15 Pesos surcharge for Bird Avoidance System

By Eric Apolonio
Manila Standard

March 29, 2011

A P15 surcharge will be imposed on domestic plane tickets to equip major airports with a bird-avoidance technology under a plan drawn up by the Civil Aviation Authority of the Philippines.

The proposed surcharge may go even higher depending on the cost of the technology, according to CAAP director-general Ramon Gutierrez.

“The P15 fee is about 35 cents, which we think is reasonable enough,” Gutierrez said.

The total cost of the project is under evaluation and it will be based on the results of a public bidding, he said.

An electronic bird-avoidance system is being offered by a foreign manufacturer for P200 million per piece, he said. It could either be rented or paid in tranches. To be effective, two units should be installed in each of the eight major airports. Thus, it will cost at least P3.2 billion to install these units in each of the 8 airports—Diosdado Macapagal (Clark), Subic, Bacolod, General Santos, Laoag, Cebu-Mactan, Zamboanga and Davao—which are also covered by the pocket open-skies policy.

“Those are very expensive equipment which we could not afford at the moment,” |Gutierrez said after viewing a presentation.

The technology harnesses a radar system, independent of those used by air traffic controllers, to detect and track hazardous bird activity at commercial airports, military airfields and bombing ranges. The information gathered by these units is relayed by air controllers to pilots.

Stressing the need to acquire the early warning system, Gutierrez said that bird-strike incidents have become a concern because they cause damage to airplanes and endanger passengers.

An airliner usually spends a minimum of $500,ooo to repair an engine damaged by bird strike, according to airline source.

What Lies Ahead for PAL and Zest Air?

A strike now may just kill PAL

By Boo Chanco

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.

Boo Chanco’s e-mail address is bchanco@gmail.com. He is also on Twitter@boochanco.

PALEA's Greed

How much more is more?

Retrenchment benefits

Before Malacañang took over the labor case at PAL, the labor department had approved a compensation package for the affected employees worth P2.5 billion.

PAL said the Malacañang approved the spin-off but required an additional P50,000 gratuity pay per affected ground crew.

Thus, each of the around 2,600 employees who will be retrenched will receive the following:

  • Separation pay equivalent to 1.25 month’s salary for every year of service;
  • Additional gratuity of P100,000 per affected employee (higher by P50,000 per Malacanang order);
  • 100% commutation to cash of unused vacation leave and sick leave balances;
  • 1-year extension of the medical and hospitalization benefits;
  • Trip pass benefits depending on the number of years of service.
March 28, 2010

The Office of the President approved and confirmed the ruling of Department of Labor and Employment (DOLE) on the plan of carrier Philippine Airlines (PAL) to spin-off 3 non-core units that authorizes layoff of more than 2,000 employees.

Coinciding with the spin-off decision is the announcement of Philippine Airlines Employees Association (PALEA) to file notice of strike anew to the flag carrier.

On Thursday, 95% of PALEA's union members approved a strike vote on the ground of refusal to enter into Collective Bargaining Agreement (CBA) with the union, perhaps pre-empting the decision of the government approving the spin off.

This is the second time a decision from the executive department was announced on the heels of PALEA's plan for a work stoppage.

Earlier, Labor Secretary Rosalinda Baldoz affirmed PAL's outsourcing plan as a "management prerogative" and directed PAL to increase retrenchment benefits to P2.5 billion from P2 billion.

PALEA held a strike vote but also appealed to Malacañang to take over the matter.

Majority of PALEA's members agreed to go on a strike, but this was averted when President Aquino himself announced that the Office of the Executive Secretary will assume jurisdiction of the case.

PAL and PALEA have been conducting talks at the Palace, but these have been slowly progressing.

Aside from discussions on the outsourcing plan, PALEA also pushed for the negotiation of a collective bargain agreement.

PALEA's leaders said the CBA has been put on hold for 12 years and negotiations now should be revived since PAL reported a huge financial turnaround in its fiscal year 2010.

PAL insisted on finalizing the outsourcing issues first and the CBA later.

That's when the labor union went back to the labor department for another round of strike voting.

Aside from PALEA, the Lucio-Tan led airline also have ongoing labor woes with its cabin crew employees.

Executive Secretary Paquito Ochoa Jr. said Malacañang agreed with the DOLE position that PAL can contract out services; that the severance of employment of rank-and-file employees to be affected by the outsourcing of services was valid; and that PAL could not be held liable for unfair labor practice for pursuing a legitimate exercise of management prerogative.

Ochoa said the airline’s management, however, modified a component of the transition benefits package that will be given to employees who will be affected, such as increasing the separation pay to equivalent to 125 percent of the employee’s monthly salary per year of service from the one-fourth of one month’s salary that had been provided in DOLE’s original decision.

He said they also affirmed several compensations like the 100 percent cash payment of vacation and sick leave balance regardless of the number of years of service; a one-year extension of the medical and hospitalization package; and the continued trip pass benefits depending on the years of service rendered.

He said the Office of the President also increased the additional gratuity pay to affected workers to P100,000 from P50,000.

PAL president and chief operating officer Jaime Bautista said Malacañang’s decision upholding Labor Secretary Rosalinda Baldoz’s decision, removes all legal impediments on the implementation of the spin-off program.

“PAL can now focus on its restructuring efforts in order to survive in the long term,” he said.

He said management would reach out to affected workers to discuss the smooth and orderly implementation of the ruling. He urged members of the PAL Employees Association (PALEA) to respect and abide by the decision for the sake of industrial peace and the welfare of the flying public. - - - with excerpts from abs-cbnnews.

