together is fueling the talk about Lucio Tan’s exit from the airline business.
Giving further credence to MVP’s acquisition of PAL is the recent news of First Pacific putting up a new aviation company called Pacific Global One Aviation Inc., without doubt a subsidiary firm to serve as support system for a PAL under new management.
Here for sex
While still on the subject of travel and tourism, US Ambassador Harry Thomas’ remarks that “40 percent of male tourists come to the Philippines for sex” drew varied reactions from the locals. No need for Wikileaks to leak that one.
Even if true, it was a diplomatic gaffe and something ambassadors do not say publicly about the host country they are posted in. It would be akin to Philippine Ambassador to Washington. Joey Cuisia, saying he does not feel safe in the US capital because of its high crime rate, even if it’s true.
“I’m not sure where he (Thomas) got that info,” Tourism Assistant Secretary Bong Bengzon said. He cited DOT market research showing visitors to the Philippines come here for bargain shopping, our beach resorts and adventure tourism..
Ambassador Thomas’ observation has no basis, Bengzon said, adding that “the Philippines is a very wholesome destination.”
Thomas made the remark during a round table discussion with Court of Appeals justices on the problem of human trafficking. The justices and the Philippine public are aware of the problem of human trafficking. They don’t have to be told by the US ambassador who should know his protocol and nuances of local culture.
Meanwhile, where was newly appointed Tourism Secretary Ramon Jimenez during all this brouhaha? He with the quotable “the Philippines is as easy to sell as Chickenjoy,” was missing in action.
September 24, 2011
Back Channel
By Alejandro Del Rosario
Speculations are rife that Philippine Airlines is for sale. The business sections of Manila dailies are replete with stories of tycoons and taipans casting a covetous eye on PAL.
The airline’s problem with the employees’ union and its recent setback from a Supreme Court ruling reinstating dismissed members of the Flight Attendants and Stewards Association of the Philippines and awarding them back wages would be enough to make any businessman throw in the towel.
While taipan Lucio Tan would like to keep PAL afloat, good business sense dictates that he can only do so if he can cut losses by outsourcing the airline’s non-core jobs like catering, airport services and passenger reservations call centers. Some 2,500 employees would be affected by the outsourcing plan that has been upheld by Labor Secretary Rosalinda Baldoz. An appeal by the Philippine Airline Employees Association to Malacañang has been denied and the union has brought its case before the Court of Appeals.
Employees who will be retrenched by Sept. 30 this year have been given the option to accept jobs with the companies PAL contracted for the outsourcing work. It’s a bitter pill to swallow for the affected workers but the airline also has to bite the bullet as it has to pay the retrenched employees a hefty sum in compliance with a court ruling mandating a fair separation pay.
Some 400 union members have availed of the separation package plus the option to be hired by PAL’s contracted outsourcing company.
Taking the money and still having a job made sense to some of the employees. The hardliners in the union, however, decry the loss of their seniority if they agree to be contractual workers.
The reality on the ground though is that whoever takes over the national flag carrier would not keep the remaining workers. Hong Kong-based First Pacific Co. Ltd , reportedly told brokers of the deal that it favors outsourcing because it wants a “lean and mean” airline to be competitive with foreign carriers and domestic market rival Cebu Pacific.
Because of the staggering cost of maintaining and operating an airline, foreign carriers too have opted to merge and also outsource some of their non-core business. What PAL is doing is simply following market trends to survive stiff competition.
However, Ramon Ang, a close business associate of Tan, told reporters that the taipan is not selling and would prefer forging an alliance with a foreign carrier. Ang added that although Tan has no cash flow problem, he would welcome the entry of a new investor to pursue plans for the upgrade of its present fleet and acquisition of new planes.
Ang also clarified that conglomerate SMC is not looking to buy PAL “but it’s me who is personally looking at it.” This confirms his standing as a major player in Philippine business. He already owns the posh Diamond Hotel on Roxas Boulevard which he bought from a Japanese group.
Vic Agustin’s column Cocktales in the Manila Standard’s business section, seems to have the inside track on this latest wheeling and dealing for PAL . His reported sighting of First Pacific’s Manuel V. Pangilinan and PAL president Jaime Bautista together is fueling the talk about Lucio Tan’s exit from the airline business.
Giving further credence to MVP’s acquisition of PAL is the recent news of First Pacific putting up a new aviation company called Pacific Global One Aviation Inc., without doubt a subsidiary firm to serve as support system for a PAL under new management.
Here for sex
While still on the subject of travel and tourism, US Ambassador Harry Thomas’ remarks that “40 percent of male tourists come to the Philippines for sex” drew varied reactions from the locals. No need for Wikileaks to leak that one.
Even if true, it was a diplomatic gaffe and something ambassadors do not say publicly about the host country they are posted in. It would be akin to Philippine Ambassador to Washington. Joey Cuisia, saying he does not feel safe in the US capital because of its high crime rate, even if it’s true.
“I’m not sure where he (Thomas) got that info,” Tourism Assistant Secretary Bong Bengzon said. He cited DOT market research showing visitors to the Philippines come here for bargain shopping, our beach resorts and adventure tourism..
Ambassador Thomas’ observation has no basis, Bengzon said, adding that “the Philippines is a very wholesome destination.”
Thomas made the remark during a round table discussion with Court of Appeals justices on the problem of human trafficking. The justices and the Philippine public are aware of the problem of human trafficking. They don’t have to be told by the US ambassador who should know his protocol and nuances of local culture.
Meanwhile, where was newly appointed Tourism Secretary Ramon Jimenez during all this brouhaha? He with the quotable “the Philippines is as easy to sell as Chickenjoy,” was missing in action.
Thursday, September 1, 2011
Facts about the PAL spin off/outsourcing program
Philippine Daily Inquirer
September 1, 2011
To the employees, clients and partners of Philippine Airlines
As part of its restructuring efforts in response to cut-throat competition in the global airline industry, your flag carrier Philippine Airlines (PAL) will spin off/outsource three non-core units (airport services, inflight catering services and call center reservations operations) effective October 1, 2011. The program will affect close to 2,400 PAL workers who are assured of a generous separation package and job offers from third party service providers.
Rationale
In the last decade, PAL and other international carriers have been adversely affected by global economic upheavals, acts of terrorism, excessive liberalization, pandemics, stiff competition from mega carriers and the emergence of budget carriers. To adjust to these new realities, airlines worldwide adopted new business models to survive. Most, if not all airlines, adjusted through cost cutting and outsourcing non-core functions. To remain competitive and ensure long-term survival, PAL was forced by circumstances to adopt leading airline practices, especially in view of the following:
PAL lost $312 million in two fiscal years (2008 & 2009)
While PAL reported modest profits of $72.5 million in 2010, PAL again posted a loss of $10.6 million for Q1 of its current fiscal year (April-June 2011) due to
weak demand as a result of lingering world economic condition
high fuel prices
effects of the devastating natural calamity in Japan
economic effects of social/political unrest in the Middle East and North Africa
Effects of the US FAA Category 2 downgrading of the country's civil aviation regulators which limits PAL’s operations to and from the United States
European Union blacklist on all Philippine carriers from flying anywhere in Europe
Cut throat competition due to budget carriers and state-sponsored open skies policy
Legal Basis
The spin off/outsourcing has been declared FOUR TIMES as a legal and valid exercise of management prerogative –
twice by the Department of Labor and Employment (DOLE): June 15, 2010 by acting Labor Secretary Romeo Lagman and on October 29, 2010 by Sec. Rosalinda Baldoz
twice affirmed by Office of the President, Malacanang: March 25, 2011 and August 11, 2011
The Spin Off / Outsourcing Process
Notices of Separation have been issued to affected employees. Their last day of work with PAL is on September 30, 2011.
Third party service providers will absorb ALL affected employees who signify intention to join them by September 9, 2011.
Separation pay and other benefits shall be given not later than October 15, 2011 after computing employees' salary and accountabilities as of September 30, 2011.
Full implementation of the spin off / outsourcing program will start on October 1, 2011.
PAL management notified the regional offices of DOLE (Manila/Pasay and Cebu) regarding its spin off/outsourcing program, the effectivity date as well as a list of affected workers.
Service Providers
SkyLogistics Philippines, Inc. will take over airport services (ground handling), while SkyKitchen Philippines, Inc. will handle inflight catering services. Both companies are owned and managed by Manny Osmena, a Cebu-based businessman.
SPi Global, a subsidiary of PLDT, will handle call center reservations operations.
Separation Benefits
PAL workers affected by the spin off/outsourcing will all receive a generous transition package, which includes:
125% of the employee's monthly basic salary for every year of service (which is 25% more than what is prescribed in the PAL-PALEA CBA)
P100,000 gratuity pay
100% commutable-to-cash accrued vacation and sick leaves
trip pass (free tickets) benefits depending on years of service
guaranteed salary for one year, of whatever salary is given by the service provider to workers who accept the employment offer of the service provider; and
medical and hospitalization benefit for one (1) year for those who will join the third party service providers
Note* PAL will spend close to PHP 2.6 billion to cover the transition benefits package of affected employees. Components of the said package are higher than industry rates and more than the prescribed benefits under the Labor Code.
Assurance
PAL would like to assure the public that your airline is exerting all efforts to ensure smooth implementation of the spin off/outsourcing program. Contingency measures are in place to minimize passenger inconvenience. Streamlining the airline's manpower is critical to remain competitive in a harsh industry environment.
PAL is seeking the understanding of its workers, clients and partners as it undertakes this difficult and painful spin off/outsourcing program. No airline, or company for that matter, wants to be remembered for severing ties with its workers. However, PAL must adapt to new realities to remain competitive. After all, its continued operations ensure that separated workers would still have jobs, albeit with a new company. A stronger and leaner PAL also means more secure future for its remaining 5,000 employees, better and more efficient service to its 10 million customers and continuing service as the country’s national flag carrier.
September 1, 2011
To the employees, clients and partners of Philippine Airlines
As part of its restructuring efforts in response to cut-throat competition in the global airline industry, your flag carrier Philippine Airlines (PAL) will spin off/outsource three non-core units (airport services, inflight catering services and call center reservations operations) effective October 1, 2011. The program will affect close to 2,400 PAL workers who are assured of a generous separation package and job offers from third party service providers.
Rationale
In the last decade, PAL and other international carriers have been adversely affected by global economic upheavals, acts of terrorism, excessive liberalization, pandemics, stiff competition from mega carriers and the emergence of budget carriers. To adjust to these new realities, airlines worldwide adopted new business models to survive. Most, if not all airlines, adjusted through cost cutting and outsourcing non-core functions. To remain competitive and ensure long-term survival, PAL was forced by circumstances to adopt leading airline practices, especially in view of the following:
PAL lost $312 million in two fiscal years (2008 & 2009)
While PAL reported modest profits of $72.5 million in 2010, PAL again posted a loss of $10.6 million for Q1 of its current fiscal year (April-June 2011) due to
weak demand as a result of lingering world economic condition
high fuel prices
effects of the devastating natural calamity in Japan
economic effects of social/political unrest in the Middle East and North Africa
Effects of the US FAA Category 2 downgrading of the country's civil aviation regulators which limits PAL’s operations to and from the United States
European Union blacklist on all Philippine carriers from flying anywhere in Europe
Cut throat competition due to budget carriers and state-sponsored open skies policy
Legal Basis
The spin off/outsourcing has been declared FOUR TIMES as a legal and valid exercise of management prerogative –
twice by the Department of Labor and Employment (DOLE): June 15, 2010 by acting Labor Secretary Romeo Lagman and on October 29, 2010 by Sec. Rosalinda Baldoz
twice affirmed by Office of the President, Malacanang: March 25, 2011 and August 11, 2011
The Spin Off / Outsourcing Process
Notices of Separation have been issued to affected employees. Their last day of work with PAL is on September 30, 2011.
Third party service providers will absorb ALL affected employees who signify intention to join them by September 9, 2011.
Separation pay and other benefits shall be given not later than October 15, 2011 after computing employees' salary and accountabilities as of September 30, 2011.
Full implementation of the spin off / outsourcing program will start on October 1, 2011.
PAL management notified the regional offices of DOLE (Manila/Pasay and Cebu) regarding its spin off/outsourcing program, the effectivity date as well as a list of affected workers.
Service Providers
SkyLogistics Philippines, Inc. will take over airport services (ground handling), while SkyKitchen Philippines, Inc. will handle inflight catering services. Both companies are owned and managed by Manny Osmena, a Cebu-based businessman.
SPi Global, a subsidiary of PLDT, will handle call center reservations operations.
Separation Benefits
PAL workers affected by the spin off/outsourcing will all receive a generous transition package, which includes:
125% of the employee's monthly basic salary for every year of service (which is 25% more than what is prescribed in the PAL-PALEA CBA)
P100,000 gratuity pay
100% commutable-to-cash accrued vacation and sick leaves
trip pass (free tickets) benefits depending on years of service
guaranteed salary for one year, of whatever salary is given by the service provider to workers who accept the employment offer of the service provider; and
medical and hospitalization benefit for one (1) year for those who will join the third party service providers
Note* PAL will spend close to PHP 2.6 billion to cover the transition benefits package of affected employees. Components of the said package are higher than industry rates and more than the prescribed benefits under the Labor Code.
Assurance
PAL would like to assure the public that your airline is exerting all efforts to ensure smooth implementation of the spin off/outsourcing program. Contingency measures are in place to minimize passenger inconvenience. Streamlining the airline's manpower is critical to remain competitive in a harsh industry environment.
PAL is seeking the understanding of its workers, clients and partners as it undertakes this difficult and painful spin off/outsourcing program. No airline, or company for that matter, wants to be remembered for severing ties with its workers. However, PAL must adapt to new realities to remain competitive. After all, its continued operations ensure that separated workers would still have jobs, albeit with a new company. A stronger and leaner PAL also means more secure future for its remaining 5,000 employees, better and more efficient service to its 10 million customers and continuing service as the country’s national flag carrier.
