ren0312
Topic Author
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What should Philippine Airlines do to make money?

Tue Mar 26, 2019 1:18 am

What should Philippine Airlines do to make money, if you look at its financial performance for the past 10 years, it has been losing money almost every single year. Now some years ago San Miguel Corporation, who used to have a major share, had the idea of turning PAL into more of a budget carrier, with only a few full service routes to lower its cost base, does this make sense, vs. PAL's efforts to continue to be a full service carrier in a penny pinching non premium market?
 
ewt340
Posts: 820
Joined: Tue Jul 10, 2012 7:22 pm

Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 2:10 am

Load Factor was bad for PAL. It's average around 70% especially on long-haul routes.
The only way to solved them is to used smaller aircraft. I don't see B777-300ER in the fleet much longer. They should have focused on A350-900 for their long-haul operations because it's smaller and more efficient.

Also, commonality with A330 and A320/A321 is a great thing to have. B777 just ended up becoming a burden for pilot and crew training + maintenance.

And it does make sense to turn PAL into more "Affordable Airlines". Not LCC.

Philippines in General are not as rich as Singapore or Japan. They are more comparable to Indonesia, Malaysia or Thailand. Most Luxury airlines from this countries also struggled because the public doesn't have the money to spent on premium products. Hence why LCC are booming here in Southeast Asia.

They should look into airlines like Finnair business model to survive. Nothing fancy, just affordable.
 
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MillwallSean
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Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 2:28 am

Hmm, while Philippines may not have the living standards of say Singapore, There is a large middle class with reasonable wealth just like there is in Malaysia, Indonesia and Thailand. Manila its main base sees soon 2 million persons fall into this category. Thats a decent base and when you add government traffic to this its a place where an airline with its organisation and costs under control should be able to flourish.
However PAL is not an organisation with its organisation and costs under control.

For anyone of us that have had the misfortune of visiting PALs HQ we have learnt that their people resource leaves a lot to be desired. First the office tend to be half empty since most managers and semi managers have the ability to come and go as fit. The younger staff sits patiently within office cubes working on very old equipment while the managers do alot but management. Not because they dont want to but because they arent capable to manage professionally.
Thats because who, that gets hired, to the back-office, to management positions, has little to do with ability, but alot to do with network. They are bloated, have extremely low productivity and lack a clear structure.
While many traditional Filipino companies sees extreme power distance, the issue with PAL is that while the power distance is there, it lacks a leader with legitimacy. Many of the tycoons of Filipino business can be revered at a level almost scary for a westerner, and its enough to know whom they are and that they are around for employees to work and for managers to be diligent. PAL lacks tsuch a leader, instead it tends to have a large number of managers whose only raisondetre is that their families have Manila connections and their positions are obtained through surnames or relation to specific persons. This leads to poor motivation among employees, leads to those with slightly more capabilities taking advantage of the situation, this leads to choices of suppliers being made for all the wrong reasons etc etc.

Its great for us that do business with PAL. its like stealing money from children. But the organisation is thereafter. it suffers and it is an organisation that I struggle to see a bright future for. Instead it will go on, call in government favours when needed and call in government bailouts when needed using a well established Manila network. Making money though isnt the primary point for most managers, instead it is to enjoy the life and prestige that a good job in the national airline offers and the results well they are thereafter.

Thats my perception, having seen the inside of PAL at way to close distance.
No One Likes Us - We Dont Care.
 
flyingdoc787
Posts: 140
Joined: Mon Jun 11, 2012 1:26 am

Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 3:17 am

Aside from addressing the mentioned management/HR issues, I would (perhaps naively) suggest that PAL have a more strategic and focused vision for its operations, i.e. capitalize on strengths such as a relatively lower cost base compared to other Asian airlines, O/D demand by Filipinos both tourists and OFW’s, and develop a realistic goal for harnessing potentials such as MNL as a transfer hub for SEAsia-N. America, or UK/EU-OZ/NZ.
PAL’s service oriented and English-speaking crew are a major asset that can attract and keep many passengers, especially Westerners (check out YouTube trip reports on PAL).
Many Filipinos have a love-hate relationship with PAL, but Filipinos are quick to forget once they experience improved service, and have great pride in seeing the national colors take to the skies. It’s hard to beat the red, white, blue, and yellow 8-rayed sun of the national airline (yellow and orange are not quite Filipino colors - but I’m also a fan of that other airline!)
Many will want to see PAL succeed.
 
RawSushi
Posts: 64
Joined: Sun Aug 19, 2018 9:02 am

Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 4:05 am

flyingdoc787 wrote:
Many will want to see PAL succeed.


Agreed. I've flown on both PAL and Cebu Pacific and enjoyed my flights on PAL a lot more. They clearly have some internal issues to fix but with new efficient planes coming in, a strong and growing local economy and a vibrant OFW community, I think the future is bright for them.
 
ewt340
Posts: 820
Joined: Tue Jul 10, 2012 7:22 pm

Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 4:35 am

MillwallSean wrote:
Hmm, while Philippines may not have the living standards of say Singapore, There is a large middle class with reasonable wealth just like there is in Malaysia, Indonesia and Thailand. Manila its main base sees soon 2 million persons fall into this category. Thats a decent base and when you add government traffic to this its a place where an airline with its organisation and costs under control should be able to flourish.
However PAL is not an organisation with its organisation and costs under control.

For anyone of us that have had the misfortune of visiting PALs HQ we have learnt that their people resource leaves a lot to be desired. First the office tend to be half empty since most managers and semi managers have the ability to come and go as fit. The younger staff sits patiently within office cubes working on very old equipment while the managers do alot but management. Not because they dont want to but because they arent capable to manage professionally.
Thats because who, that gets hired, to the back-office, to management positions, has little to do with ability, but alot to do with network. They are bloated, have extremely low productivity and lack a clear structure.
While many traditional Filipino companies sees extreme power distance, the issue with PAL is that while the power distance is there, it lacks a leader with legitimacy. Many of the tycoons of Filipino business can be revered at a level almost scary for a westerner, and its enough to know whom they are and that they are around for employees to work and for managers to be diligent. PAL lacks tsuch a leader, instead it tends to have a large number of managers whose only raisondetre is that their families have Manila connections and their positions are obtained through surnames or relation to specific persons. This leads to poor motivation among employees, leads to those with slightly more capabilities taking advantage of the situation, this leads to choices of suppliers being made for all the wrong reasons etc etc.

Its great for us that do business with PAL. its like stealing money from children. But the organisation is thereafter. it suffers and it is an organisation that I struggle to see a bright future for. Instead it will go on, call in government favours when needed and call in government bailouts when needed using a well established Manila network. Making money though isnt the primary point for most managers, instead it is to enjoy the life and prestige that a good job in the national airline offers and the results well they are thereafter.

Thats my perception, having seen the inside of PAL at way to close distance.


That's not how the market works. I lived in Indonesia and we got comparable middle class population BUT:

1. There's upper and lower middle class. But most of people who are part of this group still prefer to fly on LCC. Especially on Short-haul destinations.
2. PAL already configure some of their A330 with 9-abreast seating to compete with Cebu Pacific. They knew how the market isn't big enough for Boutique Airlines.
3. Other airlines like Garuda Indonesia, Malaysian Airlines or Thai also faced with the same problems. This ain't no different.
4. 2 million middle class population is extremely small. Unless those 2 million people fly every single week. It wouldn't make sense to focus on them alone.
5. Middle Class passengers rarely fly on Business class cabin. Only small percentage of them did. It's called Middle class after all.