Laoag airport to undergo P100-million renovation

March 27, 2011

By Eric Apolonio

A plan to renovate the Laoag International Airport at a cost of P100 million has obtained the green light from the Department of Transportation and Communications.

Civil Aviation Authority of the Philippines Director General Ramon Gutierrez said the release of half of the project financing has been approved.

The other half will come from the Ilocos Norte provincial government headed by Governor Maria Imelda “Imee” Marcos.

Gutierrez told Manila Standard that Marcos vigorously pushed for the project.

Marcos brought with her plans for the Laoag passenger terminal, designed by Architect Jun Palafox the principal architect and planner of Ilocos Norte’s tourism master plan.

“The governor’s idea is to have a passenger terminal that stands out from other terminals in the country, reflecting the local setting, culture and aesthetics of Ilocos Norte,” Gutierrez said, adding that Marcos is averse to the idea of boxy terminal design, which is common among many airport terminals here and abroad.

Philippine Airlines and Cebu Pacific hold daily flights at the Laoag airport.Chartered flights to and from Hong Kong and Kaohsiung are being mounted on scheduled basis.


Airline business needs competition to improve and grow.

March 26, 2011

We don’t have to look far for an example. For many years when Philippine Airlines lorded it over the skies as the country’s sole air carrier, it posted profits and basked in the glamour of being “Asia’s first airline” while also generating a legendary reputation for waste, sluggishness, inefficiency, unerring tardiness and pricey fares—all the ills of a smug behemoth enjoying the convenience of a competition-free environment.

But when the country’s skies were opened to new carriers, the environment changed—not only for PAL, but, more importantly, for the riding public, which found itself at the receiving end of more value-for-money services and improved performance from a suddenly invigorated industry, now that companies were forced to compete with each other in a more liberal marketplace. The entry of Cebu Pacific and other budget carriers inaugurated a boon in domestic travel and tourism in the country. PAL would soon lose its status as the country’s largest domestic airline as the Gokongwei-led carrier aggressively innovated the flying experience with bargain prices and a fun, youthful vibe aboard its planes.

Given this instructive experience, it’s easy to embrace the new executive order signed by President Aquino that adopts an “open skies” policy in the country, which would open up the airports of Manila, Clark, Cebu and Davao to greater traffic from foreign airlines. Its proponents say fully liberalizing the country’s aviation industry this way would lead to increased tourism, trade and investment. The Joint Foreign Chambers, for one, came out swinging for the executive order, saying it would not only generate more jobs and revenues, but is also a “giant step toward [the administration’s] goal of doubling annual tourist arrivals to more than six million by 2016.”

Well and good. That is, indeed, an outcome devoutly to be wished. It must be asked, however: How fair is the new policy toward local carriers?

Cebu Pacific and PAL, perhaps understandably given the impact it would have on their bottom line, both have come out with reservations against the “open skies” policy. Their statements have not been a categorical rejection of the policy. What they have asked is an assurance of “reciprocity”—that for every right given to foreign airlines to mount flights to every airport in the country (except the Ninoy Aquino International Airport), a corresponding concession would also be granted them in the airline’s home country. “If the Philippine government puts out the welcome mat for a foreign airline, [we] fully support that, as long as the foreign airline’s government grants Philippine carriers the same opportunity,” said Cebu Pacific. That position is shared by PAL, which also called for “fair, reciprocal” arrangements.

And it sounds like a reasonable request. While boosting trade and passenger traffic are laudable aims, the means to achieving them should not involve treating the local carriers shabbily and riding roughshod over their interests. These companies have painstakingly built the infrastructure, cultivated the routes, grown the market, served the local riding public loyally—however much that service could always stand improvement. They deserve, at the very least, to be treated fairly, to be allowed to compete honorably in the expanded arena created by Malacañang’s “open skies” EO.

The rub is that the EO is silent on reciprocity, for now. While it authorizes duly constituted Philippine air agreement negotiating panels to offer transport rights to foreign carriers, it makes no mention of similar rights to be enjoyed from other countries by local carriers. As late as January, a top aviation official had given the assurance that local airlines would not be put at a disadvantage by the upcoming policy. Other countries, he said, would also have to liberalize their own aviation arrangements if they were to enjoy the Philippines’ “open skies.”

“Whether it’s stipulated in the executive order or not, we will make sure that there is reciprocity in the agreements with other countries,” said Porvenir Porciuncula of the Civil Aeronautics Board.

Well, the EO as it stands now appears not to carry any such stipulation. If that remains to be negotiated by the panels, then the country’s representatives must be clear and unwavering on that one condition. “Open skies” in the Philippines? Then be prepared to offer the same thing to our carriers. That is only fair and just.

Its Clark for AirAsia Philippines

March 25, 2011

AirAsia Inc., the Philippines-based affiliate of AirAsia Group announced yesterday that the airport in Clark, Pampanga will be its main hub in the country.

The airline plans to start operating international flights from the airport in the fourth quarter. The company announced plans for a $25-million capital expenditure last December.

AirAsia Philippines said Clark will become the 13th regional hub of the AirAsia Group. Other hubs of the group are located in Kuala Lumpur, Kota Kinabalu, Kuching and Penang in Malaysia; Bangkok, Phuket and Chiang Mai in Thailand; and Jakarta, Bandung, Surabaya, Medan and Bali in Indonesia.

AirAsia Group has over 60 destinations in China, Hong Kong, Macau, Taiwan, India, Bangladesh, Sri Lanka and Australia. AirAsia Philippines said the AirAsia Group has flown more than 100 million guests since its launch in 2001.