Friday, July 29, 2011
PAL posts new profits
Full Tank
Business Mirror
Al S. Mendoza
DESPITE an increase of 19 percent in total operating costs, Philippine Airlines (PAL) still managed to post $72.5 million in profits for its fiscal year ending March.
PAL said in a statement that about 40 percent of the company’s expenses are for fuel, spending $1.61 billion from last year’s total expenses of $1.35 billion.
“While PAL is pleased with its recent positive performance, we remain watchful of the year ahead as fuel prices continue their upward trend,” PAL said.
Rebounding from its $14.4-million loss last year, the Lucio Tan-owned flag carrier’s revenues rose to 23 percent to $1.67 billion.
It said this was due to the growing number and traffic volumes of 12.4 percent and 41.8 percent, respectively.
“Increases in passenger yields also complemented the growth in traffic volume,” the PAL statement said.
Still, fuel expenses remain PAL’s chief concern.
Its fuel costs rose by $142 million or 29.9 percent. From April 2010 to March 2011 alone, PAL felt the fuel pinch when jet fuel prices averaged $102.89 a barrel compared to $86.94 the year before.
PAL cited as affecting forces the Japan quake and tsunami, plus the political unrest in the Middle East and North Africa, “…factors that can pose a serious threat to the flag carrier’s bottom line.”
Since its corporate rehabilitation in 2007, PAL slowly realized profitability status after also instituting cost-cutting measures bordering on the radical and drastic.
Well, what can I say if not urge, no, force, Mr. (Jaime) Bautista (PAL president) to take a bow. The Kapitan’s trust and confidence in you has never been this robust, Jimmy Boy.
Business Mirror
Al S. Mendoza
DESPITE an increase of 19 percent in total operating costs, Philippine Airlines (PAL) still managed to post $72.5 million in profits for its fiscal year ending March.
PAL said in a statement that about 40 percent of the company’s expenses are for fuel, spending $1.61 billion from last year’s total expenses of $1.35 billion.
“While PAL is pleased with its recent positive performance, we remain watchful of the year ahead as fuel prices continue their upward trend,” PAL said.
Rebounding from its $14.4-million loss last year, the Lucio Tan-owned flag carrier’s revenues rose to 23 percent to $1.67 billion.
It said this was due to the growing number and traffic volumes of 12.4 percent and 41.8 percent, respectively.
“Increases in passenger yields also complemented the growth in traffic volume,” the PAL statement said.
Still, fuel expenses remain PAL’s chief concern.
Its fuel costs rose by $142 million or 29.9 percent. From April 2010 to March 2011 alone, PAL felt the fuel pinch when jet fuel prices averaged $102.89 a barrel compared to $86.94 the year before.
PAL cited as affecting forces the Japan quake and tsunami, plus the political unrest in the Middle East and North Africa, “…factors that can pose a serious threat to the flag carrier’s bottom line.”
Since its corporate rehabilitation in 2007, PAL slowly realized profitability status after also instituting cost-cutting measures bordering on the radical and drastic.
Well, what can I say if not urge, no, force, Mr. (Jaime) Bautista (PAL president) to take a bow. The Kapitan’s trust and confidence in you has never been this robust, Jimmy Boy.
Wednesday, June 22, 2011
Biz Buzz: Fighting manipulation
By: the staff
Philippine Daily Inquirer
1:09 am | Wednesday, June 22nd, 2011
Spend money to make money
Philippine Airlines may be back in the black this year, but that doesn’t mean the flag carrier is about to start taking it easy.
Apart from its much-talked-about efforts to streamline its sometimes cumbersome cost structure inherited from its days as a government-owned firm, PAL is also trying to improve its revenue profile.
One particular area of interest for the airline is its lucrative trans-Pacific route which, according to our source, accounts for the biggest share of PAL’s revenue pie, but also has some of the slimmest profit margins.
To improve this, PAL not only needs to fly more passengers but it has to be able to do this more efficiently by using its brand-new Boeing 777 jets for its Manila-Los Angeles and Manila-San Francisco services (something currently prohibited by US government “Category 2” restrictions).
So PAL isn’t sitting around while waiting for this elusive upgrade to Category 1. In fact, PAL began last month paying for the services of a world-renowned aviation consultant, Tim Neel, whose specialty is getting downgraded countries upgraded to Category 1 status.
No, Tim Neel isn’t advising PAL, as the airline has always been up to par with international standards. The airline is paying him solely to help the government-run Civil Aviation Authority of the Philippines. That’s how important this is for PAL’s sustained profitability.—Daxim L. Lucas
Philippine Daily Inquirer
1:09 am | Wednesday, June 22nd, 2011
Spend money to make money
Philippine Airlines may be back in the black this year, but that doesn’t mean the flag carrier is about to start taking it easy.
Apart from its much-talked-about efforts to streamline its sometimes cumbersome cost structure inherited from its days as a government-owned firm, PAL is also trying to improve its revenue profile.
One particular area of interest for the airline is its lucrative trans-Pacific route which, according to our source, accounts for the biggest share of PAL’s revenue pie, but also has some of the slimmest profit margins.
To improve this, PAL not only needs to fly more passengers but it has to be able to do this more efficiently by using its brand-new Boeing 777 jets for its Manila-Los Angeles and Manila-San Francisco services (something currently prohibited by US government “Category 2” restrictions).
So PAL isn’t sitting around while waiting for this elusive upgrade to Category 1. In fact, PAL began last month paying for the services of a world-renowned aviation consultant, Tim Neel, whose specialty is getting downgraded countries upgraded to Category 1 status.
No, Tim Neel isn’t advising PAL, as the airline has always been up to par with international standards. The airline is paying him solely to help the government-run Civil Aviation Authority of the Philippines. That’s how important this is for PAL’s sustained profitability.—Daxim L. Lucas
Tuesday, April 19, 2011
Birds strike instead of PAL employees
SPY BITS By Babe Romualdez (The Philippine Star) Updated April 19, 2011 12:00 AM
Last Friday, PAL’s brand new Boeing 777 got struck by a bird shortly before landing at the Vancouver International Airport. Fortunately, no one got hurt, but chaos and havoc naturally reigned when the plane’s return flight PR 117 to Manila had to be cancelled. The incident inevitably made PAL’s flight PR 107 from Las Vegas via Vancouver to become overbooked for its return flight to Manila. As of this writing, PAL’s Boeing 777 is still on the ground waiting for an engine howling part to be replaced. Unbelievably, the said part could not be secured immediately despite the fact that Boeing’s Everett factory in Washington state is just a hop away across the border from Vancouver.
While PAL has been able to avert strike threats from employees after talks brokered by the Department of Labor and Employment repeatedly failed, it seems the flag carrier can’t do much about bird strikes. The fowl that hit the plane was most likely a Canadian goose, but the real albatross that hangs on the head of PAL is the fact that their brand new Boeing 777 jets are still barred from entering the United States because for some unknown reason, the Philippines’ category 2 rating from the Federal Aviation Authority has not been lifted despite the fact that the issues involved have nothing to do with PAL’s excellent safety and maintenance record – which certainly is better than most US airlines.
In any case, climate change and early bird migration is probably the reason why there seems to be a growing incidence of bird strikes reported in the western hemisphere. Also recently, a Cathay Pacific flight from Hong Kong bound for San Francisco had to be diverted to Vancouver because the plane hit a flock of birds. There has been some conjecture about the design of Boeing’s engines due to several bird strike incidents showing the birds being sucked in and getting rotated in the engine fan blades, thereby causing what is called a cascading failure. According to experts, this type of bird strike, which is also called “avian ingestion” for obvious reasons, mostly happens during takeoff when the plane is on a low altitude and the engine is turning at a very rapid rate.
These bird strikes have caused a lot of damage to the whole airline industry estimated at $1.2 billion yearly. This is also probably the worst time of the year for airlines because a lot of bird migration occurs due to seasonal changes with spring now heralding a much warmer weather.
It can be recalled that in 2009, a domestic US Airways flight 1549 (from La Guardia airport in New York and headed for North Carolina) suffered total engine failure six minutes after takeoff when a flock of Canadian geese hit the engines. The pilot, Captain Chesley “Sully” Sullenberger, successfully ditched his aircraft over the Hudson River with no casualties whatsoever – an unprecedented feat that turned him into a hero. The incident has since been called the “Miracle on the Hudson,” and consequently described as “the most successful ditching in aviation history.” Captain Sully has since retired from US Airways a year after the incident but continues to be an active airline safety advocate.
The incident also triggered calls for the Federal Aviation Authority to similarly ditch its proposal that would prevent access to a critical database on the number of bird strikes that have been happening. The public outcry to release such records compelled US president Barack Obama to release a memo which partly read, “The government should not keep information confidential merely because public officials might be embarrassed by disclosure, because errors and failures might be revealed, or because of speculative or abstract fears.”
Lorenzo’s oil
With the recent filing of plunder charges against former Agriculture Secretary Luis “Cito” Lorenzo by the Office of the Ombudsman, you would think the former Cabinet Official would be losing most of his friends overnight. Fortunately for Cito, a number of his friends have decided to rally behind him because many of them strongly feel that he is just being made a scapegoat. Close friends of the former Agriculture Secretary vowed to keep the “oil” burning until he is completely exonerated and cleared of all the charges.
Not-so-holy alliance
Opposition Congressman and RH bill main proponent Edcel Lagman found himself in a “not-so-holy” alliance with President Noynoy Aquino who recently declared at the UP graduation exercises that he is determined to push the Reproductive Health bill despite the threat of excommunication by the Catholic Church. A number of people who did not vote for P-Noy have also decided to take a stand and rally behind the beleaguered president. They, too, are ready “to be excommunicated” – or so they declare!
Spy Tidbit
– Former president Joseph Estrada celebrated his 74th birthday with former cabinet officials and a small group of friends at his new condo penthouse unit in Mandaluyong. Erap has definitely decided to sell his house in Polk St. in Greenhills, San Juan. Like most retirees, the former president has also decided to downsize.
Spy Bits note: We will be taking time off for the Holy Week starting this Thursday and will be back next Tuesday. Have a blessed Holy Week!
Last Friday, PAL’s brand new Boeing 777 got struck by a bird shortly before landing at the Vancouver International Airport. Fortunately, no one got hurt, but chaos and havoc naturally reigned when the plane’s return flight PR 117 to Manila had to be cancelled. The incident inevitably made PAL’s flight PR 107 from Las Vegas via Vancouver to become overbooked for its return flight to Manila. As of this writing, PAL’s Boeing 777 is still on the ground waiting for an engine howling part to be replaced. Unbelievably, the said part could not be secured immediately despite the fact that Boeing’s Everett factory in Washington state is just a hop away across the border from Vancouver.
While PAL has been able to avert strike threats from employees after talks brokered by the Department of Labor and Employment repeatedly failed, it seems the flag carrier can’t do much about bird strikes. The fowl that hit the plane was most likely a Canadian goose, but the real albatross that hangs on the head of PAL is the fact that their brand new Boeing 777 jets are still barred from entering the United States because for some unknown reason, the Philippines’ category 2 rating from the Federal Aviation Authority has not been lifted despite the fact that the issues involved have nothing to do with PAL’s excellent safety and maintenance record – which certainly is better than most US airlines.
In any case, climate change and early bird migration is probably the reason why there seems to be a growing incidence of bird strikes reported in the western hemisphere. Also recently, a Cathay Pacific flight from Hong Kong bound for San Francisco had to be diverted to Vancouver because the plane hit a flock of birds. There has been some conjecture about the design of Boeing’s engines due to several bird strike incidents showing the birds being sucked in and getting rotated in the engine fan blades, thereby causing what is called a cascading failure. According to experts, this type of bird strike, which is also called “avian ingestion” for obvious reasons, mostly happens during takeoff when the plane is on a low altitude and the engine is turning at a very rapid rate.
These bird strikes have caused a lot of damage to the whole airline industry estimated at $1.2 billion yearly. This is also probably the worst time of the year for airlines because a lot of bird migration occurs due to seasonal changes with spring now heralding a much warmer weather.
It can be recalled that in 2009, a domestic US Airways flight 1549 (from La Guardia airport in New York and headed for North Carolina) suffered total engine failure six minutes after takeoff when a flock of Canadian geese hit the engines. The pilot, Captain Chesley “Sully” Sullenberger, successfully ditched his aircraft over the Hudson River with no casualties whatsoever – an unprecedented feat that turned him into a hero. The incident has since been called the “Miracle on the Hudson,” and consequently described as “the most successful ditching in aviation history.” Captain Sully has since retired from US Airways a year after the incident but continues to be an active airline safety advocate.
The incident also triggered calls for the Federal Aviation Authority to similarly ditch its proposal that would prevent access to a critical database on the number of bird strikes that have been happening. The public outcry to release such records compelled US president Barack Obama to release a memo which partly read, “The government should not keep information confidential merely because public officials might be embarrassed by disclosure, because errors and failures might be revealed, or because of speculative or abstract fears.”
Lorenzo’s oil
With the recent filing of plunder charges against former Agriculture Secretary Luis “Cito” Lorenzo by the Office of the Ombudsman, you would think the former Cabinet Official would be losing most of his friends overnight. Fortunately for Cito, a number of his friends have decided to rally behind him because many of them strongly feel that he is just being made a scapegoat. Close friends of the former Agriculture Secretary vowed to keep the “oil” burning until he is completely exonerated and cleared of all the charges.
Not-so-holy alliance
Opposition Congressman and RH bill main proponent Edcel Lagman found himself in a “not-so-holy” alliance with President Noynoy Aquino who recently declared at the UP graduation exercises that he is determined to push the Reproductive Health bill despite the threat of excommunication by the Catholic Church. A number of people who did not vote for P-Noy have also decided to take a stand and rally behind the beleaguered president. They, too, are ready “to be excommunicated” – or so they declare!