Also, in rich countries like the US, UK, Germany or Singapore. Most people also love to fly cheaply on LCC. Just because your country is rich doesn't mean they all gonna fly on premium airlines.
 
LurveBus
Posts: 319
Joined: Wed Mar 21, 2007 8:21 pm

Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 7:35 am

ewt340 wrote:
MillwallSean wrote:
Hmm, while Philippines may not have the living standards of say Singapore, There is a large middle class with reasonable wealth just like there is in Malaysia, Indonesia and Thailand. Manila its main base sees soon 2 million persons fall into this category. Thats a decent base and when you add government traffic to this its a place where an airline with its organisation and costs under control should be able to flourish.
However PAL is not an organisation with its organisation and costs under control.

For anyone of us that have had the misfortune of visiting PALs HQ we have learnt that their people resource leaves a lot to be desired. First the office tend to be half empty since most managers and semi managers have the ability to come and go as fit. The younger staff sits patiently within office cubes working on very old equipment while the managers do alot but management. Not because they dont want to but because they arent capable to manage professionally.
Thats because who, that gets hired, to the back-office, to management positions, has little to do with ability, but alot to do with network. They are bloated, have extremely low productivity and lack a clear structure.
While many traditional Filipino companies sees extreme power distance, the issue with PAL is that while the power distance is there, it lacks a leader with legitimacy. Many of the tycoons of Filipino business can be revered at a level almost scary for a westerner, and its enough to know whom they are and that they are around for employees to work and for managers to be diligent. PAL lacks tsuch a leader, instead it tends to have a large number of managers whose only raisondetre is that their families have Manila connections and their positions are obtained through surnames or relation to specific persons. This leads to poor motivation among employees, leads to those with slightly more capabilities taking advantage of the situation, this leads to choices of suppliers being made for all the wrong reasons etc etc.

Its great for us that do business with PAL. its like stealing money from children. But the organisation is thereafter. it suffers and it is an organisation that I struggle to see a bright future for. Instead it will go on, call in government favours when needed and call in government bailouts when needed using a well established Manila network. Making money though isnt the primary point for most managers, instead it is to enjoy the life and prestige that a good job in the national airline offers and the results well they are thereafter.

Thats my perception, having seen the inside of PAL at way to close distance.


That's not how the market works. I lived in Indonesia and we got comparable middle class population BUT:

1. There's upper and lower middle class. But most of people who are part of this group still prefer to fly on LCC. Especially on Short-haul destinations.
2. PAL already configure some of their A330 with 9-abreast seating to compete with Cebu Pacific. They knew how the market isn't big enough for Boutique Airlines.
3. Other airlines like Garuda Indonesia, Malaysian Airlines or Thai also faced with the same problems. This ain't no different.
4. 2 million middle class population is extremely small. Unless those 2 million people fly every single week. It wouldn't make sense to focus on them alone.
5. Middle Class passengers rarely fly on Business class cabin. Only small percentage of them did. It's called Middle class after all.

Also, in rich countries like the US, UK, Germany or Singapore. Most people also love to fly cheaply on LCC. Just because your country is rich doesn't mean they all gonna fly on premium airlines.


You’re forgetting the huge deployment of workers, whose tickets are paid for by employers. And for certain sectors like the seafarers, given that one out of three seafarers out there are Filipino, that’s a lot of full-fare tickets to major ports in the world. There is a dedicated agency in Manila whose sole purpose is to book seafarers on KLM flights. It’s one of the reasons why KL still flies to MNL. PAL has been trying to get a piece of that action, but with no partner in LHR and no slots in AMS, they won’t find it easy.

In any case, PAL’s current string of losses are still within a manageable margin. It’s not going to lead to another bankruptcy in the near term, although they should get the numbers up before the next bust cycle. And while they do have a commendable goal of being friendlier to transit traffic, the airport infrastructure isn’t exactly the friendliest.

But it is nice to see PAL at least trying to compete. They used to be quite literally rent-seeking, content to rent out their entitlements to the ME3 until local regulators called them out on it and forced them to use em or lose em.
 
J343
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Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 7:36 am

The most obvious reason from my perspective is that PAL needs to stop or slow down with the aggressive expansion. They should focus on routes where there is good market demand and by this, I don't just mean OFWs, VFR market traffic. Also, they should wait wait until newer routes mature and until they capture a sizeable market share. LHR for instance was a bad route for PAL but is now starting to mature. They have captured a sizeable market share, especially Filipinos living in Visayas and Mindanao. Before PAL started LHR, Filipinos would either fly with CX, OZ and KE to Cebu and surrounding region. My take is, PAL should wait until LHR matures even more and then start another European route, MXP comes into mind or FCO.
 
StudiodeKadent
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Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 8:29 am

ewt340 wrote:
Load Factor was bad for PAL. It's average around 70% especially on long-haul routes.
The only way to solved them is to used smaller aircraft. I don't see B777-300ER in the fleet much longer. They should have focused on A350-900 for their long-haul operations because it's smaller and more efficient.

Also, commonality with A330 and A320/A321 is a great thing to have. B777 just ended up becoming a burden for pilot and crew training + maintenance.


Agreed. They could sell the 777s to Emirates, Cathay or some other carrier.

If PAL ever need something in the 777-300 size bracket again, they can get A350-1000s.
 
ren0312
Topic Author
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Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 8:46 am

Depending on how things go, Boeing may be willing to sell a dozen 737 Maxs to PAL for a few cases of San Miguel Beer.
 
filipinoavgeek
Posts: 256
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Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 12:24 pm

ewt340 wrote:
[2. PAL already configure some of their A330 with 9-abreast seating to compete with Cebu Pacific. They knew how the market isn't big enough for Boutique Airlines.

Actually the original plan is (at least for the long-term) to reconfigure the 9-abreast seating A330s, but it might take some time and I'm not sure if that's still the current plan. IIRC these now only fly on the Middle Eastern routes (which are OFW-centric and thus more price sensitive), while the A330s that do Asia regional routes have now been reconfigured with more premium 2-4-2 cabins.

J343 wrote:
The most obvious reason from my perspective is that PAL needs to stop or slow down with the aggressive expansion. They should focus on routes where there is good market demand and by this, I don't just mean OFWs, VFR market traffic. Also, they should wait wait until newer routes mature and until they capture a sizeable market share.

Especially now that ANA is in the picture, that seems to be their new plan moving forward: to slow down expansion and focus on their existing routes. Also, many of their problems isn't really their fault: blame the lack of capacity at Manila's airport. If/when the new airport is built, that should help not just them but even Cebu Pacific and others.

As for the 777, as much as people say that they want those out, it doesn't seem to be happening anytime soon. For starters, those were ordered back when PAL still had 747s and were meant to replace them, so there was some commonality at the time. Plus planes like the A350 and 787 weren't available at the time so their only alternative was the A340 (which they had of course). Finally, at least for now PAL seems to be happy with their 777s (they're still relatively new) and while some of the older ones may leave (last I heard though the leases of the oldest ones got renewed), they may opt to keep at least a small fleet for LAX/SFO since those are their biggest routes (the others are better served with the A350).
 
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Devilfish
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Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 5:20 pm

ren0312 wrote:
Depending on how things go, Boeing may be willing to sell a dozen 737 Maxs to PAL for a few cases of San Miguel Beer.

:laughing: They may have better luck offering those to RSA for his dream airline to fly into his fancy premier gateway and MPH..... :airplane: .....


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"Everyone is entitled to my opinion." - Garfield
 
ewt340
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Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 6:47 pm

Devilfish wrote:
ren0312 wrote:
Depending on how things go, Boeing may be willing to sell a dozen 737 Maxs to PAL for a few cases of San Miguel Beer.