“Our choice of Clark underlines the airline’s commitment to developing transportation and tourism hubs outside Manila," AirAsia Inc. CEO Marianne Hontiveros said in a statement.

Selection of the airport will mean easy connectivity with Malaysia-based AirAsia Berhad, which has been flying to Clark from Kuala Lumpur and Kota Kinabalu since 2005.

“We plan to make Clark the hub for flights to popular destinations including Singapore, Hong Kong, Taiwan, China, Thailand, Korea and Japan. Travel will become much easier and more affordable for tourists and overseas Filipino workers,” Hontiveros added.

The airline is 60% owned by Marianne B. Hontiveros, Antonio O. Cojuangco Jr. and Michael L. Romero, with AirAsia Berhad holding the remaining 40%.

AirAsia Philippines will have an initial fleet of 5 brand-new A320 planes which is on delivery schedule and will be gradually increase to 20 by 2015.

What Reciprocity?

EO 29 Makes foreign Airline unlimited flight,
Local Airlines on the limits!

March 21, 2011

President Aquino doesn't seem to understand what reciprocity is all about when he signed Executive Order No. 29 which liberalizes the Philippine aviation industry by easing restrictions on foreign airlines in flying to international airports outside Ninoy Aquino International Airport.

For while the Civil Aeronautics Board (CAB) cannot grant any foreign air carrier Cabotage traffic rights, or the right to transport passengers and goods between two or more points within the Philippines, the said Executive Order failed to consider Bilateral Air Agreements which limit Philippine carrier from flying to the foreign airline's country.

As Cebu Pacific pointed out, Hong Kong carriers, for example, could now mount as many flights to Cebu but domestic airlines flying to the Chinese Territory are allowed only 2,500 seats per week.

Another interesting example is the key destinations to China. From the said EO, Chinese carriers would be able to fly from any of its major cities to Kalibo, but Philippine carriers are denied such an access by the Chinese authorities.

The new EO will focus on the following secondary gateways. They are:

1. Laoag International Airport (Luzon)
2. Diosdado Macapagal International Airport (Luzon)
3. Puerto Princesa International Airport (Palawan)
4. Subic Bay International Airport (Luzon)
5. Kalibo International Airport (Panay)
6. Mactan International Airport (Cebu),
7. Davao International Airport (Mindanao)
8. General Santos International Airport (Mindanao)
9. Zamboanga International Airport (Mindanao)
10. Bacolod Airport (Negros)

Of the ten airports, the Civil Aviation Authority of the Philippines (CAAP) listed only 9 airports having customs, immigration, quarantine and security (CIQS) facilities.

The most affected on this move is Zest Air which has been trying desperately in years to secure more seats to Korea and China's major cities but yielded only a few additional entitlement, while the open skies policy of the Aquino government technically opens unlimited rights.

“We want the same benefits from the governments of these foreign airlines. We want reciprocity, which is fair and reasonable. We are not asking for special favors — just a level playing field," says Cebu Pacific.

Cebu Pacific is the first airline to protest such move and is urging the Aquino administration to revise the open skies policy, saying it will only benefit foreign airlines.

Philippine Airlines and Zest Air are preparing similar actions.

“If the benefits of air services liberalization flow only one way, we are discriminated against in our own country," says the airline.

The government thought differently however.

Opening Philippine skies to foreign airlines is a way for the administration to boost the country's tourism and investments, Executive Secretary Paquito Ochoa Jr. said in a statement.

"By empowering the CAB to allow foreign airlines to fly directly to airports other than the NAIA, the government hopes to encourage these airlines to fly to other destinations in the country and make it easier for foreign guests to visit the archipelago's top tourist attractions," says Ochoa.

Philippine Airlines had been advocating for its reciprocity. PAL senior assistant vice president for external affairs Maria Socorro Gonzaga said there are 47.4 million seats available to foreign and local carriers but only 23 percent or 10.97 million seats are filled up because none of the foreign airlines would fly to the secondary routes promoted by President Aquino.

"It's not the number of airline seats that is behind the lack of tourist interest in the Philippines but the country's image abroad" Gonzaga said.

Citing for example seat entitlements to Clark International Airport in Pampanga which is about 25.6 million; to Cebu, 20.7 million; to Davao, 20.3 million; and to Kalibo, Bohol, Palawan, and Laoag, 19.6 million. None of

While there are 21.2 million seat entitlements in Manila which are almost fully filled.

By all accounts, airlines are interested in flying just one route or two. And they are covered by bilateral air service agreements.

Civil Aeronautics Board however clarified that there is no need to amend the EO since the reciprocity of air rights is implied in all presidential order.

"Even if the EO don't say that, we can assert reciprocity because it is subject to existing and higher laws such as the Constitution," said Atty. Carmelo Arcilla.

Arcilla said that CAB negotiate air traffic on a case-to-case basis dampening fears echoed by local airlines.

Along with the Executive Order (EO) on "pocket" open skies policy, President Aquino also signed an EO 28 which removed airlines from the Philippine aviation negotiating panel and reorganized the Philippine Air Negotiating Panel and the Philippine Air Consultation Panel.

The negotiating panel will be responsible for initial negotiations that will lead to the conclusion of air services agreements.

The EO has designated the Department of Trade and Industry (DTI) secretary as chairman of the panel, and members would include the executive director of the Civil Aeronautics Board (CAB) and representatives from the DTI, the Department of Transportation and Communication (DOTC), and Department of Tourism (DOT).

Local carriers such as Philippine Airlines and Cebu Pacific, which used to be members of the panel, were removed from the list.