Spy Tidbit
– Former president Joseph Estrada celebrated his 74th birthday with former cabinet officials and a small group of friends at his new condo penthouse unit in Mandaluyong. Erap has definitely decided to sell his house in Polk St. in Greenhills, San Juan. Like most retirees, the former president has also decided to downsize.
Spy Bits note: We will be taking time off for the Holy Week starting this Thursday and will be back next Tuesday. Have a blessed Holy Week!
Monday, April 18, 2011
Good news and bad news on tourism
DEMAND AND SUPPLY
By Boo Chanco
(The Philippine Star)
Updated April 18, 2011 12:00 AM
Mabuhay
One of the incentives to take at least one regional flight on Philippine Airlines monthly is the chance to read and maybe take home a copy of Mabuhay, its excellent in-flight magazine. Edited by Jun Ventura, it had been perhaps the best promoter of Philippine tourism through the years. Its excellent photography and articles always make a Pinoy reader proud of his country. And for foreigners, it gives many compelling reasons to visit.
The April issue I had the chance to read on my flight last Wednesday is particularly interesting. Jun’s special feature on Davao provides a lot of information the typical Metro Manilan probably didn’t know about the wonders of this major metropolis in the south. Also laudable are the stories on Antique and CamSur. One wonders why the tourism sections of the major broadsheets don’t have features as colorful and compelling as Mr. Ventura’s Mabuhay.
Maybe the Department of Tourism and PAL can work together to give more exposure to this magazine as part of a good tourism promotions program. PAL should consider making the magazine available in the bookstores and hotel lobby shops. That could help increase traffic to our tourist sites and I guess, PAL ticket sales. Mabuhay could also be a very effective selling tool for our tourism attaches abroad.
My congratulations to Jun V for this great work.
By Boo Chanco
(The Philippine Star)
Updated April 18, 2011 12:00 AM
Mabuhay
One of the incentives to take at least one regional flight on Philippine Airlines monthly is the chance to read and maybe take home a copy of Mabuhay, its excellent in-flight magazine. Edited by Jun Ventura, it had been perhaps the best promoter of Philippine tourism through the years. Its excellent photography and articles always make a Pinoy reader proud of his country. And for foreigners, it gives many compelling reasons to visit.
The April issue I had the chance to read on my flight last Wednesday is particularly interesting. Jun’s special feature on Davao provides a lot of information the typical Metro Manilan probably didn’t know about the wonders of this major metropolis in the south. Also laudable are the stories on Antique and CamSur. One wonders why the tourism sections of the major broadsheets don’t have features as colorful and compelling as Mr. Ventura’s Mabuhay.
Maybe the Department of Tourism and PAL can work together to give more exposure to this magazine as part of a good tourism promotions program. PAL should consider making the magazine available in the bookstores and hotel lobby shops. That could help increase traffic to our tourist sites and I guess, PAL ticket sales. Mabuhay could also be a very effective selling tool for our tourism attaches abroad.
My congratulations to Jun V for this great work.
Monday, April 11, 2011
PAL unions must recognize market reality
The Philippine Star
April 11, 2011
DEMAND AND SUPPLY By Boo Chanco
I don’t know if the PAL rank and file union will strike this Holy Week to cause maximum headache to management even if it will guarantee maximum inconvenience to passengers out for a Holy Week break. Those of us whose holiday excursions involve a flight with PAL should probably have a Plan “B” just in case. I asked the Cebu Pacific people if they will honor a PAL ticket in such an emergency and they said they will be happy to do that but PAL must ask first. They have apparently offered in the past and got no reply from PAL. They are also almost fully booked by now for Holy Week.
Our poor flag carrier, Asia’s first, had been getting it pretty bad from their unions in recent weeks. They should all be working together instead. Everyone in PAL should realize that they are no longer the country’s number one airline, at least not in terms of number of passengers flown last year. They are now just number two and that’s why they must try even harder to please. Cebu Pacific is now the country’s largest carrier. Based on government statistics, Cebu Pacific last year flew 10,036,503 local and international passengers to PAL’s 9,259,982. In the domestic market, Cebu Pacific leads with 7,972,659 passengers to PAL’s 5,311,168. PAL still leads Cebu Pacific in the international market.
And guess what? Cebu Pacific flew more passengers with less staff. Cebu Pacific has 4,000 people working for it, about half of that are outsourced. The 2,000 staff members outsourced by Cebu Pacific are holding the same positions that PAL wants to outsource. There is just no way for PAL to continue to have 7,000 employees on its payroll. Aviation market conditions have changed so much and the older airlines, not just PAL, must do something about their so-called legacy costs or just simply lose out to more nimble competitors like Cebu Pacific.
The conditions just got tougher with our unilateral Open Skies declaration. There will be more regional budget airlines taking to our skies and it is important that PAL’s cost structure becomes more comparable to theirs. My Singapore-based son was able to fly to Manila on a whim one weekend on a roundtrip ticket costing him $150 on Tiger Air. I know PAL is trying to match such cut-throat competitors with $250 tickets but its ability to do so on a sustained basis is questionable unless it revamps its cost structure.
In the end, PAL must be financially viable for all its employees to continue to have jobs. If they are able to restructure PAL’s cost, a good part of the present employee force will continue to have jobs in the airline. But if they strike and PAL folds up, everything and everyone goes down the drain. Cebu Pacific, on the other hand, has already invested a billion dollars and planning to invest more.
Business organizations evolve and change in response to market conditions. That’s all there is to it. PAL’s present structure may have worked in the past when it was a monopoly. That is no longer the case. And there is no national interest that can justify a government takeover to save PAL. It is survival of the fittest in the marketplace and PAL is too financially unfit to survive the challenge of Cebu Pacific, Tiger Air, Air Asia and all those new budget carriers whose price structures we love as consumers. The PAL unions must help win this competitive challenge not by striking but by agreeing to restructure the airline.
Coloma
I received a reaction from Secretary Sonny Coloma to our column last week on the CommGroup. Here are relevant excerpts of his e-mail.
It is sad that you would claim that “(I) have no experience in public relations,” considering that we have known each other since the early seventies. We were colleagues in the International Association of Business Communicators (IABC) when you were working with PNOC and I was employed by Far East Bank and Trust Company.
The field of public relations spans several publics: an organization’s clients or customers, its own employees, government, mass media, and other stakeholders. I served as vice president and head of Far East Bank’s corporate relations department and also of its employee relations (including employee communication) department during my ten-year stint with the bank.
When I joined the Asian Institute of Management (AIM) as a professor in 1988, I introduced an elective entitled Corporate Public Communication, which is all about public relations. In fact, you were my preferred resource person on the topic of issues management. Other PR professionals can attest to the fact that I have designed and delivered a practitioner-oriented course on public relations in keeping with AIM’s academic standards.
My response: It is true that we organized the Philippine chapter of IABC in the early 80s. It is also true that I knew about Sonny’s PR course at AIM. In fact, I think I was his guest lecturer a couple of times. I thought of mentioning both items when I was writing my column but later on decided both facts were irrelevant. The point I was trying to make was the fact that Sonny didn’t have the kind of PR experience required of his current job. Issue management and Crisis Management are two of the more relevant skills needed at the Palace that can only be had by actual experience.
And while Sonny can say he is familiar with PR concepts from an academic perspective… that is not nearly enough. This lack of experience would have been mitigated if he had actual media experience. That would have enabled him to think like a reporter or an editor and thus be able to serve media’s information needs better as well as tweak his material to better catch media attention.
I have always been impressed with the fact that your columns are research-based. However, you might have been misinformed because, not a single centavo of appropriation
is provided in the national budget for Channels 4, 9, and 13. The charter or law that created the People’s Television Network, Inc. (PTNI) does not allow Channel 4 to receive an annual appropriation from the national government. Channels 9 and 3 are also sequestered entities that are not entitled to budgetary support from the government.
The Presidential Communications Operations Office (PCOO) that I head has a total budget of 976 million pesos for 2011 which is lower than the 2010 outlay of 1.16 billion pesos. Only about half of this amount is allotted for mass media: 293 million for the Bureau of Broadcast Services and 250 million for the Philippine Information Agency that has a field network of regional and provincial offices. When our budget for 2012 is presented anew to both houses of Congress, I am mindful that I will have to justify all items of expenses for personal services, maintenance and other operating expenses, as well as for capital outlays. This is in accordance with President Aquino’s policy on zero-based budgeting, to ensure that every centavo of the taxpayers’ money is properly spent.
My response: That’s more resources than most PR professionals get to spread their good news. The budget aside, Channel 4 could have more impact if used to provide what we cannot expect from the commercial networks. Maybe you can work out a deal with Armida Siguion Reyna to show her well produced cultural show Aawitan Kita. Or show some of the cultural features in the tourism channel. Our current generation of Pinoys must be exposed to our rich cultural heritage. Or maybe, Channel 4 can air curriculum based educational programs during school days. Knowledge Channel is doing it now but only reaches those schools with cable or satellite connections. The thing is, make Channel 4 useful. Trying to imitate what the networks are already doing in news and entertainment is a waste of resources.
(Note: Sonny also responded to my suggestions on social media. I need space to tackle those in a future column).
Paris in spring
Rosan Cruz, now in Paris to run the Paris Marathon, sent this one.
A thief stole some paintings from the Louvre. Captured a block away when his van run out of gas, he told police he stole the paintings because he had no Monet to buy Degas, to make the Van Gogh. He had De Gaulle to do it because he had nothing TOULOUSE.
I hope Rosan finished her marathon with no injuries yesterday.
April 11, 2011
DEMAND AND SUPPLY By Boo Chanco
I don’t know if the PAL rank and file union will strike this Holy Week to cause maximum headache to management even if it will guarantee maximum inconvenience to passengers out for a Holy Week break. Those of us whose holiday excursions involve a flight with PAL should probably have a Plan “B” just in case. I asked the Cebu Pacific people if they will honor a PAL ticket in such an emergency and they said they will be happy to do that but PAL must ask first. They have apparently offered in the past and got no reply from PAL. They are also almost fully booked by now for Holy Week.
Our poor flag carrier, Asia’s first, had been getting it pretty bad from their unions in recent weeks. They should all be working together instead. Everyone in PAL should realize that they are no longer the country’s number one airline, at least not in terms of number of passengers flown last year. They are now just number two and that’s why they must try even harder to please. Cebu Pacific is now the country’s largest carrier. Based on government statistics, Cebu Pacific last year flew 10,036,503 local and international passengers to PAL’s 9,259,982. In the domestic market, Cebu Pacific leads with 7,972,659 passengers to PAL’s 5,311,168. PAL still leads Cebu Pacific in the international market.
And guess what? Cebu Pacific flew more passengers with less staff. Cebu Pacific has 4,000 people working for it, about half of that are outsourced. The 2,000 staff members outsourced by Cebu Pacific are holding the same positions that PAL wants to outsource. There is just no way for PAL to continue to have 7,000 employees on its payroll. Aviation market conditions have changed so much and the older airlines, not just PAL, must do something about their so-called legacy costs or just simply lose out to more nimble competitors like Cebu Pacific.
The conditions just got tougher with our unilateral Open Skies declaration. There will be more regional budget airlines taking to our skies and it is important that PAL’s cost structure becomes more comparable to theirs. My Singapore-based son was able to fly to Manila on a whim one weekend on a roundtrip ticket costing him $150 on Tiger Air. I know PAL is trying to match such cut-throat competitors with $250 tickets but its ability to do so on a sustained basis is questionable unless it revamps its cost structure.
In the end, PAL must be financially viable for all its employees to continue to have jobs. If they are able to restructure PAL’s cost, a good part of the present employee force will continue to have jobs in the airline. But if they strike and PAL folds up, everything and everyone goes down the drain. Cebu Pacific, on the other hand, has already invested a billion dollars and planning to invest more.
Business organizations evolve and change in response to market conditions. That’s all there is to it. PAL’s present structure may have worked in the past when it was a monopoly. That is no longer the case. And there is no national interest that can justify a government takeover to save PAL. It is survival of the fittest in the marketplace and PAL is too financially unfit to survive the challenge of Cebu Pacific, Tiger Air, Air Asia and all those new budget carriers whose price structures we love as consumers. The PAL unions must help win this competitive challenge not by striking but by agreeing to restructure the airline.
Coloma
I received a reaction from Secretary Sonny Coloma to our column last week on the CommGroup. Here are relevant excerpts of his e-mail.
It is sad that you would claim that “(I) have no experience in public relations,” considering that we have known each other since the early seventies. We were colleagues in the International Association of Business Communicators (IABC) when you were working with PNOC and I was employed by Far East Bank and Trust Company.
The field of public relations spans several publics: an organization’s clients or customers, its own employees, government, mass media, and other stakeholders. I served as vice president and head of Far East Bank’s corporate relations department and also of its employee relations (including employee communication) department during my ten-year stint with the bank.
When I joined the Asian Institute of Management (AIM) as a professor in 1988, I introduced an elective entitled Corporate Public Communication, which is all about public relations. In fact, you were my preferred resource person on the topic of issues management. Other PR professionals can attest to the fact that I have designed and delivered a practitioner-oriented course on public relations in keeping with AIM’s academic standards.
My response: It is true that we organized the Philippine chapter of IABC in the early 80s. It is also true that I knew about Sonny’s PR course at AIM. In fact, I think I was his guest lecturer a couple of times. I thought of mentioning both items when I was writing my column but later on decided both facts were irrelevant. The point I was trying to make was the fact that Sonny didn’t have the kind of PR experience required of his current job. Issue management and Crisis Management are two of the more relevant skills needed at the Palace that can only be had by actual experience.
And while Sonny can say he is familiar with PR concepts from an academic perspective… that is not nearly enough. This lack of experience would have been mitigated if he had actual media experience. That would have enabled him to think like a reporter or an editor and thus be able to serve media’s information needs better as well as tweak his material to better catch media attention.