:laughing: They may have better luck offering those to RSA for his dream airline to fly into his fancy premier gateway and MPH..... :airplane: .....


Image
https://www.ft.com/__origami/service/im ... ce=nar-cms


A great airport for big LCC traffic.

PAL should have looked into establishing new subsionary as LCC to tap into the Actual market that many Southeast Asian consumers prefer.
 
ewt340
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Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 6:49 pm

LurveBus wrote:
ewt340 wrote:
MillwallSean wrote:
Hmm, while Philippines may not have the living standards of say Singapore, There is a large middle class with reasonable wealth just like there is in Malaysia, Indonesia and Thailand. Manila its main base sees soon 2 million persons fall into this category. Thats a decent base and when you add government traffic to this its a place where an airline with its organisation and costs under control should be able to flourish.
However PAL is not an organisation with its organisation and costs under control.

For anyone of us that have had the misfortune of visiting PALs HQ we have learnt that their people resource leaves a lot to be desired. First the office tend to be half empty since most managers and semi managers have the ability to come and go as fit. The younger staff sits patiently within office cubes working on very old equipment while the managers do alot but management. Not because they dont want to but because they arent capable to manage professionally.
Thats because who, that gets hired, to the back-office, to management positions, has little to do with ability, but alot to do with network. They are bloated, have extremely low productivity and lack a clear structure.
While many traditional Filipino companies sees extreme power distance, the issue with PAL is that while the power distance is there, it lacks a leader with legitimacy. Many of the tycoons of Filipino business can be revered at a level almost scary for a westerner, and its enough to know whom they are and that they are around for employees to work and for managers to be diligent. PAL lacks tsuch a leader, instead it tends to have a large number of managers whose only raisondetre is that their families have Manila connections and their positions are obtained through surnames or relation to specific persons. This leads to poor motivation among employees, leads to those with slightly more capabilities taking advantage of the situation, this leads to choices of suppliers being made for all the wrong reasons etc etc.

Its great for us that do business with PAL. its like stealing money from children. But the organisation is thereafter. it suffers and it is an organisation that I struggle to see a bright future for. Instead it will go on, call in government favours when needed and call in government bailouts when needed using a well established Manila network. Making money though isnt the primary point for most managers, instead it is to enjoy the life and prestige that a good job in the national airline offers and the results well they are thereafter.

Thats my perception, having seen the inside of PAL at way to close distance.


That's not how the market works. I lived in Indonesia and we got comparable middle class population BUT:

1. There's upper and lower middle class. But most of people who are part of this group still prefer to fly on LCC. Especially on Short-haul destinations.
2. PAL already configure some of their A330 with 9-abreast seating to compete with Cebu Pacific. They knew how the market isn't big enough for Boutique Airlines.
3. Other airlines like Garuda Indonesia, Malaysian Airlines or Thai also faced with the same problems. This ain't no different.
4. 2 million middle class population is extremely small. Unless those 2 million people fly every single week. It wouldn't make sense to focus on them alone.
5. Middle Class passengers rarely fly on Business class cabin. Only small percentage of them did. It's called Middle class after all.

Also, in rich countries like the US, UK, Germany or Singapore. Most people also love to fly cheaply on LCC. Just because your country is rich doesn't mean they all gonna fly on premium airlines.


You’re forgetting the huge deployment of workers, whose tickets are paid for by employers. And for certain sectors like the seafarers, given that one out of three seafarers out there are Filipino, that’s a lot of full-fare tickets to major ports in the world. There is a dedicated agency in Manila whose sole purpose is to book seafarers on KLM flights. It’s one of the reasons why KL still flies to MNL. PAL has been trying to get a piece of that action, but with no partner in LHR and no slots in AMS, they won’t find it easy.

In any case, PAL’s current string of losses are still within a manageable margin. It’s not going to lead to another bankruptcy in the near term, although they should get the numbers up before the next bust cycle. And while they do have a commendable goal of being friendlier to transit traffic, the airport infrastructure isn’t exactly the friendliest.

But it is nice to see PAL at least trying to compete. They used to be quite literally rent-seeking, content to rent out their entitlements to the ME3 until local regulators called them out on it and forced them to use em or lose em.


Yeah no. The lowest ticket price is the only way to go. You could list 1000 profession that required premium services and still that's not enough to justified this business model.

You are forgetting foreign competitors. ME3, CX, SQ, JL, AN, QF, etc.

Even these days airlines like SQ and CX are lowering their standard in economy class cabin for cheaper ticket prices. Flown them often between Indonesia and Japan/China. Their ticket prices are way cheaper compared to PAL.

Same goes for Vietnam Airlines.
 
LurveBus
Posts: 319
Joined: Wed Mar 21, 2007 8:21 pm

Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 8:12 pm

ewt340 wrote:
LurveBus wrote:
ewt340 wrote:

That's not how the market works. I lived in Indonesia and we got comparable middle class population BUT:

1. There's upper and lower middle class. But most of people who are part of this group still prefer to fly on LCC. Especially on Short-haul destinations.
2. PAL already configure some of their A330 with 9-abreast seating to compete with Cebu Pacific. They knew how the market isn't big enough for Boutique Airlines.
3. Other airlines like Garuda Indonesia, Malaysian Airlines or Thai also faced with the same problems. This ain't no different.
4. 2 million middle class population is extremely small. Unless those 2 million people fly every single week. It wouldn't make sense to focus on them alone.
5. Middle Class passengers rarely fly on Business class cabin. Only small percentage of them did. It's called Middle class after all.

Also, in rich countries like the US, UK, Germany or Singapore. Most people also love to fly cheaply on LCC. Just because your country is rich doesn't mean they all gonna fly on premium airlines.


You’re forgetting the huge deployment of workers, whose tickets are paid for by employers. And for certain sectors like the seafarers, given that one out of three seafarers out there are Filipino, that’s a lot of full-fare tickets to major ports in the world. There is a dedicated agency in Manila whose sole purpose is to book seafarers on KLM flights. It’s one of the reasons why KL still flies to MNL. PAL has been trying to get a piece of that action, but with no partner in LHR and no slots in AMS, they won’t find it easy.

In any case, PAL’s current string of losses are still within a manageable margin. It’s not going to lead to another bankruptcy in the near term, although they should get the numbers up before the next bust cycle. And while they do have a commendable goal of being friendlier to transit traffic, the airport infrastructure isn’t exactly the friendliest.

But it is nice to see PAL at least trying to compete. They used to be quite literally rent-seeking, content to rent out their entitlements to the ME3 until local regulators called them out on it and forced them to use em or lose em.


Yeah no. The lowest ticket price is the only way to go. You could list 1000 profession that required premium services and still that's not enough to justified this business model.

You are forgetting foreign competitors. ME3, CX, SQ, JL, AN, QF, etc.

Even these days airlines like SQ and CX are lowering their standard in economy class cabin for cheaper ticket prices. Flown them often between Indonesia and Japan/China. Their ticket prices are way cheaper compared to PAL.

Same goes for Vietnam Airlines.


So you’re saying that PAL shouldn’t chase corporate accounts of business traffic from their home base that goes to other carriers. Got it.
 
ewt340
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Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 8:34 pm

LurveBus wrote:
ewt340 wrote:
LurveBus wrote:

You’re forgetting the huge deployment of workers, whose tickets are paid for by employers. And for certain sectors like the seafarers, given that one out of three seafarers out there are Filipino, that’s a lot of full-fare tickets to major ports in the world. There is a dedicated agency in Manila whose sole purpose is to book seafarers on KLM flights. It’s one of the reasons why KL still flies to MNL. PAL has been trying to get a piece of that action, but with no partner in LHR and no slots in AMS, they won’t find it easy.