On the other hand, the consultation panel, which will be responsible for succeeding negotiations of the air agreements, will be headed by the DOTC secretary and CAB executive director as chair and vice chair, respectively. Members will come from the DTI, DOT, Department of Foreign Affairs and the Department of Labor and Employment.

President Aquino signed on March 14 EO 28 and EO 29, with the latter authorizing the CAB and the aviation panels to pursue more aggressively the liberalization of the country's international airports, except for the main gateway Ninoy Aquino International Airport (NAIA).

Yao on Zest Air


March 20, 2011

MANILA, Philippines - In a highly competitive industry where flight attendants entertain passengers with dance numbers and online seat sales take on the frenetic energy of holiday bazaars, one airline chooses to go about its business quietly.

This isn’t to say Zest Air isn’t giving its competitors a run for their money. They hit the 1.4 million passenger-mark in 2010, and are looking to almost double this in 2011. Zest Airways, Inc. Vice-Chair, President, and CEO Alfredo Macam-Yao is confident about these figures, despite the current challenge of increasing prices of fuel due to the escalating Middle East crisis.

Maybe it’s his 40-plus years as a hardworking entrepreneur, one who didn’t have an easy start but who didn’t give up and had the knack for recognizing opportunities, that gives Ambassador Yao (he was Special Envoy to China for Tourism Cooperation under Gloria Macapagal-Arroyo’s term) his optimism. “I believe air travel will continue to grow in the next 10 years,” he says.

“The development of biofuels for aircraft use is already a reality and it is just a matter of time when the rest of the world catches up with it through American leadership in this technology. There is a healthy and growing demand for low cost
carriers and we intend to be part of this demand.”

Yao shares thoughts on the industry, transforming a company,and Zest Air’s plans for the summer season in this one-on-one with Business Agenda.

BA: Zest Air took over an old airline in 2008. What opportunities in the industry and in the market did you see that made you want to take over?

Alfredo M. Yao: More and more people are realizing and enjoying the convenience of air travel. Flying, like in developed countries, has become an integral part of people's daily lives and continues to do so. Gone were the days when air travel was considered a luxury. The predominance and growth of low cost carriers in the last decade have given everyone the chance to fly with affordable fares. Aside from the business opportunities that come with a robust industry passenger growth, there is a need to further develop Philippine tourism. Tourism brings jobs and opportunities to our country which is rich in natural resources and beauty. These economic and social opportunities in turn, will improve Filipino lives.

BA: Can you give us a brief rundown of what changes and/or improvements Zest Air infused in the old company in terms of service, acquisitions, and management practices?

AMY: We discarded all the old planes from the old airline and acquired a series of brand new Airbuses and MA60s to revitalize and improve the fleet plan. It is part of our vision and mission to satisfy our customers through product and service innovations. It is our desire to provide a satisfying experience for each and every one of our passengers and gradually obtain their loyalty to our brand. In terms of management practice, we introduced best practices to change the status quo and improve organizational functioning.

BA: What among these changes do you think made the most impact with your employees and the customers?

AMY : The implementation of best practices, which is an organization’s commitment to maintaining the highest standards and bringing effective change within the company, will inevitably reflect on how we serve and value our customers.

BA: What were your biggest challenges when you took over the old company?

AMY : Entering into the aviation industry with no prior background was in itself a challenge, butchanging mindsets and transforming organizational culture is a more formidable task. And of course, for me to be able to turn this venture into a profitable one without necessarily diluting the interest of the various stakeholders, is also one of my biggest challenges. But I believe that with hard work, perseverance and foresight, plus having the right people work with me to develop and sustain the business, we will make a distinctive mark in the airline industry.

BA: How much has Zest Air grown since you took over? Can you name figures?

AMY: We flew around 800,000 passengers in 2009 and this grew to 1.4M passengers in 2010. We are projecting this to increase to 2.6M passengers in 2011 as a result of more aircraft acquisitions planned for this year and adding more frequencies to our existing destinations plus introducing new domestic and international routes.

BA: Considering how affordable air travel has become, and that other airlines are resorting aggressively to gimmicks to attract passengers, how is Zest Air holding up? What is its edge, its most significant contribut ion to the cur rent landscape?

AMY : Despite stiff competition, we are doing pretty well. We do not intend to fight head on with our competitors but instead to differentiate ourselves from them.

We have recently introduced new products such as the Voyager Pass, a booklet composed of 10 one-way sectors with 1 one-way sector free.

The Voyager Pass makes it very easy and convenient for a passenger to travel by writing his or her own ticket. All they have to do is call our reservations hotline. We also have the popular Voyager Card, a privilege card that provides card members discounts, freebies and other perks by mere presentation of the privilege card to member establishments.

These two distinct products enhance the customer experience and helps us fortify our branding efforts.

BA: What other areas of growth are you seeing in the industry in the next 10 years, and how will Zest Air fill in those areas?

AMY: There is a bright future in this industry. Things may look dismal now because of the recent Middle East turmoil, which of course affects our largest cost component: fuel. I believe air travel will continue to grow in the next 10 years. The development of bio-fuels for aircraft use is already a reality and it is just a matter of time when the rest of the world catches up with it through American leadership in this technology. There is a healthy and growing demand for low cost carriers and we intend to be part of this demand.

BA: You’re called the “juice magnate”, having built the name Zest-O. You also lead several other companies in diverse fields. Do you “lead” them in different ways? Do you follow a general “leadership rule” or do you tailor-fit the way you manage companies depending on the nature of their business?