I have always been impressed with the fact that your columns are research-based. However, you might have been misinformed because, not a single centavo of appropriation
is provided in the national budget for Channels 4, 9, and 13. The charter or law that created the People’s Television Network, Inc. (PTNI) does not allow Channel 4 to receive an annual appropriation from the national government. Channels 9 and 3 are also sequestered entities that are not entitled to budgetary support from the government.
The Presidential Communications Operations Office (PCOO) that I head has a total budget of 976 million pesos for 2011 which is lower than the 2010 outlay of 1.16 billion pesos. Only about half of this amount is allotted for mass media: 293 million for the Bureau of Broadcast Services and 250 million for the Philippine Information Agency that has a field network of regional and provincial offices. When our budget for 2012 is presented anew to both houses of Congress, I am mindful that I will have to justify all items of expenses for personal services, maintenance and other operating expenses, as well as for capital outlays. This is in accordance with President Aquino’s policy on zero-based budgeting, to ensure that every centavo of the taxpayers’ money is properly spent.
My response: That’s more resources than most PR professionals get to spread their good news. The budget aside, Channel 4 could have more impact if used to provide what we cannot expect from the commercial networks. Maybe you can work out a deal with Armida Siguion Reyna to show her well produced cultural show Aawitan Kita. Or show some of the cultural features in the tourism channel. Our current generation of Pinoys must be exposed to our rich cultural heritage. Or maybe, Channel 4 can air curriculum based educational programs during school days. Knowledge Channel is doing it now but only reaches those schools with cable or satellite connections. The thing is, make Channel 4 useful. Trying to imitate what the networks are already doing in news and entertainment is a waste of resources.
(Note: Sonny also responded to my suggestions on social media. I need space to tackle those in a future column).
Paris in spring
Rosan Cruz, now in Paris to run the Paris Marathon, sent this one.
A thief stole some paintings from the Louvre. Captured a block away when his van run out of gas, he told police he stole the paintings because he had no Monet to buy Degas, to make the Van Gogh. He had De Gaulle to do it because he had nothing TOULOUSE.
I hope Rosan finished her marathon with no injuries yesterday.
Monday, March 28, 2011
A strike now may just kill PAL
DEMAND AND SUPPLY By Boo Chanco (The Philippine Star) Updated March 28, 2011
I was afraid something like this will happen. As I watched the 70th anniversary presentation of Philippine Airlines that recalled memorable events in its corporate history, I felt a foreboding that this could be its last hurrah. Asia’s First Airline, like the country it proudly represents abroad, needs to do serious rethinking of where it stands, where it wants to go and how to get there.
Like the country, PAL was ahead of almost everybody in the region. But somewhere along the way the airline was, like the country, badly served by the politicians who led Asia’s first Republic. Not only did they abuse the airline to attain their jetsetter reputations, they forced the airline to hire their protégés to the point that it became, and still is, overstaffed and uncompetitive.
Today, the airline is already in trouble even without the strike threat. Fuel prices are going to the stratosphere. Competition is getting fiercer than it ever was. World economies are still under threat of a double dip recession. And it isn’t easy to have big overhead costs and try to recover increased operating costs in a very competitive environment.
When the pilots of PAL last had a strike, the airline still enjoyed a lion’s share of the domestic market. Because PAL was then still a near monopoly, the strike was a pain to the public. Government had to resort to extraordinary measures like allowing Cathay Pacific to operate domestic routes to minimize the strike’s negative impact on the economy. But today, PAL has very strong domestic competitors. In fact, Cebu Pacific, one of the many new local airlines, now carries more passengers between our islands than PAL.
There are other airlines too that will be ready to pick up the slack left by a Philippine Airlines grounded by a strike. I was just talking last week with Alfred Yao, the owner of Zest Air, and he impressed me as an entrepreneur with an aggressiveness that could make his airline a strong competitor for PAL not just in the domestic market but regionally as well.
Mr. Yao told me he was buying more Airbus 320s to serve local and international routes. He said he now has twice weekly flights on the Shanghai-Kalibo route, increasing to four weekly in June, opening Boracay to an increasingly prosperous Chinese market.
Zest Air also flies the Seoul-Kalibo route four times a week and increasing to daily by June, with planeloads of vacationing Korean tourists. Zest also flies Pusan-Kalibo twice a week now.
And he told me Zest Air will also fly between Beijing and Palawan starting late April, opening a new direct destination for Chinese tourists. Zest will also fly between Beijing and Kalibo by late June. Also by June, Zest Air will be flying to Singapore, joining PAL, Cebu Pacific, SEAir-Tiger Air and AirPhil Express in linking the city state with the Philippines.
Mr. Yao said he is not afraid of P-Noy’s pocket open skies even if he also shares the demand for reciprocity aired by his competitors. But instead of complaining about it, he is trying to move ahead of the foreign airlines who may decide to take advantage of the new E.O. That explains his decision to bring international passengers directly to Palawan.
Then there is AirAsia that will establish a local subsidiary with majority control under Tonyboy Cojuangco. SEAir, on the other hand, is tying up with Tiger Air, a Singaporean budget carrier designed for tough competition. And there is AirPhil Express, practically a sister airline of PAL but one whose business model and staff structure are geared to enable it to compete in today’s turbulent skies.
There is no doubt about how tough competition is these days. Let us listen to Alfred Yao of Zest Air. “We have very good service,” he said, emphasizing the airline’s so-called value proposition for its clients. “Our people are very friendly. Price-wise, we provide very affordable prices that are within reach of Filipinos. Despite stiff competition, we are doing pretty well.”
As for Cebu Pacific, it flew 10.5 million passengers last year. This year, it expects that figure to go up to 12 million, of which 10 million would be using the NAIA Terminal 3, almost using up the terminal’s rated capacity of 13 million.
Despite the brave words of its executives during their 70th anniversary celebration, Philippine Airlines is in serious crisis. It needs a new business model in order to survive. Like what happened to Japan Airlines, PAL needs to reorganize to make it more nimble in today’s environment. It can no longer afford to have three times the number of employees Cebu Pacific has.
The restructuring of PAL that its union is vigorously objecting to is a survival response. This is probably why P-Noy upheld the position of the Department of Labor allowing it to do so. As I had previously written here, the employees union should learn from the example of the American automotive unions. When it became clear that GM, Ford and Chrysler would go belly up unless the unions worked with management and government to save the car companies, the United Auto Workers or UAW decided that cooperation was the better deal.
The union may be overestimating the importance of the airline’s survival to its owners. I see a very strong incentive on the part of the owners to let the airline fold up if the strike materializes and successfully grounds its flights. Most of its aircrafts are on lease anyway, and the lease can be transferred to AirPhil Express as it takes over PAL’s old routes.
On the marketing side, the worse part of a strike threat is the reluctance of passengers to do advance booking, something that helps the airline plan better. A passenger will not risk buying a ticket for a flight two months or more ahead of time if there is any danger that a strike may strand him here or in a foreign port. That crank call on a San Francisco bound PAL flight, hopefully, isn’t related to the labor problems of the airline because pranks like that can ruin an airline’s reputation.
It is crunch time for PAL and every stakeholder must decide if they want to save the airline or bury it for good. Government should not be expected to save PAL in the mistaken notion that its survival is in the national interest. Unlike in the past, if PAL goes belly up, there are enough competitors to take over its market and provide the service almost as if nothing happened.
The world has changed drastically in recent years. Job security can no longer be guaranteed in a globalized world where stiff competition is the name of the game. PAL is still organized under the rules of a more genteel world that had long ago changed. The new rules of the game in today’s business world may not be for the better in humane terms but businesses can only play by the new rules or perish.
A strike at this time may kill the airline. That does not do the union members any good. And while the owners may get hurt as well, they are in a better position to bounce back quickly as their Plan B, Airphil Express, is already up and running.
About 2,600 rank and file employees will be retrenched under the plan but more than 4,000 will retain their jobs in an airline that is better equipped to compete. And for those who will be retrenched, they will get financial and other benefits and be first in line for jobs in the outsource company that will take over the functions. That sounds better than killing the airline and almost 7000 employees losing their jobs. If the airline keels over because of the strike, all 7000 employees fall in line with other creditors for any financial claims.
Hopefully reason rather than emotion prevails so that Asia’s First Airline can still proudly fly the national colors in all corners of the world. For the PAL union to strike now is like cutting their nose to spite their face. It just doesn’t work for their benefit or anyone else’s other than PAL’s competitors who will gladly divide among themselves the still formidable market share of Asia’s First.
Those were the days
Jose Villaescusa sent this one.
LIFE was really so much simpler then... when Apple and Blackberry were just fruits, while Samsung was Delilah’s lover!
I was afraid something like this will happen. As I watched the 70th anniversary presentation of Philippine Airlines that recalled memorable events in its corporate history, I felt a foreboding that this could be its last hurrah. Asia’s First Airline, like the country it proudly represents abroad, needs to do serious rethinking of where it stands, where it wants to go and how to get there.
Like the country, PAL was ahead of almost everybody in the region. But somewhere along the way the airline was, like the country, badly served by the politicians who led Asia’s first Republic. Not only did they abuse the airline to attain their jetsetter reputations, they forced the airline to hire their protégés to the point that it became, and still is, overstaffed and uncompetitive.
Today, the airline is already in trouble even without the strike threat. Fuel prices are going to the stratosphere. Competition is getting fiercer than it ever was. World economies are still under threat of a double dip recession. And it isn’t easy to have big overhead costs and try to recover increased operating costs in a very competitive environment.
When the pilots of PAL last had a strike, the airline still enjoyed a lion’s share of the domestic market. Because PAL was then still a near monopoly, the strike was a pain to the public. Government had to resort to extraordinary measures like allowing Cathay Pacific to operate domestic routes to minimize the strike’s negative impact on the economy. But today, PAL has very strong domestic competitors. In fact, Cebu Pacific, one of the many new local airlines, now carries more passengers between our islands than PAL.
There are other airlines too that will be ready to pick up the slack left by a Philippine Airlines grounded by a strike. I was just talking last week with Alfred Yao, the owner of Zest Air, and he impressed me as an entrepreneur with an aggressiveness that could make his airline a strong competitor for PAL not just in the domestic market but regionally as well.
Mr. Yao told me he was buying more Airbus 320s to serve local and international routes. He said he now has twice weekly flights on the Shanghai-Kalibo route, increasing to four weekly in June, opening Boracay to an increasingly prosperous Chinese market.
Zest Air also flies the Seoul-Kalibo route four times a week and increasing to daily by June, with planeloads of vacationing Korean tourists. Zest also flies Pusan-Kalibo twice a week now.
And he told me Zest Air will also fly between Beijing and Palawan starting late April, opening a new direct destination for Chinese tourists. Zest will also fly between Beijing and Kalibo by late June. Also by June, Zest Air will be flying to Singapore, joining PAL, Cebu Pacific, SEAir-Tiger Air and AirPhil Express in linking the city state with the Philippines.
Mr. Yao said he is not afraid of P-Noy’s pocket open skies even if he also shares the demand for reciprocity aired by his competitors. But instead of complaining about it, he is trying to move ahead of the foreign airlines who may decide to take advantage of the new E.O. That explains his decision to bring international passengers directly to Palawan.
Then there is AirAsia that will establish a local subsidiary with majority control under Tonyboy Cojuangco. SEAir, on the other hand, is tying up with Tiger Air, a Singaporean budget carrier designed for tough competition. And there is AirPhil Express, practically a sister airline of PAL but one whose business model and staff structure are geared to enable it to compete in today’s turbulent skies.
There is no doubt about how tough competition is these days. Let us listen to Alfred Yao of Zest Air. “We have very good service,” he said, emphasizing the airline’s so-called value proposition for its clients. “Our people are very friendly. Price-wise, we provide very affordable prices that are within reach of Filipinos. Despite stiff competition, we are doing pretty well.”
As for Cebu Pacific, it flew 10.5 million passengers last year. This year, it expects that figure to go up to 12 million, of which 10 million would be using the NAIA Terminal 3, almost using up the terminal’s rated capacity of 13 million.
Despite the brave words of its executives during their 70th anniversary celebration, Philippine Airlines is in serious crisis. It needs a new business model in order to survive. Like what happened to Japan Airlines, PAL needs to reorganize to make it more nimble in today’s environment. It can no longer afford to have three times the number of employees Cebu Pacific has.
The restructuring of PAL that its union is vigorously objecting to is a survival response. This is probably why P-Noy upheld the position of the Department of Labor allowing it to do so. As I had previously written here, the employees union should learn from the example of the American automotive unions. When it became clear that GM, Ford and Chrysler would go belly up unless the unions worked with management and government to save the car companies, the United Auto Workers or UAW decided that cooperation was the better deal.
The union may be overestimating the importance of the airline’s survival to its owners. I see a very strong incentive on the part of the owners to let the airline fold up if the strike materializes and successfully grounds its flights. Most of its aircrafts are on lease anyway, and the lease can be transferred to AirPhil Express as it takes over PAL’s old routes.
On the marketing side, the worse part of a strike threat is the reluctance of passengers to do advance booking, something that helps the airline plan better. A passenger will not risk buying a ticket for a flight two months or more ahead of time if there is any danger that a strike may strand him here or in a foreign port. That crank call on a San Francisco bound PAL flight, hopefully, isn’t related to the labor problems of the airline because pranks like that can ruin an airline’s reputation.
It is crunch time for PAL and every stakeholder must decide if they want to save the airline or bury it for good. Government should not be expected to save PAL in the mistaken notion that its survival is in the national interest. Unlike in the past, if PAL goes belly up, there are enough competitors to take over its market and provide the service almost as if nothing happened.
The world has changed drastically in recent years. Job security can no longer be guaranteed in a globalized world where stiff competition is the name of the game. PAL is still organized under the rules of a more genteel world that had long ago changed. The new rules of the game in today’s business world may not be for the better in humane terms but businesses can only play by the new rules or perish.