In any case, PAL’s current string of losses are still within a manageable margin. It’s not going to lead to another bankruptcy in the near term, although they should get the numbers up before the next bust cycle. And while they do have a commendable goal of being friendlier to transit traffic, the airport infrastructure isn’t exactly the friendliest.

But it is nice to see PAL at least trying to compete. They used to be quite literally rent-seeking, content to rent out their entitlements to the ME3 until local regulators called them out on it and forced them to use em or lose em.


Yeah no. The lowest ticket price is the only way to go. You could list 1000 profession that required premium services and still that's not enough to justified this business model.

You are forgetting foreign competitors. ME3, CX, SQ, JL, AN, QF, etc.

Even these days airlines like SQ and CX are lowering their standard in economy class cabin for cheaper ticket prices. Flown them often between Indonesia and Japan/China. Their ticket prices are way cheaper compared to PAL.

Same goes for Vietnam Airlines.


So you’re saying that PAL shouldn’t chase corporate accounts of business traffic from their home base that goes to other carriers. Got it.


It's pretty illogical to think that PAL could survived entirely on corporate rats.

Manila is not as business centric destination like Tokyo, Hong Kong, Singapore, Sydney, LA, NYC, London, Paris or Frankfurt.
The premium market isn't that big. Nobody suggested PAL to scrapped their business class cabin. They should just reduced the quality of service in turn for cheaper ticket prices.
Nobody is suggesting for them to turn into LCC completely. What they need to do is to lower the quality of sof products to compete with other airlines especially on Long-haul routes.
 
LX138
Posts: 309
Joined: Sat Jul 11, 2009 5:45 pm

Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 10:06 pm

My brief analysis as a European looking at their existing set-up:

- PAL is fairly well governed, operationally stable, even if not efficient with its overheads or management structure. The training of its workforce is good and safety in recent years has also been pretty good. Modern fleet.
- They however try to be all things to everyone, flying as a global full service carrier to the worlds key cities. PAL suffers intense competition in its home market to almost every destination it serves - LCC's galore on short-haul and the ME3 carriers dumping capacity from Europe and the west. Not an easy environment to survive in. The yields are also low on long haul routes both West and Eastwards towards North America.

I would probably:
- Focus - focus on a very certain type of passenger type - maybe O&D mass but keep it within the region or premium leisure traffic from the West? If one has to accept that the yields are always going to be depressed then perhaps high capacity aircraft layouts to ensure the volume approach will work.
- Marketing - is poor, the image is fairly dated. They probably need to try and attract more Western clientele that will pay the higher fares on vacation trips compared to VFR traffic that is mostly discounted.
- Fleet - their fleet isn't actually too bad, perhaps bloated on long haul routes but if they go down the volume route then 77W's and A321's are the way to go with their current network.
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Devilfish
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Re: What should Philippine Airlines do to make money?

Tue Mar 26, 2019 10:35 pm

ewt340 wrote:
A great airport for big LCC traffic.

Right...so you're agreeing the Government should sink billions (IIRC, $12.5B was the figure bandied about) into that fantasy airport just to attract LCCs :?: Maybe I should have used this :sarcastic: instead of the airplane :!:


ewt340 wrote:
PAL should have looked into establishing new subsionary as LCC to tap into the Actual market that many Southeast Asian consumers prefer.

PR did that with 2P and we all saw how that went..... :down:
"Everyone is entitled to my opinion." - Garfield
 
HJM
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 12:09 am

Better inventory control system may help, B777 slimline Y class seats at 31" for more capacity and improve MNL connection experience.
 
StudiodeKadent
Posts: 399
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 2:27 am

filipinoavgeek wrote:
As for the 777, as much as people say that they want those out, it doesn't seem to be happening anytime soon. For starters, those were ordered back when PAL still had 747s and were meant to replace them, so there was some commonality at the time. Plus planes like the A350 and 787 weren't available at the time so their only alternative was the A340 (which they had of course). Finally, at least for now PAL seems to be happy with their 777s (they're still relatively new) and while some of the older ones may leave (last I heard though the leases of the oldest ones got renewed), they may opt to keep at least a small fleet for LAX/SFO since those are their biggest routes (the others are better served with the A350).


Can't PAL just get more A350-900s, and return the 777-300ERs as leases expire? I know at least 4 of their 777-300ERs are leased, and they have 6 options on A350s they could exercise.

If their load factor is too low, shifting to smaller jets is the best way forward.
 
royalswazi
Posts: 41
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 3:14 am

I flew PAL frequently in the nineties. It was a great airline once they got off the ground.

The way to succeed is to have higher revenues than costs. I’ve never worked in the airline industry, but I’ve had a fair few years experience in the private sector. Now let PAL management do their job.
 
fusionliner
Posts: 31
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 3:17 am

They aren't doing that bad, despite what many in here seem to say. Lots of assumptions rather than facts (which seems to have this unfair bias of doom and gloom, poor, no money Philippines that many continue to enforce)

Load factor is actually around 80% with approx. 17 Million pax carried in 2018. Lots of expenses in 2018 attributable to fuel, back fee repayment to government (approx. $100 Million) investments in product, brand/marketing etc. They've done a lot to diversify their MNL hub to CRK, CEB along with promoting transit traffic. B777-300ERs are definitely highly utilized around the region as well as North America and to be honest, they wouldn't have leased an addition 2 B777-300ER in 2017/18 if there wasn't demand & need.

Investing in your airline that has lofty ambitions isn't going to bring a profit overnight, so this is probably a discussion to talk about after 2021 once the dust settles.

https://www.philstar.com/business/2019/03/22/1903434/philippine-airlines-trims-loss-sees-turnaround-2019
https://asia.nikkei.com/Business/Companies/Philippine-Airlines-says-foreign-investor-will-provide-stability

In the meantime, It might be nice for some people in this thread to do a deeper search on trends happening in the Philippines/Asia, economic data & news, along with news/info/initatives on the airline along with Philippine aviation news from the past few years. It might bring greater clarity on why PAL sees an opportunity in repositioning their value proposition.
 
filipinoavgeek
Posts: 256
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 3:45 am

Actually, before anyone asks if PAL should "downgrade" their services, they already did that during the years they were owned by San Miguel. And the results weren't pretty and their reputation actually soured even more then. It was part of the reason why Lucio Tan bought back the airline in the first place, when his original plan was to eventually divest his stake entirely.

StudiodeKadent wrote:
Can't PAL just get more A350-900s, and return the 777-300ERs as leases expire? I know at least 4 of their 777-300ERs are leased, and they have 6 options on A350s they could exercise. If their load factor is too low, shifting to smaller jets is the best way forward.


The A350s were ordered as A340 replacements and IIRC were intended to complement but not supplement the 777s. And publicly PAL said they're happy with the 777s, though them not reconfiguring the older ones might be a sign that that may not necessarily be the case.
 
StudiodeKadent
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 3:56 am

filipinoavgeek wrote:

The A350s were ordered as A340 replacements and IIRC were intended to complement but not supplement the 777s. And publicly PAL said they're happy with the 777s, though them not reconfiguring the older ones might be a sign that that may not necessarily be the case.


If they aren't reconfiguring the older ones, it seems they may be gearing up to return the older ones to lessors. The A350-1000 is a natural replacement for the 777-300ERs, if they truly need the size, and would provide them with more pax-ex consistency.