AMY: My father passed away when I was a teenager, leaving me to fill in his shoes and my mother, Soledad Macam, to make many sacrifices for our family. I’m led by her example and by faith in God. Those are my leading principles in leading companies, no matter what they may be. Helping, giving back, and providing people with sustainable solutions so that their lives can be bettered, even when they leave the company and venture out on their own. I believe strongly in social entrepreneurship and in having meaningful CSR programs, like our partnership with Gawad Kalinga, where we have communities make products out of old Zest-O packaging—doilies and bags—which we in turn sell in Zest Air ticketing offices.

BA: You’re also part of many other affiliations. How do you make sure you fulfill your role in each one, and not spread yourself too thin?

AMY: It’s simply a matter of time management. I always believe that when you do something, you have to do it well, to the best of your ability. Half-hearted efforts are a waste of time and resources.

BA: What do you do for work-life balance? How does Ambassador Yao relax and unwind when he’s not in the office?

AMY: I do take breaks every now and then, spend time with my family and close friends. When time permits, I also play golf and tennis. Going to church and having my private moments with God relaxes me, I have always anchored my faith in God.

BA: Summer’s coming. Any special promos or new routes for Zest Air for this season?

AMY: We have the Voyager Pass which we are aggressively promoting plus promo fares during paydays.

We also have a wide range of tour packages (Zestful Getaways) to choose from at very affordable prices for those who want to travel during the summer holidays and beyond. Passengers may also avail of these packages at 0% in partnership with BDO. For our passengers’ peace of mind, we will soon be offering travel insurance to passengers in partnership with ACE Insurance.

We will be starting our Beijing-Kalibo route in June 26, 2011 in addition to our Shanghai-Kalibo, Incheon- Kalibo, Busan-Cebu routes. We intend to add more international destinations in the latter half of this year. Recently, we have added more frequencies to our domestic destinations such as Cebu, Davao, Bohol, Iloilo, Puerto Princesa, and Tagbilaran, to name a few.

PAL celebrates 70th anniversary

March 15, 2011

MANILA, Philippines – Philippine Airlines (PAL) celebrated its 70th year anniversary Tuesday by commemorating its storied past while charting a course for the future.

The PAL family has marked the milestone with simple but meaningful activities. Masses were held at the airline’s various stations and facilities throughout the country and overseas.

PAL also hosted an anniversary reception at the Newport Performing Arts Theater at the Resorts World Manila complex in Pasay City, attended by PAL staff and 1,500 guests from government, the diplomatic corps, and the aviation, travel and business sectors.

PAL chairman and chief executive officer Dr. Lucio C. Tan led the airline in welcoming the guests.

As PAL turns 70, the airline has one eye on the legacies of its past and another on the goals of the future.

Since its founding 70 years ago, PAL has been inextricably linked with the Filipino nation as the pioneer flag carrier, major air transport utility and partner in nation-building.

PAL was founded by a group of prominent Filipino industrialists on February 26, 1941. On March 15, 1941, a tiny Beech Model 18 aircraft carrying five passengers took off from Nielson Airport in Makati bound for Baguio “earning for PAL the distinction of being Asia’s first airline.

The flag carrier is bidding to replicate its past success in the more demanding operating and competitive landscape of the future. It faces a slate of tough challenges in this quest.

PAL reported a modest profit of $15.1 million in the third quarter - October to December 2010 - of its current 2010-2011 financial year a period when air travel gingerly recovered from a slump the previous year.

But the succeeding months, from January 2011 to the present, showed just how fragile the recovery was. The sudden eruption of political unrest in the Middle East sent crude oil prices skyrocketing to nearly $120 per barrel in late February the highest in two and a half years.

This forced the global airline industry to flag a potential loss for carriers by the end of 2011. In fact, the International Air Transport Association (IATA) has already downgraded its outlook for the year.

Centennial of Philippines Dream to the Sky

Its Mars and Baldwin Day!

The International Hot Air Balloon Festival, now on its 16th year, is an attempt to re-start and continue the tradition started 100 years ago, where the first flight on Philippine soil took place.

The first airplane in the Philippines was christened "Skylark", a Red Devil biplane developed by Capt. Thomas S. Baldwin, a famous balloonist during the Manila Carnival.

It was not the first flight in Asia however as the Philippines was beaten by Vietnam by a matter of days, but its carnival was truly dubbed as the "Greatest Annual event in the orient".

The plane arrived on February 11. It was flown by Bud Mars A.K.A. James C. Mars at the opening ceremony of the festival as flight demonstrations for the Governor General. The Carnival then was held on the 21st to 28th day of February.

Mars was part of the Pacific exhibition tour organized by Captain Thomas Baldwin, who also made an exhibition flight on the same day after Mars did, in his Baldwin Red Devil biplane.

But it was Baldwin who made the first cross-country flight in the Philippines six days later, when on Feb. 27, 1911, he flew 10 miles out of Manila in his Red Devil biplane.

In 1910 Baldwin built his own airplane, the first to feature a all-steel framework rather than wood, and called it the "Red Devil." It was powered by a 60 horsepower Hall-Scott engine, to distinguished it from the Curtiss.

In a fitting tribute to the festival, Baldwin made his first balloon ascent in 1875 and spent the next 10 years performing in balloons at thousands of shows and fairs across the United States. he made, on January 30, 1885 one of the first parachute jumps from a balloon recorded in aviation history. He made many more jumps, becoming known as "The Father of the Modern Parachute."

The Baldwin exhibition team came from Hawaii on board a steamboat with two planes each in stow. They arrived in the Philippines on February 11th and tested the Philippine skies on the 13th before they flew to the general public on the 21st of February.