A strike at this time may kill the airline. That does not do the union members any good. And while the owners may get hurt as well, they are in a better position to bounce back quickly as their Plan B, Airphil Express, is already up and running.
About 2,600 rank and file employees will be retrenched under the plan but more than 4,000 will retain their jobs in an airline that is better equipped to compete. And for those who will be retrenched, they will get financial and other benefits and be first in line for jobs in the outsource company that will take over the functions. That sounds better than killing the airline and almost 7000 employees losing their jobs. If the airline keels over because of the strike, all 7000 employees fall in line with other creditors for any financial claims.
Hopefully reason rather than emotion prevails so that Asia’s First Airline can still proudly fly the national colors in all corners of the world. For the PAL union to strike now is like cutting their nose to spite their face. It just doesn’t work for their benefit or anyone else’s other than PAL’s competitors who will gladly divide among themselves the still formidable market share of Asia’s First.
Those were the days
Jose Villaescusa sent this one.
LIFE was really so much simpler then... when Apple and Blackberry were just fruits, while Samsung was Delilah’s lover!
Tuesday, February 22, 2011
PAL airs side on flight attendants issue
FROM THE STANDS
The Philippine Star
By Domini M. Torrevillas
Congratulations to Vice-President Jojo Binay for successfully working for the reprieve of three Filipino overseas workers who were sentenced to die yesterday for smuggling drugs to the People’s Republic of China. Early, the VP, with, for sure, the assistance of government authorities, showed his negotiating skill in delaying the execution of the three convicted Filipinos. How long the reprieve lasts, or whether they would be commuted for the rest of their lives, and not executed, will be known in due course.
With due respect to the VP, however, I agree with Teresita Ang See, a Filipino-Chinese activist, who said in a television interview yesterday that the Chinese government has a very strict rule against drug smuggling, and we should not expect it to bend over backwards in its treatment of convicted Filipinos. Teresita strongly argued that the three had known that they were carrying illegal luggage; they were not just “mules” who knew nothing of their mission. How could one not know she was carrying four kilos of heroine? She said while it is right for our government to intercede on behalf of its citizens facing lethal injection, it should be concerned with the victims of drug traffickers and dealers. Indeed, how many lives — of children and adults — have been ruined because of people who want to earn quick money? Why do we plead for the forgiveness of the convicts, when we should worry about the fate of the victims of drug lords, traffickers, and couriers?
I agree with Teresita and other concerned people, that heinous crimes cannot be treated with kid gloves; drug dealers should be meted the death penalty.
In addition, I propose that to eliminate manufacturing of shabu and other dangerous drugs, whole communities must be involved in the clean-up process, that local government officials be punished if such laboratories are found in their communities, and whistle blowers should be given rewards.
* * *
In the interest of balance and fairness, I am printing the response of Cielo Villaluna, Philippine Airlines spokesperson, to my February 15 column on the Philippine Airlines-Flight Attendants Association of the Philippines (PAL-FASAP) dispute.
“PAL Management, contrary to claims by certain sectors, does not regard its flight attendants as sex objects for marketing purposes.
“They are highly-trained service providers and safety professionals. Their competence on safety, resulting from comprehensive training, is crucial in ensuring the safety and well-being of passengers in all phases of the flight.
“On the issue of retirement age, the debate is in two venues: 1) the Department of Labor and Employment and 2) the Makati Regional Trial Court.
“It is PAL’s position that retirement age can be the subject of agreement or negotiations. Hence, in the last Collective Bargaining Agreements between PAL and FASAP, there were various retirement ages, agreed upon by both Management and the Cabin Crew Union (FASAP), to wit:
“1). For those hired before 1996, 55 years old for female cabin crew and 60 for male cabin crew;
“2). For those hired between 1996 – November 2000, 45 years old for both genders;
“3). For those hired from Nov. 2000 onwards, it is 40 years of age.
“All of these CBA provisions were duly approved by the FASAP officers with the aid of their lawyers and ratified by the members themselves. There was no force or coercion in any way, shape or form. In fact, they agreed to lower the retirement age in exchange for economic benefits and more beneficial work rules.
“FASAP, in its efforts to renegotiate its CBA with PAL Management, questioned its “retirement ages”, saying the same is unconstitutional, citing gender discrimination, among others. This was the particular point that became the subject of the PAL-FASAP dispute brought before the Department of Labor and Employment.
“Last December 23, 2010, Labor Secretary Rosalinda Baldoz ruled that the retirement age should be pegged at 60 years old for both male and female cabin crewmembers. Her order included financial and other non-economic benefits. PAL Management filed a motion for reconsideration after said decision was rendered. While PAL’s appeal is still pending with the DOLE, the Makati RTC in a separate case, lifted a writ of injunction which earlier prevented PAL from retiring flight attendants reaching 55 years of age.
“With the court’s order lifting the injunction, it is PAL Management’s position that there is no legal impediment for it to retire its Flight Attendants at 55 years old. In essence, PAL has a legal basis and was merely implementing a valid and enforceable court order. PAL’s legal counsels believe that a valid court order takes precedence over a department ruling that is not final and executory. Therefore, claims that PAL was defying a DOLE ruling, are baseless. We have a situation where two separate branches of government have adopted different views on the subject matter.
“It is important to note that those who will be retired as a result of the court order are not without remedy. If at the end of the case, the court rules that they are to be retired at 60, they can be paid salaries and benefits that have accrued to them. Judge Oscar Pimentel of the Makati RTC required PAL to post a P5 million counter-injunction bond to answer for any or all damages if the Court later determines that PAL is not entitled to the lifting of the said injunction order.” — Cielo Villaluna, PAL spokesperson
* * *
Joe Nacilla of Las Pinas City reacts to my column last week, saying lawyer Lorna Kapunan’s reason to complain about the unfair practice of some multinational corporations is the lack of protection for local entrepreneurs and that “in most cases existing laws and requirements are being used as a backdoor to corruption. There are enough examples of how a generally good idea is used as a backdoor for bad intentions.
“To start a business in the Philippines, we have to pass a sea and tedious bureaucratic processes that allow a lot of powerbrokers to poke their noses into our business. We are left at the mercy of the smallest unit in the bureaucracy who are investment insensitive and inhospitable to investors and are only inclined to make a quick buck. We have to spend a lot of money before we can start the business. If you have more patience you might be able to secure the proper paper business permit but only after the business opportunity has passed. This happened to me, forcing me to close my planned business before starting it. The funny thing is, before you can retire your business, you again have to pass tedious bureaucratic processes that take time and additional expenses.”
The Philippine Star
By Domini M. Torrevillas
Congratulations to Vice-President Jojo Binay for successfully working for the reprieve of three Filipino overseas workers who were sentenced to die yesterday for smuggling drugs to the People’s Republic of China. Early, the VP, with, for sure, the assistance of government authorities, showed his negotiating skill in delaying the execution of the three convicted Filipinos. How long the reprieve lasts, or whether they would be commuted for the rest of their lives, and not executed, will be known in due course.
With due respect to the VP, however, I agree with Teresita Ang See, a Filipino-Chinese activist, who said in a television interview yesterday that the Chinese government has a very strict rule against drug smuggling, and we should not expect it to bend over backwards in its treatment of convicted Filipinos. Teresita strongly argued that the three had known that they were carrying illegal luggage; they were not just “mules” who knew nothing of their mission. How could one not know she was carrying four kilos of heroine? She said while it is right for our government to intercede on behalf of its citizens facing lethal injection, it should be concerned with the victims of drug traffickers and dealers. Indeed, how many lives — of children and adults — have been ruined because of people who want to earn quick money? Why do we plead for the forgiveness of the convicts, when we should worry about the fate of the victims of drug lords, traffickers, and couriers?
I agree with Teresita and other concerned people, that heinous crimes cannot be treated with kid gloves; drug dealers should be meted the death penalty.
In addition, I propose that to eliminate manufacturing of shabu and other dangerous drugs, whole communities must be involved in the clean-up process, that local government officials be punished if such laboratories are found in their communities, and whistle blowers should be given rewards.
* * *
In the interest of balance and fairness, I am printing the response of Cielo Villaluna, Philippine Airlines spokesperson, to my February 15 column on the Philippine Airlines-Flight Attendants Association of the Philippines (PAL-FASAP) dispute.
“PAL Management, contrary to claims by certain sectors, does not regard its flight attendants as sex objects for marketing purposes.
“They are highly-trained service providers and safety professionals. Their competence on safety, resulting from comprehensive training, is crucial in ensuring the safety and well-being of passengers in all phases of the flight.
“On the issue of retirement age, the debate is in two venues: 1) the Department of Labor and Employment and 2) the Makati Regional Trial Court.
“It is PAL’s position that retirement age can be the subject of agreement or negotiations. Hence, in the last Collective Bargaining Agreements between PAL and FASAP, there were various retirement ages, agreed upon by both Management and the Cabin Crew Union (FASAP), to wit:
“1). For those hired before 1996, 55 years old for female cabin crew and 60 for male cabin crew;
“2). For those hired between 1996 – November 2000, 45 years old for both genders;
“3). For those hired from Nov. 2000 onwards, it is 40 years of age.
“All of these CBA provisions were duly approved by the FASAP officers with the aid of their lawyers and ratified by the members themselves. There was no force or coercion in any way, shape or form. In fact, they agreed to lower the retirement age in exchange for economic benefits and more beneficial work rules.
“FASAP, in its efforts to renegotiate its CBA with PAL Management, questioned its “retirement ages”, saying the same is unconstitutional, citing gender discrimination, among others. This was the particular point that became the subject of the PAL-FASAP dispute brought before the Department of Labor and Employment.
“Last December 23, 2010, Labor Secretary Rosalinda Baldoz ruled that the retirement age should be pegged at 60 years old for both male and female cabin crewmembers. Her order included financial and other non-economic benefits. PAL Management filed a motion for reconsideration after said decision was rendered. While PAL’s appeal is still pending with the DOLE, the Makati RTC in a separate case, lifted a writ of injunction which earlier prevented PAL from retiring flight attendants reaching 55 years of age.
“With the court’s order lifting the injunction, it is PAL Management’s position that there is no legal impediment for it to retire its Flight Attendants at 55 years old. In essence, PAL has a legal basis and was merely implementing a valid and enforceable court order. PAL’s legal counsels believe that a valid court order takes precedence over a department ruling that is not final and executory. Therefore, claims that PAL was defying a DOLE ruling, are baseless. We have a situation where two separate branches of government have adopted different views on the subject matter.
“It is important to note that those who will be retired as a result of the court order are not without remedy. If at the end of the case, the court rules that they are to be retired at 60, they can be paid salaries and benefits that have accrued to them. Judge Oscar Pimentel of the Makati RTC required PAL to post a P5 million counter-injunction bond to answer for any or all damages if the Court later determines that PAL is not entitled to the lifting of the said injunction order.” — Cielo Villaluna, PAL spokesperson
* * *
Joe Nacilla of Las Pinas City reacts to my column last week, saying lawyer Lorna Kapunan’s reason to complain about the unfair practice of some multinational corporations is the lack of protection for local entrepreneurs and that “in most cases existing laws and requirements are being used as a backdoor to corruption. There are enough examples of how a generally good idea is used as a backdoor for bad intentions.
“To start a business in the Philippines, we have to pass a sea and tedious bureaucratic processes that allow a lot of powerbrokers to poke their noses into our business. We are left at the mercy of the smallest unit in the bureaucracy who are investment insensitive and inhospitable to investors and are only inclined to make a quick buck. We have to spend a lot of money before we can start the business. If you have more patience you might be able to secure the proper paper business permit but only after the business opportunity has passed. This happened to me, forcing me to close my planned business before starting it. The funny thing is, before you can retire your business, you again have to pass tedious bureaucratic processes that take time and additional expenses.”
Friday, January 21, 2011
A cloudy open skies
Posted on January 20, 2011 08:21:41 PM
Business World: Opinion
Trade Tripper -- By Jemy Gatdula
There’s a line from CNN that goes somewhat like this: "do you go with those who got it right or with those who got it wrong?" Because, frankly, in relation to the ongoing debate on the open-skies policy, do we give credence to those men able to build business empires from scratch, as well as the men and women able to effectively run local airlines for the country, or do we believe the promises of some guy who spent a considerable amount of money just to come up with "Pilipinas kay ganda"? I know what I’d choose.
Look, I don’t know Lucio Tan. I don’t know what he’s like. But I do know what he did and what he did is all around us. From beer to banks to airlines to cigarettes, this is a man who knows business. And when you have guys like that who can actually get things done, I would think we should instinctively help them or their endeavors. Apparently, we’d rather do the reverse.
Because at a time when a lot of people are predicting uncertainties for the global economy this year, with the concomitant unpredictability of our own economy, why we should be making it harder for the Philippines’ very own PAL (as well as Cebu Pacific and Zest Air), at this particular time, is beyond me. We shouldn’t be making it harder for them, we should be helping them.
Considerably, our tourism industry needs more than additional plane seats to get going: they need better airports and an efficient infrastructure. Both of which, we don’t really have. Such also needs careful and coordinated planning. None of which is being done effectively. We have a Category 2 rating from the International Civil Aviation Organization due to deficient aviation infrastructure and safety standards. All these are beyond the purview of local airlines. But they do fall squarely within the responsibility of the government. Traffic, peace and order, pollution, sanitation? These are not the responsibility of the local airlines. These are government’s. So why put the burden squarely on the shoulders of our airlines?
Besides, what does "pocket open skies" even mean? How different is that from a mere open skies? I suspect it’s one of those terms some policymaker cooked up to obfuscate matters, like "calibrated trade liberalization." They have no practical meaning. It’s either you open or you don’t. If one is going to be selective about it, then there better be good reasons for the selection. And if the selection turns out to be opening almost all air travel anyway, then that is not "pocket." That is open skies. Period.