Are all of PAL's 777s leased?
 
filipinoavgeek
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 4:04 am

StudiodeKadent wrote:
filipinoavgeek wrote:

The A350s were ordered as A340 replacements and IIRC were intended to complement but not supplement the 777s. And publicly PAL said they're happy with the 777s, though them not reconfiguring the older ones might be a sign that that may not necessarily be the case.


If they aren't reconfiguring the older ones, it seems they may be gearing up to return the older ones to lessors. The A350-1000 is a natural replacement for the 777-300ERs, if they truly need the size, and would provide them with more pax-ex consistency.

Are all of PAL's 777s leased?


Airfleets says that six are leased, but there's no note mentioned on the other four.
 
StudiodeKadent
Posts: 399
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 4:40 am

filipinoavgeek wrote:
StudiodeKadent wrote:
filipinoavgeek wrote:

The A350s were ordered as A340 replacements and IIRC were intended to complement but not supplement the 777s. And publicly PAL said they're happy with the 777s, though them not reconfiguring the older ones might be a sign that that may not necessarily be the case.


If they aren't reconfiguring the older ones, it seems they may be gearing up to return the older ones to lessors. The A350-1000 is a natural replacement for the 777-300ERs, if they truly need the size, and would provide them with more pax-ex consistency.

Are all of PAL's 777s leased?


Airfleets says that six are leased, but there's no note mentioned on the other four.


Got it. Coincidentally, PAL has 6 options on A350s remaining, and the options can be used on either variant.

I can absolutely see PAL eventually ending the 777 leases and going to A350-1000s to replace them if they really need the capacity. Or downsizing to A350-900s if they don't. In PAL's 3 class config, the A350-1000 is probably going to be a bit smaller than the 2 class 777-300ERs anyway.
 
ewt340
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 5:00 am

Devilfish wrote:
ewt340 wrote:
A great airport for big LCC traffic.

Right...so you're agreeing the Government should sink billions (IIRC, $12.5B was the figure bandied about) into that fantasy airport just to attract LCCs :?: Maybe I should have used this :sarcastic: instead of the airplane :!:


ewt340 wrote:
PAL should have looked into establishing new subsionary as LCC to tap into the Actual market that many Southeast Asian consumers prefer.

PR did that with 2P and we all saw how that went..... :down:


Well 2P are doing extremely well right now. PAL Express currently holds the no. 3 position among Philippine-based airlines, with 19% market share.

Doesn't sounds too bad right?
 
carlokiii
Posts: 138
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 5:14 am

I'm aware that we aren't writing scientific journals here, but some claims would age much better if they were supported by sources.

If the 777 was indeed a money-pit for PAL, they would not have kept topping up their orders four times.
While the financials seem to be in the red, do we know what sectors/ventures they're losing money in, and are they worsening or getting better?
Anecdotally, I have flown with PR internationally a lot more in the last two years than prior, and all those flights were full. Even domestically to Tacloban, Bohol, and Laoag, were all full. So where do they fly so terribly that they average only 70%? The Middle East? LHR?

PR has been very conservative and well-calculated compared to the past in terms of expansion and growing flights. Their fleet planning is also more curated than before, so I'm not sure where this sudden need to help PR make money is coming from. They seem to be doing a lot better now compared to pre-SMC takeover, during the SMC days, and right after the SMC buy back - context is very important.
 
ewt340
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 6:54 am

It's mostly due to the fact that especially on low season, many flights remain empty. Especially on certain weekday like Tuesday or Wednesday.
It's better to have less seats than to have more seats and have it empty on other times.

It could be full when you're flying, but what happen to the other day when you're not flying. Cause the last time I flew with them, there are lots of empty seats on their A330.

Also, most of the times, during high season or weekend, the flight is completely full. But on certain weekday, it's less than 50% full. The 70% is on average, not majority of the flight would be 70% full.

Routes like LAX, JFK or SFO would probably always be close to 100%, but other destinations might not always be so.
 
carlokiii
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 7:47 am

^ Yes that's why I was wondering where they fly that terribly to get a dismal 70% LF to balance out the flights that do exceptionally well. I genuinely wanted to know which sectors do poorly - I know LHR and JFK can be improved. And for the record, PR had an average of 80% LF for 2018.

Anyway, the losses they have incurred are from rising fuel costs and capital outlay for new aircraft acquisition/leasing, which means further dropping existing aircraft for newer ones (ie. more A359) will worsen their finances. 777's core destinations (SFO, LAX, YYZ, and to a degree YVR) have healthy load factors year-round, and their utilization definitely supports this. If anything, it's been said by PR executives that the they are still bettering the load factors of destinations that the A359 flies to. So the strategy for more A359 orders to replace the young 777 fleet is indeed confusing to me.
Last edited by carlokiii on Wed Mar 27, 2019 7:48 am, edited 2 times in total.
 
LurveBus
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 7:47 am

At the end of the day, PAL has a huge slot portfolio in a very slot-restricted capital airport in what is one of Asia’s fastest-growing economies over the past decade. They’ll be fine.
 
Waterbomber2
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 7:54 am

ewt340 wrote:
Load Factor was bad for PAL. It's average around 70% especially on long-haul routes.
The only way to solved them is to used smaller aircraft. I don't see B777-300ER in the fleet much longer. They should have focused on A350-900 for their long-haul operations because it's smaller and more efficient.

Also, commonality with A330 and A320/A321 is a great thing to have. B777 just ended up becoming a burden for pilot and crew training + maintenance.

And it does make sense to turn PAL into more "Affordable Airlines". Not LCC.

Philippines in General are not as rich as Singapore or Japan. They are more comparable to Indonesia, Malaysia or Thailand. Most Luxury airlines from this countries also struggled because the public doesn't have the money to spent on premium products. Hence why LCC are booming here in Southeast Asia.

They should look into airlines like Finnair business model to survive. Nothing fancy, just affordable.


PAL s low load factors are because they are not affordable, so rather than your first idea of downsizing airctaft size, I would go with your second idea of making it more affordable.

They are managed by people who thinknthay higher and higher fares will eventually get them into profits.

You can only start managing yields once you can consistently fill your aircraft. Until then, you are only managing occupancy versus capacity and this is as meaningful as drawing clouds all day.

So my suggestion is to bring in a management that knows business.
 
melpax
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 8:18 am

ewt340 wrote:

It's pretty illogical to think that PAL could survived entirely on corporate rats.

Manila is not as business centric destination like Tokyo, Hong Kong, Singapore, Sydney, LA, NYC, London, Paris or Frankfurt.
The premium market isn't that big. Nobody suggested PAL to scrapped their business class cabin. They should just reduced the quality of service in turn for cheaper ticket prices.
Nobody is suggesting for them to turn into LCC completely. What they need to do is to lower the quality of sof products to compete with other airlines especially on Long-haul routes.


A lot of Australian corporates have outsourced their back offices, IT & call centres to Manila - if you call either of the big Aussie Telcos, chances are you'll be speaking to someone in Manila.

Also a bit of trade between both countries - a school mate works for a large logistics company & has to travel to Manila on occasion - he hates Manila & Jakatra trips since he's unable to leave his hotel when he's not at a client site.

So there is a bit of business demand between SYD/MEL-MNL.
Essendon - Whatever it takes......
 
ren0312
Topic Author
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 8:24 am

What are PAL's load factors vs. Garuda, Malaysia Airlines, Viet Nam Airlines, Thai Airways, and SIA?
 
ewt340
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 3:00 pm

melpax wrote:
ewt340 wrote:

It's pretty illogical to think that PAL could survived entirely on corporate rats.