Before Baldwin left the country for Japan, he sold one of their airplanes to a flight school in the Philippines. (Special Thanks to Roy Mize)

PAL cuts Riyadh Flight

Due to Operational Restrictions

By Mary Ann Ll. Reyes

March 12, 2011

MANILA, Philippines - Flag carrier Philippine Airlines (PAL) will stop flights to and from Riyadh beginning April 2 after incurring losses from its operations in the capital and largest city of Saudi Arabia.

PAL vice president for operations Nikki Gozon said it was a difficult route to sell because they are only allowed to fly three specific aircraft registries, one particular Boeing 747 and two Airbus 330s.

He said restrictions on what plane PAL can use for the route have restrained its flexibility in operating the Manila-Riyadh service.

PAL flies four times weekly to the Middle Eastern city.

“It becomes an operational nightmare because we only use three specific aircraft that you can fly into the city. When one airplane is down, we cannot change to another,” Gozon said.

The airline deploys a Boeing 747-400 aircraft, which seats 50 passengers in the business class and 383 in the economy class.

PAL resumed its flights to Riyadh in March last year after halting operations beginning March 2006. The airline first suspended the service due to high fuel prices, an oversupply of seats, and intense competition with Middle Eastern carriers.

“There are not enough passengers taking this flight to justify its continued operation. Revenues earned are not enough to cover cost of operations,” PAL said.

PAL also stopped flying to Brisbane beginning October last year, just seven months after it launched its maiden flight to the city.

But the carrier is set to add India to its international network starting this month. It will launch thrice-weekly flights to New Delhi using an Airbus 330.

PAL stopped flying to India in the 50s but now sees good prospects due to the influx of Indian tourists to Manila and Cebu.

“We look at India as a profitable market, that’s why we are flying into it,” Gozon said.

PAL, which has a fleet of seven Boeing aircraft and 30 airbuses, currently serves a network of 20 domestic points and 25 international destinations spanning Asia, Oceania and North America.

Zamboanga airport closed

As PAL A320 veered-off runway

March 9, 2011

More than 2,000 incoming and outgoing passengers were stranded at airports in Manila, Cebu, Davao, and Tawi-Tawi when a Philippine Airlines A320 plane veered off runway at the turn around pad and stuck on soft grounds Wednesday morning.

Philippine Airlines flight number PR 124 bound for Manila, was supposed to leave at 6:55 am and was turning slowly for take off, when its left wheel fell off the concrete runway towards the mud.

The plane was not able to get off the mud and the passengers were requested to temporarily wait back at the pre-departure area for further announcement until they were told that their flight together with all others were canceled for the day.

The plane was carrying at least 90 passengers. No one was injured in the incident.

Airport Manager Celso Bayabos this was the first incident that an aircraft taking off from the Zamboanga City Airport runway got stranded in the mud. He called the incident a "runway obstruction" after it effectively closes the runway for the entire day.

Capt. Amado Soliman of the Civil Aviation Authority of the Philippines (CAAP) said that Notice to Airmen (NOTAM) was immediately circulated advising airlines that Zamboanga International Airport is closed to air traffic since 7:05 am.

PAL is still investigating an alleged miscalculation on the part of the pilots while maneuvering the plane, but he said

Soliman said PAL is coordinating with authorities, particularly the US Air Force who are based at Zamboanga airport to lend them towing equipment to remove the plane off the mud.

Meanwhile, another PAL plane also bound for Manila was delayed for at least seven hours in Cebu after its Airbus 330-300 reported an oxygen leak in the cockpit.

No one was reported hurt, but the delay caused inconvenience to more than 200 passengers bound for Manila.

PR Flight 848 was supposed to leave the Mactan Cebu International Airport (MCIA) in Lapu-Lapu City at 9:05 a.m. Wednsday but left at 4:30 p.m. due to the leaking problem.

The plane arrived safely in Manila at 5:15 p.m., while the plane in Zamboanga is expected to fly back tomorrow morning.

Police inaugurates sky patrol

By Cecille Suerte Felipe

March 9, 2011

MANILA, Philippines - The Philippine National Police (PNP) will now employ helicopters with night-flying capability to boost their anti-crime efforts particularly in Metro Manila.

Interior and Local Government Secretary Jesse Robredo said the tactical capability of the aircraft would translate to greater operational advantage in anti-criminality, public safety and law enforcement missions.

“The sky police will be a picture of the services that the PNP will give,” said Robredo.

PNP spokesman Chief Superintendent Agrimero Cruz Jr. said the new police choppers will provide operational command and control functions to coordinate ground units in police operations, particularly during mobile pursuit situations.

Robredo formally launched yesterday the Sky Police during simple ceremonies at PNP headquarters in Camp Crame.

The DILG chief said the PNP has operationalized tactical air support for ground operations to boost the crime-fighting capability of police units.

He said the primary mission of the Sky Police is to conduct aerial anti-crime and surveillance patrols in Metro Manila and nearby regions in support of ground operations.

“The Sky Police will conduct aerial patrols as well as monitor incidents and to provide surveillance, security and real time information to the PNP ground units operating in Metro Manila and its neighboring regions,” Robredo said.

The Sky Police is manned by members of the Air Unit of the PNP Special Action Force (PNP-SAF) who, while on aerial patrol duty, will report to two PNP units based at Camp Bagong Diwa in Taguig and at Camp Crame, Quezon City.