Some people argue from the perspective of the expected benefits of "liberalization." Let’s not be simpletons about this. This column obviously is partial to liberalization. But there’s a difference between being partial and blind. As in all matters, we need to be smart about this. Look, US skies won’t open unilaterally. And it’s done very deliberately. Liberalization entails competition, which entails we step our game up, which means all of us, which means the government and private sector. If one of those factors or players is missing from the equation, then we just made people lose their jobs for no purpose. We can’t just open our skies up and hope that a "trickle down" effect ensues. We simply cannot gamble with people’s livelihoods.
Government assistance is particularly crucial for the airline industry. I don’t know of any successful foreign airline that made it without government support. Aside from airports, infrastructure, security, and safety, government help, particularly in economic crunches, is significant. The ability of the government to open up markets for our airlines is vastly important as well. To open up our skies without getting reciprocity from the other countries is to place an undue handicap for our companies. It’s not only unintelligent, it’s unconstitutional.
Besides, the nature of the market doesn’t seem to support the idea of open skies. People sometimes rail against our airlines for being monopolies, but we may have to accept that a "natural monopoly" may be necessary as far as airlines in the Philippines is concerned. That’s because the market could perhaps support only two or three players. That being the case, I’d rather have those two or three to be Filipinos. It then follows that we support such Filipino airlines as to be able to compete against those better-funded and larger foreign airlines.
The importance of Filipino carriers goes beyond economics. There’s also "transport security" (similar to "food security" arguments), particularly to ensure the safe return of our numerous OFWs during international emergencies. Finally, there’s also national pride. I rather like the idea of having Filipino-owned planes flying around. I like the thought that we have a flag carrier. And, despite (or because of) our difficulties, I’d really like to still be able to lift my head up and see the Philippines soar.
Business World: Opinion
Trade Tripper -- By Jemy Gatdula
There’s a line from CNN that goes somewhat like this: "do you go with those who got it right or with those who got it wrong?" Because, frankly, in relation to the ongoing debate on the open-skies policy, do we give credence to those men able to build business empires from scratch, as well as the men and women able to effectively run local airlines for the country, or do we believe the promises of some guy who spent a considerable amount of money just to come up with "Pilipinas kay ganda"? I know what I’d choose.
Look, I don’t know Lucio Tan. I don’t know what he’s like. But I do know what he did and what he did is all around us. From beer to banks to airlines to cigarettes, this is a man who knows business. And when you have guys like that who can actually get things done, I would think we should instinctively help them or their endeavors. Apparently, we’d rather do the reverse.
Because at a time when a lot of people are predicting uncertainties for the global economy this year, with the concomitant unpredictability of our own economy, why we should be making it harder for the Philippines’ very own PAL (as well as Cebu Pacific and Zest Air), at this particular time, is beyond me. We shouldn’t be making it harder for them, we should be helping them.
Considerably, our tourism industry needs more than additional plane seats to get going: they need better airports and an efficient infrastructure. Both of which, we don’t really have. Such also needs careful and coordinated planning. None of which is being done effectively. We have a Category 2 rating from the International Civil Aviation Organization due to deficient aviation infrastructure and safety standards. All these are beyond the purview of local airlines. But they do fall squarely within the responsibility of the government. Traffic, peace and order, pollution, sanitation? These are not the responsibility of the local airlines. These are government’s. So why put the burden squarely on the shoulders of our airlines?
Besides, what does "pocket open skies" even mean? How different is that from a mere open skies? I suspect it’s one of those terms some policymaker cooked up to obfuscate matters, like "calibrated trade liberalization." They have no practical meaning. It’s either you open or you don’t. If one is going to be selective about it, then there better be good reasons for the selection. And if the selection turns out to be opening almost all air travel anyway, then that is not "pocket." That is open skies. Period.
Some people argue from the perspective of the expected benefits of "liberalization." Let’s not be simpletons about this. This column obviously is partial to liberalization. But there’s a difference between being partial and blind. As in all matters, we need to be smart about this. Look, US skies won’t open unilaterally. And it’s done very deliberately. Liberalization entails competition, which entails we step our game up, which means all of us, which means the government and private sector. If one of those factors or players is missing from the equation, then we just made people lose their jobs for no purpose. We can’t just open our skies up and hope that a "trickle down" effect ensues. We simply cannot gamble with people’s livelihoods.
Government assistance is particularly crucial for the airline industry. I don’t know of any successful foreign airline that made it without government support. Aside from airports, infrastructure, security, and safety, government help, particularly in economic crunches, is significant. The ability of the government to open up markets for our airlines is vastly important as well. To open up our skies without getting reciprocity from the other countries is to place an undue handicap for our companies. It’s not only unintelligent, it’s unconstitutional.
Besides, the nature of the market doesn’t seem to support the idea of open skies. People sometimes rail against our airlines for being monopolies, but we may have to accept that a "natural monopoly" may be necessary as far as airlines in the Philippines is concerned. That’s because the market could perhaps support only two or three players. That being the case, I’d rather have those two or three to be Filipinos. It then follows that we support such Filipino airlines as to be able to compete against those better-funded and larger foreign airlines.
The importance of Filipino carriers goes beyond economics. There’s also "transport security" (similar to "food security" arguments), particularly to ensure the safe return of our numerous OFWs during international emergencies. Finally, there’s also national pride. I rather like the idea of having Filipino-owned planes flying around. I like the thought that we have a flag carrier. And, despite (or because of) our difficulties, I’d really like to still be able to lift my head up and see the Philippines soar.
Friday, December 10, 2010
Myths behind blue skies
Philippine Daily Inquirer
December 10, 2010
The turmoil in Philippine Airlines aside, it really is time to ramp up the implementation of the so-called ?open skies? policy for air transportation. It has been over 15 years since the landmark Executive Order 219, issued by President Fidel Ramos in January 1995, called for the liberalization of the air travel industry in the Philippines.
As far as domestic travel is concerned, liberalization was an unqualified success. The most obvious proof is the rise of Cebu Pacific, which now has fair claim to being the country?s leading airline. When it comes to the international sector, however, the record has not been very encouraging.
President Benigno Aquino III, following through on a long-held commitment, has said he wants to implement EO 219 fully. At the private-public partnerships ?summit? last month, he vowed to take the necessary next steps to implement the EO?s provisions on international aviation. ?Our national development requires promoting an open and competitive international aviation sector that enables Philippine and foreign air carriers to expand their operations, maintain a strong Philippine-based aviation industry, and ensure international connectivity in order to allow Philippine and foreign air carriers to plan and make long-term investments in the Philippine market.?
Open skies will have its biggest impact on Philippine tourism; it is seen as one crucial stage in the development of a world-beating tourism industry. Even the Aquino administration, however, despite its high approval ratings, will face great resistance in implementing the policy. It will be up against three persistent, pernicious myths.
It is obvious that the open skies policy, even in the ?pocket? version that the Aquino administration wants to try first, cannot work by itself. No advocate has ever said that it is the silver bullet that will slay the vampire of lower-than-deserved tourist arrivals. However, quite a number of critics of open skies argue as though the policy were a stand-alone initiative. This, then, is the first myth: open skies will be characterized as putting the cart before the horse. But in fact efforts are under way to decongest airport terminals, build new roads, create more support systems, train more tourist workers and (as we have seen in the botched Pilipinas Kay Ganda campaign) create a new, more attractive marketing drive.
The second myth is present market demand. It is an argument offered by Philippine Airlines management, and has been echoed by an official of the Civil Aeronautics Board. Foreign airlines have seat entitlements they do not use, said Porvenir Porciuncula, CAB deputy executive director. ?It is really a function of the market. Open skies will not guarantee foreign airline flights to the country,? he said. This is the kind of thinking that, under its old management, allowed PLDT to monopolize the telephone industry for many years. It is a bureaucrat?s view, not an entrepreneur?s perspective?and would have been incapable of imagining the growth in the number of phones in the country after deregulation.
Opponents of open skies are insisting on reciprocity, wrapping this particular argument with the mantle of nationalism. Of course reciprocity is fundamental to any open-skies agreements but, we hasten to add, reciprocity must be understood in a broader sense, the better to serve the public interest. This, then, is the third myth: The idea that open skies must mean strict equality, seat for seat, route for route, airport for airport. But, just to give one example, wouldn?t we want more tourists from Singapore? How many points of entry can that tiny but rich island-state offer us? EO 219 defined the criteria for the exchange of travel rights and routes right: It should be a combination of reciprocity, defined as ?the exchange of rights, freedoms, and opportunities of equal or equivalent value,? and the national interest, including ?value for the Philippines in promoting international trade, foreign investments and tourism.?
We should not leave the definition of national interest to airlines or bureaucrats alone.
December 10, 2010
The turmoil in Philippine Airlines aside, it really is time to ramp up the implementation of the so-called ?open skies? policy for air transportation. It has been over 15 years since the landmark Executive Order 219, issued by President Fidel Ramos in January 1995, called for the liberalization of the air travel industry in the Philippines.
As far as domestic travel is concerned, liberalization was an unqualified success. The most obvious proof is the rise of Cebu Pacific, which now has fair claim to being the country?s leading airline. When it comes to the international sector, however, the record has not been very encouraging.
President Benigno Aquino III, following through on a long-held commitment, has said he wants to implement EO 219 fully. At the private-public partnerships ?summit? last month, he vowed to take the necessary next steps to implement the EO?s provisions on international aviation. ?Our national development requires promoting an open and competitive international aviation sector that enables Philippine and foreign air carriers to expand their operations, maintain a strong Philippine-based aviation industry, and ensure international connectivity in order to allow Philippine and foreign air carriers to plan and make long-term investments in the Philippine market.?
Open skies will have its biggest impact on Philippine tourism; it is seen as one crucial stage in the development of a world-beating tourism industry. Even the Aquino administration, however, despite its high approval ratings, will face great resistance in implementing the policy. It will be up against three persistent, pernicious myths.
It is obvious that the open skies policy, even in the ?pocket? version that the Aquino administration wants to try first, cannot work by itself. No advocate has ever said that it is the silver bullet that will slay the vampire of lower-than-deserved tourist arrivals. However, quite a number of critics of open skies argue as though the policy were a stand-alone initiative. This, then, is the first myth: open skies will be characterized as putting the cart before the horse. But in fact efforts are under way to decongest airport terminals, build new roads, create more support systems, train more tourist workers and (as we have seen in the botched Pilipinas Kay Ganda campaign) create a new, more attractive marketing drive.
The second myth is present market demand. It is an argument offered by Philippine Airlines management, and has been echoed by an official of the Civil Aeronautics Board. Foreign airlines have seat entitlements they do not use, said Porvenir Porciuncula, CAB deputy executive director. ?It is really a function of the market. Open skies will not guarantee foreign airline flights to the country,? he said. This is the kind of thinking that, under its old management, allowed PLDT to monopolize the telephone industry for many years. It is a bureaucrat?s view, not an entrepreneur?s perspective?and would have been incapable of imagining the growth in the number of phones in the country after deregulation.
Opponents of open skies are insisting on reciprocity, wrapping this particular argument with the mantle of nationalism. Of course reciprocity is fundamental to any open-skies agreements but, we hasten to add, reciprocity must be understood in a broader sense, the better to serve the public interest. This, then, is the third myth: The idea that open skies must mean strict equality, seat for seat, route for route, airport for airport. But, just to give one example, wouldn?t we want more tourists from Singapore? How many points of entry can that tiny but rich island-state offer us? EO 219 defined the criteria for the exchange of travel rights and routes right: It should be a combination of reciprocity, defined as ?the exchange of rights, freedoms, and opportunities of equal or equivalent value,? and the national interest, including ?value for the Philippines in promoting international trade, foreign investments and tourism.?
We should not leave the definition of national interest to airlines or bureaucrats alone.
Wednesday, December 8, 2010
The ethics of layoffs
Tuesday, 07 December 2010 00:00
BY BENITO L. TEEHANKEE
Philippine Airlines (PAL) has announced its plan to lay off 2,600 ground employees as part of its cost-cutting program. PAL president, Jaime Bautista, has argued for the necessity of this step to ensure the survival of the company.
The Department of Labor and Employment (DOLE) has ruled the move legal as management’s prerogative to do what it takes to keep the company afloat. The PAL Employees’ Association (PALEA) has questioned the move, labelling it as mainly profit motivated a preparation for massive contractualization in the airline.
Whichever side one takes on the issue, the PAL-PALEA conflict has called attention to one of the most painful events in the life of a company—restructuring. Ensuring that the company stays viable and competitive is clearly a legitimate business goal. What needs closer scrutiny, especially from the ethical standpoint, is whether laying off thousands of workers is a legitimate means for the airline to achieve this goal at this time.
Anayzing the ethics of layoffs begins with applicable core principles. The Constitution provides two such principles. First is the principle that “the use of property bears a social function, and all economic agents shall contribute to the common good.” Second is “the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes.”
The common good principle reminds capital owners that their decisions must properly respect the dignity of those affected as well as their need for human development. Corporate decisions involving livelihood have the greatest impact on the common good since these affect the employees’ survival and personal growth, while indirectly impacting these employees’ families and other dependents.
The shared responsibility principle reminds both capital owners and employees that they are essentially “partners” in ensuring the health of the business. Partners are responsible for each other and commit to support each other. Business challenges should be met through collaborative and creative approaches which manage costs, on the one hand, and enhance business value, on the other. Thus, the sacrifices that come with turning around a business situation, as well as the fruits of its successful outcome, must be shared by the partners.
It is important to ask whether the PAL management (as influenced by capital owners) and the employee union observed these two principles in their approach to the business challenges facing the airline. Both sides may use legal arguments to support their respective positions but these do not suffice to make their behaviors ethical. More importantly, a legalistic approach does not build the high-trust situation crucial for a creative business turnaround.