Manila is not as business centric destination like Tokyo, Hong Kong, Singapore, Sydney, LA, NYC, London, Paris or Frankfurt.
The premium market isn't that big. Nobody suggested PAL to scrapped their business class cabin. They should just reduced the quality of service in turn for cheaper ticket prices.
Nobody is suggesting for them to turn into LCC completely. What they need to do is to lower the quality of sof products to compete with other airlines especially on Long-haul routes.


A lot of Australian corporates have outsourced their back offices, IT & call centres to Manila - if you call either of the big Aussie Telcos, chances are you'll be speaking to someone in Manila.

Also a bit of trade between both countries - a school mate works for a large logistics company & has to travel to Manila on occasion - he hates Manila & Jakatra trips since he's unable to leave his hotel when he's not at a client site.

So there is a bit of business demand between SYD/MEL-MNL.


Of course they are. But the reality is the fact that those people would prefer to fly with QF, no? Australian companies supporting Australian Airlines?
 
ewt340
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 3:17 pm

ren0312 wrote:
What are PAL's load factors vs. Garuda, Malaysia Airlines, Viet Nam Airlines, Thai Airways, and SIA?


From annual report either from 2017 or 2018:

- PAL = 71.39%
- Singapore Airlines = 84.8%
- Garuda = 75.6%
- Thai = 75.7%
- Malaysian = 75.4%
- Vietnam = For some reason, the website and the pdf file took more than 1 hour to load on a fast internet....

Cebu pacific = 77%
Scott = 88%
 
LurveBus
Posts: 319
Joined: Wed Mar 21, 2007 8:21 pm

Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 4:32 pm

ewt340 wrote:
melpax wrote:
ewt340 wrote:

It's pretty illogical to think that PAL could survived entirely on corporate rats.

Manila is not as business centric destination like Tokyo, Hong Kong, Singapore, Sydney, LA, NYC, London, Paris or Frankfurt.
The premium market isn't that big. Nobody suggested PAL to scrapped their business class cabin. They should just reduced the quality of service in turn for cheaper ticket prices.
Nobody is suggesting for them to turn into LCC completely. What they need to do is to lower the quality of sof products to compete with other airlines especially on Long-haul routes.


A lot of Australian corporates have outsourced their back offices, IT & call centres to Manila - if you call either of the big Aussie Telcos, chances are you'll be speaking to someone in Manila.

Also a bit of trade between both countries - a school mate works for a large logistics company & has to travel to Manila on occasion - he hates Manila & Jakatra trips since he's unable to leave his hotel when he's not at a client site.

So there is a bit of business demand between SYD/MEL-MNL.


Of course they are. But the reality is the fact that those people would prefer to fly with QF, no? Australian companies supporting Australian Airlines?


PAL has better schedules and flies to more points in Australia. And the hard product is competitive.

Oh, and MNL still remains on QF metal and has not been transferred to Jetstar, unlike other Southeast Asian cities. Something to think about.
 
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Devilfish
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 5:09 pm

royalswazi wrote:
I’ve never worked in the airline industry, but I’ve had a fair few years experience in the private sector. Now let PAL management do their job.

:checkmark: :checkmark: :checkmark: :checkmark: :checkmark:


ewt340 wrote:
Well 2P are doing extremely well right now. PAL Express currently holds the no. 3 position among Philippine-based airlines, with 19% market share.

Doesn't sounds too bad right?

Given that there are only three local carriers of note, being No. 3 is mighty impressive indeed :!:

ewt340 wrote:
It's mostly due to the fact that especially on low season, many flights remain empty. Especially on certain weekday like Tuesday or Wednesday.

Isn't that true for most everyone else? And "empty" may be a rather exaggerated way of describing it. :expressionless:

ewt340 wrote:
It could be full when you're flying, but what happen to the other day when you're not flying.

Nothing...why should it be full when you're not flying? :confused:

ewt340 wrote:
The only way to solved them is to used smaller aircraft.

Aha :idea: that seems like an endorsement for the A338 should Airbus start its production ..... :airplane: .....

Unfortunately, cheap is not the only metric for selecting an aircraft type. :|

ewt340 wrote:
I don't see B777-300ER in the fleet much longer. They should have focused on A350-900 for their long-haul operations because it's smaller and more efficient.

Don't forget the 77W's very good cargo capability...it was meant to replace PR's 747s. And the A359 was not yet on offer when they were looking to renew their long-haul fleet.

Waterbomber2 wrote:
PAL s low load factors are because they are not affordable, so rather than your first idea of downsizing airctaft size, I would go with your second idea of making it more affordable.

As mentioned, PR cannot be all things to all people. That's their business model...there's another airline catering to the other side.

ewt340 wrote:
And it does make sense to turn PAL into more "Affordable Airlines". Not LCC.

That hybrid approach consequently led to their "identity crisis" of sorts and left them "conflicted"! :crackup:

ewt340 wrote:
2. PAL already configure some of their A330 with 9-abreast seating to compete with Cebu Pacific.

Perhaps you should look into how 5J did financially these past two years?
"Everyone is entitled to my opinion." - Garfield
 
ewt340
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 6:00 pm

Devilfish wrote:
royalswazi wrote:
I’ve never worked in the airline industry, but I’ve had a fair few years experience in the private sector. Now let PAL management do their job.

:checkmark: :checkmark: :checkmark: :checkmark: :checkmark:


ewt340 wrote:
Well 2P are doing extremely well right now. PAL Express currently holds the no. 3 position among Philippine-based airlines, with 19% market share.

Doesn't sounds too bad right?

Given that there are only three local carriers of note, being No. 3 is mighty impressive indeed :!:

ewt340 wrote:
It's mostly due to the fact that especially on low season, many flights remain empty. Especially on certain weekday like Tuesday or Wednesday.

Isn't that true for most everyone else? And "empty" may be a rather exaggerated way of describing it. :expressionless:

ewt340 wrote:
It could be full when you're flying, but what happen to the other day when you're not flying.

Nothing...why should it be full when you're not flying? :confused:

ewt340 wrote:
The only way to solved them is to used smaller aircraft.

Aha :idea: that seems like an endorsement for the A338 should Airbus start its production ..... :airplane: .....

Unfortunately, cheap is not the only metric for selecting an aircraft type. :|

ewt340 wrote:
I don't see B777-300ER in the fleet much longer. They should have focused on A350-900 for their long-haul operations because it's smaller and more efficient.

Don't forget the 77W's very good cargo capability...it was meant to replace PR's 747s. And the A359 was not yet on offer when they were looking to renew their long-haul fleet.

Waterbomber2 wrote:
PAL s low load factors are because they are not affordable, so rather than your first idea of downsizing airctaft size, I would go with your second idea of making it more affordable.

As mentioned, PR cannot be all things to all people. That's their business model...there's another airline catering to the other side.

ewt340 wrote:
And it does make sense to turn PAL into more "Affordable Airlines". Not LCC.

That hybrid approach consequently led to their "identity crisis" of sorts and left them "conflicted"! :crackup:

ewt340 wrote:
2. PAL already configure some of their A330 with 9-abreast seating to compete with Cebu Pacific.

Perhaps you should look into how 5J did financially these past two years?