It will be under the direct operational control of the National Operations Center (NOC) of the PNP and the Regional Tactical Operations and Intelligence Center (RTOIC) of the National Capital Region Police Office (NCRPO).

Both NOC and RTOIC will provide command and control to the Sky Police.

Three R-44 “Raven” aircraft, officially commissioned as police helicopters in 2010, will be the workhorses of the Sky Police.

The three US-made Robinson R44 Raven II police helicopters worth P104.9 million were acquired by the PNP under its 2008 capability enhancement program.

Other standard equipment include a 500-watt xenon searchlight and infrared imaging system, monitor, and dual audio controller for police radios.

“These aircraft form part of the fleet of rotary-wing aircraft of the air unit of the PNP-SAF. As a multi-role aircraft, the police choppers can also provide tactical support for fire suppression, aerial reconnaissance and supply airlift for ground troops in field operations,” Cruz said.

The Raven police helicopter is capable of flying for three hours on a standard fuel load and at a cruising speed of 130 mph and range of 300 miles. – With Non Alquitran

PAL flies to Europe!

Prepares 777 flight to Crete

March 8, 2011

Philippine Airlines (PAL) said on Monday that it is preparing two Boeing 777-300ER plane for repatriation flights of Overseas Filipino Workers (OFW) displaced in the Libyan conflict today as it sets to fly its first chartered flight to Crete set to depart at 5 and 10 p.m. respectively.

This is the first and only instance where a Philippine Flag carrier will land in the Greek island nestled in the Mediterranean Sea, and amidst flight ban to the European Union.

The plan was for PAL to fly to Heraklion International Airport in Crete to pick up Filipinos who were ferried there by ship from Libya.

PAL already secured the services of a ground handler for their plane so that it could be properly serviced and refueled back to Manila.

In a statement, the airline said that many times in its 70-year history, the national flag carrier, with its wide international route network, has embarked on emergency missions to evacuate OFWs in conflict-stricken territories.

The company said it was able to get a special permit to fly to Greece for the repatriation, despite a standing ban on Philippine carriers from flying to Europe.

“PAL [is seeking] the understanding of passengers who might experience slight delays as the airline adjusts its aircraft schedules to give way to special charter flights for the repatriation of Filipinos fleeing the unrest in Libya,” the company said.

*     *     *

 A view from Heraklion International Airport in Greece
Two Philippine Airlines Boeing 777-300ER jets were flown to Heraklion, Greece for repatriation of Overseas Filipino Workers displaced by Libyan conflict. RP-C7777 became the first PR plane to land in Crete followed by RP-C7776 10 hours later. Philippine Airlines also became the first triple seven operator to land at Heraklion Airport.  

Videos for the rescue flights can be found here and here

Aquino flew low cost to Jakarta

Makes a milestone as the first Philippine President to ever done so

March 8, 2011

MANILA, Philippines - Making good on his government's vow of austerity, President Aquino took a Cebu Pacific flight for his state visit to Indonesia on Monday, the first time that the country's head of state flew low cost.

The 8:55 p.m. Cebu Pacific flight 5J759 to Jakarta was the only one that fit into the President's schedule, his senior military adviser Brig. Gen. Jeffrey Delgado earlier said.

From Jakarta, Aquino and his 53-man delegation will take a Philippine Airlines (PAL) flight for another state visit to Singapore.

PAL had always played host to Philippine presidents, including Aquino's predecessor and now Pampanga Rep. Gloria Arroyo.

Aquino has promised to keep expenses when traveling abroad at a minimum to allow more savings for the government, which is hard-pressed in trimming the budget deficit.

His state visits to Indonesia and Singapore, according to Executive Secretary Paquito Ochoa Jr., would cost P12.27 million. abs-cbnnews

Manny Osias, Pilot of the year!

5J pilots tops honor roll again

March 6, 2011,

Another pilot from Cebu Pacific Airlines was awarded Airline Pilot of the Year by the Aircraft Owners and Pilots Association Philippines (AOPAP) and the Philippine International Hot Air Balloon Fiesta organizing committee.

“I am flattered at having won the award, especially since it was judged by my peers, fellow pilots and colleagues in the industry,” said Osias.

Capt. Manny Osias of Cebu Pacific has been flying with the airline beginning with its DC-9 aircraft since 2001 and has been recognized by the airline as its Pilot of the Year for 2008. Osias also garnered Safety Achievement Awards and Instructor of the Year Awards throughout his career.

According to Capt. Meynard Halili, an AOPAP member of the board and at the same time a screening committee member, the Airline Pilot of the Year award which was won by Capt. Myra Florencio, also of Cebu Pacific garnered a similar award in 2009, which is meant to show that the Philippines measures up to international aviation standards, provide role models for young industry professionals, and elevate the quality of technical skills through competition.

“This award is for those who have the passion for aviation, commitment to safety and proficiency, and positive influence in the workplace and industry. If there was anyone who was born to be an airline pilot, it would be Capt. Osias,” said Halili.

Osias has been an Airbus type-rating instructor since 2007. He qualifies CEB’s Airbus pilots, and maintains the proficiency of the airline’s pilots.

AOPAP and the Balloon Fiesta Committee have been giving the Airline Pilot of the Year Award since 2006. They have also been recognizing Filipino airmen annually for their contribution to fostering safety, competence and excellence in general, military and commercial aviation.

PAL signs engine maintenance agreement with KLM

A Prelude to Europe?

March 04, 2011

Philippine Airlines (PAL) has entered into a 12-year contract with AFI KLM E&M for maintenance and engineering support of its GE90 engines, the primary workhorses of PAL’s fleet of Boeing 777-300ERs.