Perhaps PAL and PALEA can learn from the experience of Universal Motors Corporation (manufacturer and distributor of Nissan vehicles) some years ago. Faced with a slump in demand, the company had the option to lay off employees. Elizabeth Lee, then chief operating officer, found the resulting loss of jobs and negative impact on families morally unacceptable. Instead, she rallied the management team and employees to create the “UrVan, UrBusiness” program. The program provided buyers with easy-payment terms and entrepreneurial ideas for using Nissan vehicles. The program has saved jobs, increased the company’s revenues and market share, and improved the lives of thousands of families.
A business downturn is a challenge to the creative partnership between capital and labor. The company’s problem is not merely managing its costs but inspiring the shared vision to pull everyone together for the good of the company and all those who depend on it. Does PAL management and PALEA have what it takes to turn a “We vs. Them” situation into an “Us” situation? I certainly hope so—for the common good.
Dr. Ben Teehankee is the Aquino associate professor for business and governance at De La Salle University. He may be emailed at teehankeeb@yahoo.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it . The views expressed above are the author’s and do not necessarily reflect the official position of De La Salle University and its faculty and administrators.
BY BENITO L. TEEHANKEE
Philippine Airlines (PAL) has announced its plan to lay off 2,600 ground employees as part of its cost-cutting program. PAL president, Jaime Bautista, has argued for the necessity of this step to ensure the survival of the company.
The Department of Labor and Employment (DOLE) has ruled the move legal as management’s prerogative to do what it takes to keep the company afloat. The PAL Employees’ Association (PALEA) has questioned the move, labelling it as mainly profit motivated a preparation for massive contractualization in the airline.
Whichever side one takes on the issue, the PAL-PALEA conflict has called attention to one of the most painful events in the life of a company—restructuring. Ensuring that the company stays viable and competitive is clearly a legitimate business goal. What needs closer scrutiny, especially from the ethical standpoint, is whether laying off thousands of workers is a legitimate means for the airline to achieve this goal at this time.
Anayzing the ethics of layoffs begins with applicable core principles. The Constitution provides two such principles. First is the principle that “the use of property bears a social function, and all economic agents shall contribute to the common good.” Second is “the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes.”
The common good principle reminds capital owners that their decisions must properly respect the dignity of those affected as well as their need for human development. Corporate decisions involving livelihood have the greatest impact on the common good since these affect the employees’ survival and personal growth, while indirectly impacting these employees’ families and other dependents.
The shared responsibility principle reminds both capital owners and employees that they are essentially “partners” in ensuring the health of the business. Partners are responsible for each other and commit to support each other. Business challenges should be met through collaborative and creative approaches which manage costs, on the one hand, and enhance business value, on the other. Thus, the sacrifices that come with turning around a business situation, as well as the fruits of its successful outcome, must be shared by the partners.
It is important to ask whether the PAL management (as influenced by capital owners) and the employee union observed these two principles in their approach to the business challenges facing the airline. Both sides may use legal arguments to support their respective positions but these do not suffice to make their behaviors ethical. More importantly, a legalistic approach does not build the high-trust situation crucial for a creative business turnaround.
Perhaps PAL and PALEA can learn from the experience of Universal Motors Corporation (manufacturer and distributor of Nissan vehicles) some years ago. Faced with a slump in demand, the company had the option to lay off employees. Elizabeth Lee, then chief operating officer, found the resulting loss of jobs and negative impact on families morally unacceptable. Instead, she rallied the management team and employees to create the “UrVan, UrBusiness” program. The program provided buyers with easy-payment terms and entrepreneurial ideas for using Nissan vehicles. The program has saved jobs, increased the company’s revenues and market share, and improved the lives of thousands of families.
A business downturn is a challenge to the creative partnership between capital and labor. The company’s problem is not merely managing its costs but inspiring the shared vision to pull everyone together for the good of the company and all those who depend on it. Does PAL management and PALEA have what it takes to turn a “We vs. Them” situation into an “Us” situation? I certainly hope so—for the common good.
Dr. Ben Teehankee is the Aquino associate professor for business and governance at De La Salle University. He may be emailed at teehankeeb@yahoo.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it . The views expressed above are the author’s and do not necessarily reflect the official position of De La Salle University and its faculty and administrators.
Tuesday, December 7, 2010
Red faced
Philippine Daily Inquirer
Biz Buzz: Christmas-party rivalry
December 6, 2010
IT LOOKS like militant labor groups have failed to convince union members to reject early retirement packages from Fortune Tobacco Corp. and Philippine Airlines.
As of last weekend, 99 percent of Fortune Tobacco workers have already accepted retirement packages, which the firm describes as “generous,” leaving leaders of the labor union and their left-side allies not a bit red-faced (coming off a “unity march” they held along Ayala Avenue just two weeks ago).
According to the grapevine, more than 1,200 workers of Fortune have signed up to avail themselves of retirement packages equivalent to 2.5 months of pay for every year of service.
Whatever resistance they had was also broken down by a P60,000 “early bird” bonus for those who immediately signed up. In fact, more than 90 percent of union members signed up on the first two days after the program was officially announced.
The same scene is playing out in Philippine Airlines. Even as union leaders are moving heaven and earth to reverse the labor department’s decision authorizing the rationalization program, close to a thousand union members have already volunteered to avail themselves of PAL’s early-retirement package.
This presents a huge dilemma for PAL union leaders who were rebuffed by Malacañang last Friday for announcing their plan to hold a strike vote while their case is pending review by President P-Noy.
Apparently, there are limits to the effectiveness of both unions’ battle cry. It’s Christmas, after all.—Daxim L. Lucas
Biz Buzz: Christmas-party rivalry
December 6, 2010
IT LOOKS like militant labor groups have failed to convince union members to reject early retirement packages from Fortune Tobacco Corp. and Philippine Airlines.
As of last weekend, 99 percent of Fortune Tobacco workers have already accepted retirement packages, which the firm describes as “generous,” leaving leaders of the labor union and their left-side allies not a bit red-faced (coming off a “unity march” they held along Ayala Avenue just two weeks ago).
According to the grapevine, more than 1,200 workers of Fortune have signed up to avail themselves of retirement packages equivalent to 2.5 months of pay for every year of service.
Whatever resistance they had was also broken down by a P60,000 “early bird” bonus for those who immediately signed up. In fact, more than 90 percent of union members signed up on the first two days after the program was officially announced.
The same scene is playing out in Philippine Airlines. Even as union leaders are moving heaven and earth to reverse the labor department’s decision authorizing the rationalization program, close to a thousand union members have already volunteered to avail themselves of PAL’s early-retirement package.
This presents a huge dilemma for PAL union leaders who were rebuffed by Malacañang last Friday for announcing their plan to hold a strike vote while their case is pending review by President P-Noy.
Apparently, there are limits to the effectiveness of both unions’ battle cry. It’s Christmas, after all.—Daxim L. Lucas
Saturday, November 20, 2010
Retirement age
By Raul J. Palabrica
Philippine Daily Inquirer
First Posted 22:32:00 08/12/2010
AGE IS JUST a number, so goes an advertisement for a food supplement directed at senior citizens.
Try telling that to the flight attendants of Philippine Airlines who, under their collective bargaining agreement, have to retire when they reach 40. And be ready to get a severe tongue lashing.
The airline industry has varying retirement policies. Most American and European airlines send their pilots packing between ages 60 and 65. For PAL, it’s 60.
The cabin attendants of US airlines are better situated. Strict anti-age discrimination laws allow them to stay on as long as they are physically fit.
Not so for some Asian airlines. Age and physical appearance determine the stewardesses’ continued employment.
The female flight attendants of Thai Airways who are aged 45 and above are encouraged to sign a “mutual separation plan” that would give them generous separation benefits in exchange for calling it quits.
Singapore Airlines’ famous “Singapore girls” can wear their figure-hugging uniforms only up to age 35. By entering into five-year contracts, with one renewal only, management is able to skirt discrimination suits that may be filed by young retirees.
Mandatory
Retirement is a sensitive issue in both private and government sectors, especially in the executive or managerial levels.
Except for judicial and constitutional offices, the compulsory retirement age for government employees is 65. Barring any disciplinary action or requirement for special qualifications, a civil service employee can reasonably expect to be promoted within the ranks through attrition as those above him reach retirement age.
Retirement is a double-edged sword. A high retirement age could adversely affect the morale of talented staff members who aspire to climb the corporate ladder (and enjoy its accompanying perks) as soon as possible.
When vacancies in the executive offices are hard to come by due to the presence of “overstaying” officers, ambitious employees with marketable skills will not hesitate to seek their fortunes elsewhere.
But setting a low retirement age has its downside too. Expertise gained through long years of service is not easy to replicate. There is no assurance that the prospective successors, even if they hold prestigious academic degrees, can effectively fill up the void left by the retirees.
Finding a balance between these two concerns is a test of managerial leadership.
Planning
Adherence to age-specific rules on retirement is not a problem for companies with internal training programs that ensure the availability of staff who can take over in case of retirements or resignations.
This “estate planning” process begins the moment new employees get on board. Those who show leadership potentials are put on the fast track and given proper exposure and training to prepare them for bigger responsibilities.
They can quickly step into the shoes of the retirees. The adjustment period, if any, is often minimal.
The partners of one of the country’s leading auditing firms are obliged to retire upon reaching age 54 or 55, or roughly the equivalent of 20 years service, to allow the younger partners to assume leadership positions while at the peak of their professional productivity.
The presumption is, by that time, the retiree has saved enough money to be able to start a new business, or live in retirement comfort, or received a lucrative offer to work in a client company.
When the road to the executive floor is not littered with overstaying officers, those who occupy the lower floors are inspired to work harder as they await their turn to move up.
Benefits
The retirement age in the private sector is determined by the collective bargaining agreement between the employees and the company, or other applicable employment contract.
If the job is stressful or physically demanding and extended stay at work could be detrimental to the employee’s health, union and management can agree on a lower retirement age.
In PAL’s case, the argument has been raised that the strain caused by irregular working, sleeping and eating hours, including the adverse effects of atmospheric cabin pressure, justify the flight attendants’ early retirement.
For companies with no CBA, the retirement age is a matter of agreement between the individual employee and the employer.
Although the common practice is for employees to stay on until they reach 65, unless earlier dismissed for justifiable cause, there are employees who opt for early retirement so they can enjoy their retirement pay while still relatively young.
This holds true for jobs that require specialized intellectual or creative talent, e.g., software development and entertainment production, that command hefty compensation benefits.
As in all high paying jobs, the burnt-out feeling sets in much earlier when the brain and the nerves are placed under constant pressure in an effort to justify the fat paycheck.
If there is neither CBA nor employment contract, the Labor Code provides that an employee who reaches age 60 or more, but not more than 65, and has worked for at least five years, is entitled to a retirement pay equivalent to 15 days pay for every year of service.
Philippine Daily Inquirer
First Posted 22:32:00 08/12/2010
AGE IS JUST a number, so goes an advertisement for a food supplement directed at senior citizens.
Try telling that to the flight attendants of Philippine Airlines who, under their collective bargaining agreement, have to retire when they reach 40. And be ready to get a severe tongue lashing.
The airline industry has varying retirement policies. Most American and European airlines send their pilots packing between ages 60 and 65. For PAL, it’s 60.
The cabin attendants of US airlines are better situated. Strict anti-age discrimination laws allow them to stay on as long as they are physically fit.
Not so for some Asian airlines. Age and physical appearance determine the stewardesses’ continued employment.
The female flight attendants of Thai Airways who are aged 45 and above are encouraged to sign a “mutual separation plan” that would give them generous separation benefits in exchange for calling it quits.
Singapore Airlines’ famous “Singapore girls” can wear their figure-hugging uniforms only up to age 35. By entering into five-year contracts, with one renewal only, management is able to skirt discrimination suits that may be filed by young retirees.
Mandatory
Retirement is a sensitive issue in both private and government sectors, especially in the executive or managerial levels.
Except for judicial and constitutional offices, the compulsory retirement age for government employees is 65. Barring any disciplinary action or requirement for special qualifications, a civil service employee can reasonably expect to be promoted within the ranks through attrition as those above him reach retirement age.
Retirement is a double-edged sword. A high retirement age could adversely affect the morale of talented staff members who aspire to climb the corporate ladder (and enjoy its accompanying perks) as soon as possible.
When vacancies in the executive offices are hard to come by due to the presence of “overstaying” officers, ambitious employees with marketable skills will not hesitate to seek their fortunes elsewhere.
But setting a low retirement age has its downside too. Expertise gained through long years of service is not easy to replicate. There is no assurance that the prospective successors, even if they hold prestigious academic degrees, can effectively fill up the void left by the retirees.
Finding a balance between these two concerns is a test of managerial leadership.
Planning
Adherence to age-specific rules on retirement is not a problem for companies with internal training programs that ensure the availability of staff who can take over in case of retirements or resignations.
This “estate planning” process begins the moment new employees get on board. Those who show leadership potentials are put on the fast track and given proper exposure and training to prepare them for bigger responsibilities.
They can quickly step into the shoes of the retirees. The adjustment period, if any, is often minimal.
The partners of one of the country’s leading auditing firms are obliged to retire upon reaching age 54 or 55, or roughly the equivalent of 20 years service, to allow the younger partners to assume leadership positions while at the peak of their professional productivity.
The presumption is, by that time, the retiree has saved enough money to be able to start a new business, or live in retirement comfort, or received a lucrative offer to work in a client company.
When the road to the executive floor is not littered with overstaying officers, those who occupy the lower floors are inspired to work harder as they await their turn to move up.
Benefits
The retirement age in the private sector is determined by the collective bargaining agreement between the employees and the company, or other applicable employment contract.
If the job is stressful or physically demanding and extended stay at work could be detrimental to the employee’s health, union and management can agree on a lower retirement age.
In PAL’s case, the argument has been raised that the strain caused by irregular working, sleeping and eating hours, including the adverse effects of atmospheric cabin pressure, justify the flight attendants’ early retirement.