- It's not the rankings, it's the percentages of the market share that they hold on domestic market. And we are only talking about the Express brand here, excluding the Mainline brand and market share.
- Just because it's quite common for other financially troubled airlines to fly empty on low season, doesn't mean it's okay for PAL to do so. The terms empty could be used to describe a really low payload or when they're not break even at operating said flight.
- Some users here making excuse how hen they are flying it's always full. Using that as an indicator that because it's full when they are flying, then it's must be always full every other time. Which is false. The passengers load factor said otherwise.
- Why would they need A330-800neo? The fuel burn isn't as good as A330-900neo. They need smaller widebodies which included A330-900neo, A350-900 and B787-9. And since they are already operating airbus plane for majority, it's only logical to stick to it. You got to deal with the fact that Philippines is not a premium heavy market for airlines. This isn't Japan.
- It's not a hybrid approach. The business model of providing cheaper ticket prices to attract costumers by lowering food or IFE standard is common in the industry. Both CX and SQ are currently doing it and it worked.
- 5J 2017 annual report : https://cebupacificaircorporate.com/Ann ... 202017.pdf
You decide.
 
filipinoavgeek
Posts: 256
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 9:59 pm

ewt340 wrote:
Why would they need A330-800neo? The fuel burn isn't as good as A330-900neo. They need smaller widebodies which included A330-900neo, A350-900 and B787-9.

He's had a known soft-spot for the A330-800 for years and has been pushing for PAL (and other airlines) to order it both in the Philippine Aviation threads and elsewhere. He sometimes even brought up the -800 when the type wasn't being mentioned at all in a discussion prior. This is in spite of being told numerous times that the -800 doesn't fit their needs, the fact that PAL has never (publicly) considered it, and more importantly, that it simply hasn't caught on.
 
SuperiorPilotMe
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Re: What should Philippine Airlines do to make money?

Wed Mar 27, 2019 11:21 pm

Quick answer: quit being an airline.

Wish I’m just strictly joking but you may simply not have a financially viable airline without massive subsidies. It’s rarely that case otherwise especially outside of huge population baes.
Stop the stupids!- Claus Kellerman
 
Akiestar
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Re: What should Philippine Airlines do to make money?

Thu Mar 28, 2019 4:08 am

SuperiorPilotMe wrote:
Quick answer: quit being an airline.

Wish I’m just strictly joking but you may simply not have a financially viable airline without massive subsidies. It’s rarely that case otherwise especially outside of huge population baes.


PR is a privately-owned, publicly-listed airline (unlike every other flag carrier in Southeast Asia) and hasn't benefited from public subsidies since the early 1990s. What subsidies are you implying they may have received?
 
fusionliner
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Re: What should Philippine Airlines do to make money?

Thu Mar 28, 2019 4:37 am

ewt340 wrote:
ren0312 wrote:
What are PAL's load factors vs. Garuda, Malaysia Airlines, Viet Nam Airlines, Thai Airways, and SIA?


From annual report either from 2017 or 2018:

- PAL = 71.39%
- Singapore Airlines = 84.8%
- Garuda = 75.6%
- Thai = 75.7%
- Malaysian = 75.4%
- Vietnam = For some reason, the website and the pdf file took more than 1 hour to load on a fast internet....

Cebu pacific = 77%
Scott = 88%


if you see the link I posted previously, they mentioned a 80% Load Factor for 2018. They haven't released their annual report yet, but it should be coming out any day now.
 
lutfi
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Re: What should Philippine Airlines do to make money?

Thu Mar 28, 2019 4:55 am

I thhink PAL should sell freight & seats to customers at a price higher than it costs PAL to produce the capacity.

If Revenue- Costs > 0, they will make money

BOOM. MIC DROP. You can send the fat consulting cheques to me
 
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Devilfish
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Re: What should Philippine Airlines do to make money?

Fri Mar 29, 2019 4:51 pm

ewt340 wrote:
It's not the rankings, it's the percentages of the market share that they hold on domestic market. And we are only talking about the Express brand here, excluding the Mainline brand and market share.

And I thought PR was doing very badly that it was necessary to solicit management advice from A.net. :roll:

ewt340 wrote:
Just because it's quite common for other financially troubled airlines to fly empty on low season, doesn't mean it's okay for PAL to do so. The terms empty could be used to describe a really low payload or when they're not break even at operating said flight.

It's never okay for any airline to fly "empty" whatever the season, so what would you say is the breakeven load factor for PR?

ewt340 wrote:
Why would they need A330-800neo? The fuel burn isn't as good as A330-900neo. They need smaller widebodies which included A330-900neo, A350-900 and B787-9. And since they are already operating airbus plane for majority, it's only logical to stick to it. You got to deal with the fact that Philippines is not a premium heavy market for airlines.

Simply because the A339 doesn't have the legs to fly where PR wants to go and will require a big load penalty to get there -- cancelling whatever CASM advantage it has, while amortizing a bigger, more expensive frame which apparently is not needed anyway due to the low load factors you cited. As you say, it's not a premium heavy market so why should PR invest in very expensive planes to serve it...when they could stay with the same OEM with all the commonality benefits still present?

ewt340 wrote:
It's not a hybrid approach. The business model of providing cheaper ticket prices to attract costumers by lowering food or IFE standard is common in the industry. Both CX and SQ are currently doing it and it worked.

Isn't that because both carriers' standards were already much higher to begin with? PR is only striving for service quality parity and competitiveness.

ewt340 wrote:
5J 2017 annual report : https://cebupacificaircorporate.com/Ann ... 202017.pdf
You decide.

It's curious that you did not include the 2018 results. :scratchchin: .....

http://www.flightsinasia.com/article/4348


filipinoavgeek wrote:
He's had a known soft-spot for the A330-800 for years and has been pushing for PAL (and other airlines) to order it both in the Philippine Aviation threads and elsewhere. He sometimes even brought up the -800 when the type wasn't being mentioned at all in a discussion prior. This is in spite of being told numerous times that the -800 doesn't fit their needs, the fact that PAL has never (publicly) considered it, and more importantly, that it simply hasn't caught on.

Aah, running to big brother, I see...looking for validation? Has PAL told you that the A338 does not fit their needs? This attachment to the herd mentality does not disprove the model's suitability for certain sectors.
"Everyone is entitled to my opinion." - Garfield
 
YYZORD
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Re: What should Philippine Airlines do to make money?

Fri Mar 29, 2019 5:21 pm

Just out of curiousity, does anyone know when PAL will start their routes to SEA and ORD? They said it'll be sometime this year but so far there is no official announcement and there is only one A350 left to be delivered in their order fleet.
 
filipinoavgeek
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Re: What should Philippine Airlines do to make money?

Fri Mar 29, 2019 8:37 pm

Devilfish wrote:
filipinoavgeek wrote:
He's had a known soft-spot for the A330-800 for years and has been pushing for PAL (and other airlines) to order it both in the Philippine Aviation threads and elsewhere. He sometimes even brought up the -800 when the type wasn't being mentioned at all in a discussion prior. This is in spite of being told numerous times that the -800 doesn't fit their needs, the fact that PAL has never (publicly) considered it, and more importantly, that it simply hasn't caught on.

Aah, running to big brother, I see...looking for validation? Has PAL told you that the A338 does not fit their needs? This attachment to the herd mentality does not disprove the model's suitability for certain sectors.

Well they've never actually publicly announced that they ever considered it (like I said before, it was already available during the time they were deciding between the 787 and A350, so the fact that the A330neo wasn't mentioned at the time has to say something). This is unlike the A350-1000 or even the A350-900 where they mentioned that they would take a look at them when Airbus was promoting those models to PAL. And even when there has been talk about the A330neo for PAL, it's been usually the -900 and even then only rarely. There's a reason why only Kuwait has ordered the -800 and why Hawaiian cancelled their orders, making PAL ordering the -800 even more unlikely. Remember that an airline ordering a plane does not always mean that the plane they ordered was the perfect fit for them, but can be due to other circumstances as well. Kind of like how Emirates ended up ordering the A330neo even though Emirates itself didn't think it was the best choice (it was as part of the deal to cancel the remaining A380 order).