PAL president and COO Jaime J. Bautista and AFI KLM E&M executives led by its senior vice president commercial Fabrice de France, signed the agreement which covers on-site and on-wing maintenance, shop visits, component support, spare engines and engineering support for PAL’s extended range Boeing 777s.

During the past years, PAL has tapped the services of AFI KLM E&M not only for CF6-80E engine maintenance but also for airframe and FTR support services. Satisfied with AFI KLM E&M’s high quality services and attractive pricing, PAL decided to take the partnership further.

“AFI KLM E&M has amply demonstrated its flexibility and understanding of our needs in all the work done for us. We are, therefore, happy to extend our cooperation to a new area – GE90 engine support – where AFI KLM E&M has a proven knowhow and track record,” Bautista said.

Apart from competitive rates, PAL was also won over by the dual MRO-Airline profile of AFI KLM E&M, which has unrivalled experience in the GE90 maintenance product, both for the Air France KLM fleets and for its customers worldwide. AFI KLM E&M has expanded its engineering capabilities, enabling it to offer a comprehensive range of solutions for handling GE90 engines – currently the only comprehensive, reliable alternative to the manufacturer’s service offer.

Franck Terner, AFI KLM E&M, executive vice president said: “We are delighted to continue working with Philippine Airlines, with which we have developed a relationship based on respect and mutual trust over the years.”

Now celebrating its 70th anniversary, PAL is the flag carrier and national airline of the Philippines. Founded in 1941, it is the oldest commercial airline in Asia operating under its original name. Air France Industries and KLM Engineering & Maintenance, which joined forces following the Air France KLM merger, are world-leading multi-product MRO (maintenance, repair, overhaul) providers with a joint workforce of 14,000.

$10 Million CAAP Funds Missing!

March 3, 2011

Don't be surprise why its CAT II

The Commission on Audit (COA) has discovered questionable withdrawals in the country's premiere aviation body amounting to more than $10 million from the savings account of the Civil Aviation Authority of the Philippines (CAAP) in 2009.

In its audit report to the agency, COA said there was “non-recording” of credits-withdrawals amounting to $5.12 million or P237.69 million and debits-remittances amounting to $5.68 million or P263.7 million from the CAAP savings account with the Land Bank of the Philippines.

The CAAP Employees Union (CAAP-EU) earlier exposed in the Philippine Star the withdrawal of almost P400 million from the UCPB and Landbank accounts of the aviation body by former CAAP director general Ruben Ciron before he was replaced by Alfonso Cusi.

According to the report, Ciron made massive withdrawals, assisted by his chief of staff Ronaldo Manlapig, in March 2010. The withdrawals were made before Ciron was replaced by Alfonso Cusi, then general manager of the Manila International Airport Authority (MIAA).

CAAP’s account with the United Coconut Planters Bank (UCPB) and the Land Bank of the Philippines showed five huge cash withdrawals shortly before Ciron’s departure as head of CAAP in March 2010.

CAAP’s passbook with the UCPB showed a similar strategy employed in the Armed Forces of the Philippines (AFP) “conversion” scandal, when it figured a withdrawal P150 million on Jan. 7 and P80 million on March 2, last year without further report where it went.

Meanwhile, the Land bank passbook showed that there were four huge US dollar withdrawals made by CAAP amounting to US$1 million on Feb. 23, another US$1 million on Feb. 26, and US$2 million, also on March 2.

“These withdrawals are highly questionable since it was made when he was known to be on the way out due to the CAAP’s failures such as the issuance of the SSC (significance safety concerns) findings on Philippine civil aviation by the ICAO (International Civil Aviation Organization) in December 2009 and the Category II downgrade of the Philippines by the US FAA (United States Federal Aviation Authority,” a senior CAAP official was quoted as saying.

Apart from the huge bank withdrawals, the CAAP-EU said another anomaly in the CAAP that seemed similar to the AFP “conversion” controversy was the disbursements of United Nations fund, noting the ICAO was a specialized agency of the UN on international civil aviation matters.

COA said the unrecorded withdrawals cast doubt on the balance of the CAAP savings account which stood at P3.666 billion.

ANA Arrives Manila

First Foreign Airline at Terminal 3

March 1, 2011

MANILA - For the first time since the government took possession of the Ninoy Aquino International Airport terminal 3 (Naia 3) seven years ago, a foreign airline finally began operations here on Sunday, promising what could be the start of the terminal’s full rehabilitation and commercial use for both domestic and international operations. 

All Nippon Airways (ANA), the second-largest airline company in Japan, landed on Sunday as scheduled at the NAIA Terminal 3 from Narita, the first foreign airline to do so after it flew yesterday 108 passengers, 14 of which were seated in business class.

Majority of the passengers were Japanese, with the aircraft departing from Narita Airport at 5:55 p.m. local time and arrived at NAIA Terminal 3 at 9:50 p.m. using a 214-seater Boeing 767-300 plane for daily service to Tokyo.

“This is an historic occasion in line with President Aquino’s promise to lure more tourists to come to the Philippines,” said Manila International Airport Authority general manager Jose Honrado.

Honrado also disclosed that starting March this year, a team would start conducting tests on Terminal 3’s other facilities to make way for two other foreign airlines slated to Join ANA before June this year.

Honrado revealed that Cathay Pacific and Singapore Airlines are only waiting for the completion of the test before they start constructing their own passenger lounges, check-in counters, computer system and others.

The Terminal was constructed by Takenaka, the Japanese construction firm that was awarded contract for the passenger terminal’s rehabilitation at a cost of almost P2 billion.