For companies with no CBA, the retirement age is a matter of agreement between the individual employee and the employer.
Although the common practice is for employees to stay on until they reach 65, unless earlier dismissed for justifiable cause, there are employees who opt for early retirement so they can enjoy their retirement pay while still relatively young.
This holds true for jobs that require specialized intellectual or creative talent, e.g., software development and entertainment production, that command hefty compensation benefits.
As in all high paying jobs, the burnt-out feeling sets in much earlier when the brain and the nerves are placed under constant pressure in an effort to justify the fat paycheck.
If there is neither CBA nor employment contract, the Labor Code provides that an employee who reaches age 60 or more, but not more than 65, and has worked for at least five years, is entitled to a retirement pay equivalent to 15 days pay for every year of service.
Think Bits
Protecting labor
By Ricky Poca
Cebu Daily News First Posted 13:13:00 08/08/2010
There is much talk about the proposed 12-year basic education program to comply with the country’s commitment with the Bologna Accord and the Washington Agreement, which require those who would like to work in Europe and in the United States to have at least the same number of years of basic education as Europeans and Americans.
Education Secretary Armin Luistro says his department will implement the 12-year program with emphasis on vocational and technical education, so that after high school, the graduates are already qualified, skilled and competent to work. I think that is the proper thing to do because today our curricula have plenty of subjects that aren’t useful for most employment opportunities.
Is the additional two years of basic education good for the country? Some question its propriety, because it would be an added burden to families, but there is no other way but to comply with the Bologna and Washington Agreements. If we don’t we would lose our competitiveness abroad and many Filipinos who want to work abroad will find no proper employment.
So, what happens after the 12-year basic education? Will the graduates still take up four years of college? I think what is going to happen is that graduates will just take up two years of technical or vocational education, and those who qualify can take up three or four years of specialized college courses.
This is a good proposal. I’ve been teaching college classes for years and I often have students who are still 16 years old and not mature enough to face the rigors of higher learning, so they fail to choose the courses that fit them best. Others are simply not academically prepared.
In my experience as the new chairman of the Department of Political Science at University of San Carlos, when I interview applicants for the program, asking them what tracks in political science they want to pursue, many usually don’t know and would usually settle for the most common, which is law and public policy, ignoring that there are other three equally relevant tracks.
The lack of maturity of many first year and second year students is a concern for us teachers who see that they may not be prepared for college life. I am encouraging more debate on this proposed new highway of education, for us to come up with better-informed choices.
* * *
I think the problem confronting Philippine Airlines has brought to for the issue of contractualization in the private sector. Workers are hired on the basis of their contracts, which bar them from becoming regular employees.
In this scheme, recruitment or placement agencies provide workers to companies, which hire the workers for just five months, not long enough for the six-month period to let them qualify for regularization.
This scheme has been abused by many private companies that want to shortchange their laborers who don’t get entitled to the benefits regular workers enjoy.
Even those doing work directly related to the core business of a company are hired under this scheme. What is worse is that the legislative department and judicial branches of government have in a way reinforced the scheme of contractualization.
A proposal to enact a new Labor Code that would regulate or ban contractualization had rough sailing in Congress, which was expected because many senators and district representatives are business owners or consultants of big firms. So, they protect their own kind.
In the judiciary, I do not know if the members of the bench are blind to the lamentable conditions of workers.
Even established firms are adopting the scheme, although I think some of them do so primarily to check on new employees’ workplace behavior and attitude.
But this can be corrected with the many tools available for both labor and management to pursue. There are ample provisions in the law to protect management from abusive employees, but management must be vigilant in documenting incidents involving misbehaving employees. One must remember that in Labor Law, in case of doubt everything must be resolved in favor of labor.
In many labor cases, management finds itself at the losing end, based on statistics of the National Labor Relations Commission and the Department of Labor.
I observed that management had this penchant for dismissing or terminating employees without due process, confident that they could do anything because they own the company. It’s a whole new story today. That is why management resorts to the contractualization scheme; it’s more convenient to forego dealing with problems that go with having regular employees.
It is hoped that government comes up with a law that would protect labor from the abuses brought about by contractualization, especially because the Constitution recognizes labor as the primary social and economic force in our country.
By Ricky Poca
Cebu Daily News First Posted 13:13:00 08/08/2010
There is much talk about the proposed 12-year basic education program to comply with the country’s commitment with the Bologna Accord and the Washington Agreement, which require those who would like to work in Europe and in the United States to have at least the same number of years of basic education as Europeans and Americans.
Education Secretary Armin Luistro says his department will implement the 12-year program with emphasis on vocational and technical education, so that after high school, the graduates are already qualified, skilled and competent to work. I think that is the proper thing to do because today our curricula have plenty of subjects that aren’t useful for most employment opportunities.
Is the additional two years of basic education good for the country? Some question its propriety, because it would be an added burden to families, but there is no other way but to comply with the Bologna and Washington Agreements. If we don’t we would lose our competitiveness abroad and many Filipinos who want to work abroad will find no proper employment.
So, what happens after the 12-year basic education? Will the graduates still take up four years of college? I think what is going to happen is that graduates will just take up two years of technical or vocational education, and those who qualify can take up three or four years of specialized college courses.
This is a good proposal. I’ve been teaching college classes for years and I often have students who are still 16 years old and not mature enough to face the rigors of higher learning, so they fail to choose the courses that fit them best. Others are simply not academically prepared.
In my experience as the new chairman of the Department of Political Science at University of San Carlos, when I interview applicants for the program, asking them what tracks in political science they want to pursue, many usually don’t know and would usually settle for the most common, which is law and public policy, ignoring that there are other three equally relevant tracks.
The lack of maturity of many first year and second year students is a concern for us teachers who see that they may not be prepared for college life. I am encouraging more debate on this proposed new highway of education, for us to come up with better-informed choices.
* * *
I think the problem confronting Philippine Airlines has brought to for the issue of contractualization in the private sector. Workers are hired on the basis of their contracts, which bar them from becoming regular employees.
In this scheme, recruitment or placement agencies provide workers to companies, which hire the workers for just five months, not long enough for the six-month period to let them qualify for regularization.
This scheme has been abused by many private companies that want to shortchange their laborers who don’t get entitled to the benefits regular workers enjoy.
Even those doing work directly related to the core business of a company are hired under this scheme. What is worse is that the legislative department and judicial branches of government have in a way reinforced the scheme of contractualization.
A proposal to enact a new Labor Code that would regulate or ban contractualization had rough sailing in Congress, which was expected because many senators and district representatives are business owners or consultants of big firms. So, they protect their own kind.
In the judiciary, I do not know if the members of the bench are blind to the lamentable conditions of workers.
Even established firms are adopting the scheme, although I think some of them do so primarily to check on new employees’ workplace behavior and attitude.
But this can be corrected with the many tools available for both labor and management to pursue. There are ample provisions in the law to protect management from abusive employees, but management must be vigilant in documenting incidents involving misbehaving employees. One must remember that in Labor Law, in case of doubt everything must be resolved in favor of labor.
In many labor cases, management finds itself at the losing end, based on statistics of the National Labor Relations Commission and the Department of Labor.
I observed that management had this penchant for dismissing or terminating employees without due process, confident that they could do anything because they own the company. It’s a whole new story today. That is why management resorts to the contractualization scheme; it’s more convenient to forego dealing with problems that go with having regular employees.
It is hoped that government comes up with a law that would protect labor from the abuses brought about by contractualization, especially because the Constitution recognizes labor as the primary social and economic force in our country.
Friday, November 19, 2010
No-fly zone
OPINION COLUMN
Editorial
No-fly zone
Philippine Daily Inquirer
First Posted 21:55:00 08/03/2010
IT MAY be, as some of the employees of Philippine Airlines have started to suggest, that the untimely resignation of about two dozen pilots is a crisis that is the company’s own making. There will be space to discuss that, but first things first: Both the pilots and PAL management must recognize that the dispute affects not only the two parties themselves but the general public. The crippling of PAL, in other words, is a matter of national interest.
That is why former Sen. Ernesto Herrera’s press release circulated Tuesday, on behalf of the Trade Union Congress of the Philippines, strikes us as both misleading and unhelpful. PAL cannot force its pilots to fly or to stay, Herrera said. “Professionals are entitled to go wherever their skills will get the greatest reward. If employers or companies can invoke their need to stay profitable in order to justify indiscriminate job cuts, then surely professionals and other staff are also entitled to abandon their posts in favor of greener pasture elsewhere.”
No one disagrees with the basic principle that the pilots—13 captains and 12 first officers flying the airline’s workhorse planes—can leave for higher pay or better conditions abroad. Not even PAL management. “PAL doesn’t want to get in the way of its pilots’ dream of landing better paying jobs abroad, but they have contractual obligations with the company and a moral responsibility to thousands of passengers,” a management statement read.
The immediate issue is precisely those contractual obligations. Because commercial airplane pilots possess what are called “mission-critical skills,” they cannot simply resign. Government regulations require six months’ notice—surely a reasonable requirement, designed to ensure the traveling public’s safety by providing the airline enough time to train replacements. The pilots who left the company immediately after tendering their letters of resignation thus have some explaining to do—to the public at large.
But the long-term issue is squarely in PAL management’s court. And it is something that airline executives cannot simply explain away by saying that other airlines offer “two to three times” a PAL pilot’s salary. A higher salary, after all, is not always the main deciding factor in choosing a new job; work conditions come into play, including employee morale and the reasonable expectation of success in one’s chosen career path. The rumblings from PAL’s rank and file, therefore, form an ominous soundtrack: rumors about unsatisfactory secondment to affiliate companies; employee complaints about undermanned flights, resulting in overworked flight attendants; excessive downsizing. Even the improbably coincidental immediate resignation of the pilots is already a statement in itself.
If these issues remain unresolved, what is to prevent another mass resignation of pilots, or airline mechanics, or flight attendants, in the future?
The international repercussions, it bears belaboring, go beyond the economic. For instance, the Agence France Presse story on the resignations that the popular Yahoo News service carried used the following headline: “Philippine Airlines cancels flights as pilots quit.” Strictly speaking, this was an accurate description. But a reader abroad, who may not have the time to read the story and thus find out that the cancellations affected only a handful of flights and two dozen pilots, may think the entire airline has suspended all operations. In other words, the headlines alone can damage PAL’s reputation, and with it the country’s image, too.
The Associated Press decided to use a humorous lead in one of its stories on the PAL crisis. “Good morning, passengers, and welcome aboard. We’re expecting clear skies today, but we’re out of pilots.”
Funny, ha-ha. But in fact the joke’s on the country, which is part of the name of Asia’s oldest airline. Like we said, the impact of news like this, while it will be felt most sharply in business and tourism, goes beyond the economic.
Editorial
No-fly zone
Philippine Daily Inquirer
First Posted 21:55:00 08/03/2010
IT MAY be, as some of the employees of Philippine Airlines have started to suggest, that the untimely resignation of about two dozen pilots is a crisis that is the company’s own making. There will be space to discuss that, but first things first: Both the pilots and PAL management must recognize that the dispute affects not only the two parties themselves but the general public. The crippling of PAL, in other words, is a matter of national interest.
That is why former Sen. Ernesto Herrera’s press release circulated Tuesday, on behalf of the Trade Union Congress of the Philippines, strikes us as both misleading and unhelpful. PAL cannot force its pilots to fly or to stay, Herrera said. “Professionals are entitled to go wherever their skills will get the greatest reward. If employers or companies can invoke their need to stay profitable in order to justify indiscriminate job cuts, then surely professionals and other staff are also entitled to abandon their posts in favor of greener pasture elsewhere.”
No one disagrees with the basic principle that the pilots—13 captains and 12 first officers flying the airline’s workhorse planes—can leave for higher pay or better conditions abroad. Not even PAL management. “PAL doesn’t want to get in the way of its pilots’ dream of landing better paying jobs abroad, but they have contractual obligations with the company and a moral responsibility to thousands of passengers,” a management statement read.
The immediate issue is precisely those contractual obligations. Because commercial airplane pilots possess what are called “mission-critical skills,” they cannot simply resign. Government regulations require six months’ notice—surely a reasonable requirement, designed to ensure the traveling public’s safety by providing the airline enough time to train replacements. The pilots who left the company immediately after tendering their letters of resignation thus have some explaining to do—to the public at large.
But the long-term issue is squarely in PAL management’s court. And it is something that airline executives cannot simply explain away by saying that other airlines offer “two to three times” a PAL pilot’s salary. A higher salary, after all, is not always the main deciding factor in choosing a new job; work conditions come into play, including employee morale and the reasonable expectation of success in one’s chosen career path. The rumblings from PAL’s rank and file, therefore, form an ominous soundtrack: rumors about unsatisfactory secondment to affiliate companies; employee complaints about undermanned flights, resulting in overworked flight attendants; excessive downsizing. Even the improbably coincidental immediate resignation of the pilots is already a statement in itself.
If these issues remain unresolved, what is to prevent another mass resignation of pilots, or airline mechanics, or flight attendants, in the future?
The international repercussions, it bears belaboring, go beyond the economic. For instance, the Agence France Presse story on the resignations that the popular Yahoo News service carried used the following headline: “Philippine Airlines cancels flights as pilots quit.” Strictly speaking, this was an accurate description. But a reader abroad, who may not have the time to read the story and thus find out that the cancellations affected only a handful of flights and two dozen pilots, may think the entire airline has suspended all operations. In other words, the headlines alone can damage PAL’s reputation, and with it the country’s image, too.
The Associated Press decided to use a humorous lead in one of its stories on the PAL crisis. “Good morning, passengers, and welcome aboard. We’re expecting clear skies today, but we’re out of pilots.”
Funny, ha-ha. But in fact the joke’s on the country, which is part of the name of Asia’s oldest airline. Like we said, the impact of news like this, while it will be felt most sharply in business and tourism, goes beyond the economic.
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