Finally, as mentioned above and elsewhere, the -800's fuel burn and range is inferior to the 787. If the -800 was suitable for transpacific sectors as you suggest, then most likely PAL and other transpacific airliners would have ordered some by now.
 
strfyr51
Posts: 3935
Joined: Tue Apr 10, 2012 5:04 pm

Re: What should Philippine Airlines do to make money?

Fri Mar 29, 2019 8:49 pm

MillwallSean wrote:
Hmm, while Philippines may not have the living standards of say Singapore, There is a large middle class with reasonable wealth just like there is in Malaysia, Indonesia and Thailand. Manila its main base sees soon 2 million persons fall into this category. Thats a decent base and when you add government traffic to this its a place where an airline with its organisation and costs under control should be able to flourish.
However PAL is not an organisation with its organisation and costs under control.

For anyone of us that have had the misfortune of visiting PALs HQ we have learnt that their people resource leaves a lot to be desired. First the office tend to be half empty since most managers and semi managers have the ability to come and go as fit. The younger staff sits patiently within office cubes working on very old equipment while the managers do alot but management. Not because they dont want to but because they arent capable to manage professionally.
Thats because who, that gets hired, to the back-office, to management positions, has little to do with ability, but alot to do with network. They are bloated, have extremely low productivity and lack a clear structure.
While many traditional Filipino companies sees extreme power distance, the issue with PAL is that while the power distance is there, it lacks a leader with legitimacy. Many of the tycoons of Filipino business can be revered at a level almost scary for a westerner, and its enough to know whom they are and that they are around for employees to work and for managers to be diligent. PAL lacks tsuch a leader, instead it tends to have a large number of managers whose only raisondetre is that their families have Manila connections and their positions are obtained through surnames or relation to specific persons. This leads to poor motivation among employees, leads to those with slightly more capabilities taking advantage of the situation, this leads to choices of suppliers being made for all the wrong reasons etc etc.

Its great for us that do business with PAL. its like stealing money from children. But the organisation is thereafter. it suffers and it is an organisation that I struggle to see a bright future for. Instead it will go on, call in government favours when needed and call in government bailouts when needed using a well established Manila network. Making money though isnt the primary point for most managers, instead it is to enjoy the life and prestige that a good job in the national airline offers and the results well they are thereafter.

Thats my perception, having seen the inside of PAL at way to close distance.

This seems to happen at many state companies. Not just PAL. I first saw it at Iran Air, then Saudia. It doesn't happen at many American Carriers since they police Nepatism. There are relatives working but they cannot work in the same area.
 
ewt340
Posts: 820
Joined: Tue Jul 10, 2012 7:22 pm

Re: What should Philippine Airlines do to make money?

Sat Mar 30, 2019 6:30 am

Devilfish wrote:
ewt340 wrote:
It's not the rankings, it's the percentages of the market share that they hold on domestic market. And we are only talking about the Express brand here, excluding the Mainline brand and market share.

And I thought PR was doing very badly that it was necessary to solicit management advice from A.net. :roll:

ewt340 wrote:
Just because it's quite common for other financially troubled airlines to fly empty on low season, doesn't mean it's okay for PAL to do so. The terms empty could be used to describe a really low payload or when they're not break even at operating said flight.

It's never okay for any airline to fly "empty" whatever the season, so what would you say is the breakeven load factor for PR?

ewt340 wrote:
Why would they need A330-800neo? The fuel burn isn't as good as A330-900neo. They need smaller widebodies which included A330-900neo, A350-900 and B787-9. And since they are already operating airbus plane for majority, it's only logical to stick to it. You got to deal with the fact that Philippines is not a premium heavy market for airlines.

Simply because the A339 doesn't have the legs to fly where PR wants to go and will require a big load penalty to get there -- cancelling whatever CASM advantage it has, while amortizing a bigger, more expensive frame which apparently is not needed anyway due to the low load factors you cited. As you say, it's not a premium heavy market so why should PR invest in very expensive planes to serve it...when they could stay with the same OEM with all the commonality benefits still present?

ewt340 wrote:
It's not a hybrid approach. The business model of providing cheaper ticket prices to attract costumers by lowering food or IFE standard is common in the industry. Both CX and SQ are currently doing it and it worked.

Isn't that because both carriers' standards were already much higher to begin with? PR is only striving for service quality parity and competitiveness.

ewt340 wrote:
5J 2017 annual report : https://cebupacificaircorporate.com/Ann ... 202017.pdf
You decide.

It's curious that you did not include the 2018 results. :scratchchin: .....

http://www.flightsinasia.com/article/4348


filipinoavgeek wrote:
He's had a known soft-spot for the A330-800 for years and has been pushing for PAL (and other airlines) to order it both in the Philippine Aviation threads and elsewhere. He sometimes even brought up the -800 when the type wasn't being mentioned at all in a discussion prior. This is in spite of being told numerous times that the -800 doesn't fit their needs, the fact that PAL has never (publicly) considered it, and more importantly, that it simply hasn't caught on.

Aah, running to big brother, I see...looking for validation? Has PAL told you that the A338 does not fit their needs? This attachment to the herd mentality does not disprove the model's suitability for certain sectors.


Oh yeah, because they need to listen to your advice too....

And you somehow forgot about their financial situation, market shares, or the fact that they ordered A350-900 instead of A330-800neo....
 
User avatar
Devilfish
Posts: 6522
Joined: Tue Jan 24, 2006 7:52 am

Re: What should Philippine Airlines do to make money?

Sat Mar 30, 2019 4:22 pm

filipinoavgeek wrote:
Well they've never actually publicly announced that they ever considered it (like I said before, it was already available during the time they were deciding between the 787 and A350, so the fact that the A330neo wasn't mentioned at the time has to say something).

The A338 wasn't available then...Airbus were just shopping it to airlines to assess potential market.

filipinoavgeek wrote:
And even when there has been talk about the A330neo for PAL, it's been usually the -900 and even then only rarely. There's a reason why only Kuwait has ordered the -800 and why Hawaiian cancelled their orders, making PAL ordering the -800 even more unlikely.

Doesn't that confirm the latter was not ready and that Airbus stands to profit more by selling the -900? Never said that the -800 was a sure shot at PAL. BTW, I wouldn't be surprised if KU sends the A338 to MNL or CEB in the near future to take over where A332s left off..... :airplane:

filipinoavgeek wrote:
Remember that an airline ordering a plane does not always mean that the plane they ordered was the perfect fit for them, but can be due to other circumstances as well.
I've said essentially as much in the last part of my post #38.


filipinoavgeek wrote:
Finally, as mentioned above and elsewhere, the -800's fuel burn and range is inferior to the 787. If the -800 was suitable for transpacific sectors as you suggest, then most likely PAL and other transpacific airliners would have ordered some by now.

Shorter TPAC sectors...the fuel burn will begin to hurt on say, CEB-LAX, even if the could do it. I doubt PR would disregard the commonality angle unless the 787 is much keenly priced.


ewt340 wrote:
Oh yeah, because they need to listen to your advice too....

That is your perception...they only need to listen to the data available to them to decide.

ewt340 wrote:
And you somehow forgot about their financial situation, market shares, or the fact that they ordered A350-900 instead of A330-800neo....

Not at all...I actually linked the report about their 2018 setbacks in the Philippine Aviation thread. Didn't it occur to you that the A338 couldn't do PR's polar routes for which the A359 was primarily intended :?:
"Everyone is entitled to my opinion." - Garfield

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