PAL Boost service to Vancouver as Asian rivals cut back

Philippine Airlines defies world recession, expands service while Asian heavyweight cuts YVR




By Joanne Lee-Young

The global economic crisis has Asian airlines struggling harder than anyone else to keep up international traffic numbers, but in an anomaly that speaks to demographic change in Canada, Philippine Airlines said this week that it will boost flights to Vancouver.

The airline will go from flying five times a week to a daily service starting March 23, adding Monday and Wednesday departures to its schedule.

Currently, it flies Manila direct to Vancouver, down to Las Vegas, back up to Vancouver and on to Manila. The additional flights, however, will not include Las Vegas.

“The two new flights will only be coming into Canada,” said Allan Coo, Vancouver-based country manager for Philippine Airlines. “The additional capacity will solely benefit Canada and not the U.S. and is due to the [expanding] Philippine community that we are serving here.”

The move is striking because it comes as mightier names like Singapore Airlines and Cathay Pacific have been forced to axe or trim long-established routes to Canada.

In January, Asian carriers led the decline in passenger traffic with an 8.4-per-cent year-on-year drop, according to the International Air Transport Association. Due to a modest lift from Lunar New Year bookings, this was slightly better than their 9.7-per-cent December drop.

ALLAN COO, PAL CANADA MANAGER

Nevertheless, it was more pronounced than the 6.2-per-cent drop for North American carriers and a 5.7-per-cent drop for European carriers. Tellingly, even North American carriers said that their overall decline was led specifically by a reduction in trans-Pacific travel.

In response, Singapore Airlines will, after 20 years, end its service to Vancouver.

Cathay Pacific, which serves a much larger market, is cutting one flight per day. On Wednesday in Hong Kong, Cathay reported a record $1.4 billion net loss for 2008 compared to a net profit of $1.1 billion in 2007, its first shortfall in a decade.

Although Philippine Airlines may absorb a small number of passengers heading to Southeast Asia, Coo said “our passengers are mainly ethnic Filipinos that go between the Philippines and Canada.”

Andrew Budiman, vice-president Canada at Singapore Airlines, agreed. “Let me put it this way — we certainly have a few passengers that like to go to Singapore and then to Manila, but it’s a bit of a backtrack,” he said. “I would not think that a huge chunk of my revenue would now go to Philippine Airlines. It’s different route and market.”

“Many airlines are redeploying aircraft and staff to the niche markets that they feel they can turn a profit on, as they streamline and cut non-profitable routes,” said Marc-David Seidel, who follows aviation trends at the University of B.C.’s Sauder School of Business.

Indeed, Coo of Philippine Airlines said that in tandem with the Vancouver additions, the company could shave some capacity to its American destinations, even though a few were recently added for the busy summer season.

One of the main factors that makes Canada a more attractive market for Philippines Airlines is the wave of temporary foreign workers who have come not only to B.C., but also to other western Canadian provinces via Vancouver, said Coo.

“We have more workers from the Philippines in Canada. That community has increased over the years and right now, the Philippines is the second-largest source of foreign workers in Canada,” after the U.S., he said.

Coo added that a shaky economy might temporarily erode this market, but that the long-term trend would likely hold.

“In northern Alberta, (mining and petroleum companies) had to send home about 300 workers because (the economy) has considerably slowed. But many of these workers have assurances that when the economy shifts, they would be first in line [for new jobs]. We were part of sending them home and will be part of bringing them back.”

Coo pointed to Saskatchewan’s signing of a memorandum of understanding with the Philippine government to bring in more health care workers. “They are more essential and less likely to [be let go] even in a downturn. They are still being hired,” he said.

Immigrants from the Philippines are also a growing demographic, Coo said. “They also travel a fair bit, back and forth, to visit friends and family.”

“We are scared and excited,” said Coo, explaining that Philippine Airlines re-started serving Vancouver in 2001 with three flights. Between 1996 and 1998, its Manila-Newark, N.J., flight stopped over in Vancouver.

It’s not the first time it has chosen to add flights while others cut. During the SARS outbreak, when much travel in and out of Asia ground to a halt, Philippine Airlines began adding flights to its Vancouver route, Coo said.

“Cathay went from 21 to seven flights a week and we added for the first time. People wondered why, but we found an opportunity as our passengers wanted to avoid landing in any middle points.”