5J to fly Bali by March 16

November 20, 2012

Cebu Pacific will inaugurate flights to Bali, Indonesia, on March 16, 2013 says Candice Iyog, CEB’s VP for marketing and distribution.

Manila-Bali service will be every Tuesday and Saturday. It will depart Manila at 4 a.m. and arrive in Bali at 7:50 a.m. The return flight will depart Bali at 8:35 a.m. and arrive in Manila at 12:25 p.m.

5J 279 MNL 0400H Arrives DPS  at 0750H T-SA A320
5J 280 DPS  0835H Arrives MNL at 1225H T-SA A320

Airborne to disaster

November 17, 2012

The finding by the Civil Aviation Authority of the Philippines (CAAP) that pilot error was behind the plane crash that killed Interior Secretary Jesse Robredo should remind everyone that in the era of easy and readily available air transport, safety remains a key concern and a nagging challenge. 

According to the 14-page report of the special body that investigated the crash, Capt. Jessup Bahinting, the pilot and owner of the six-seater Piper Seneca aircraft that sank in waters off Masbate last Aug. 18 lacked the ability to handle the plane in bad weather. Bahinting and his Nepalese student-pilot died along with Robredo. 

The report said Bahinting erred when he did not turn the plane back to Cebu at the first sign of engine trouble. The plane had only one engine operating and Bahinting had no training in what the report called a “one-engine inoperative emergency.” He could have turned back to Mactan airport where he had taken off but he pressed on toward Naga City—a decision that proved fatal. Had he turned back, the accident might not have happened, or it would have been mitigated, because Mactan has the longest runway and widest air strip, the most modern navigation and communication equipment, and the most advanced and trained crash, fire and rescue equipment and personnel. Bahinting simply ignored dire warnings and wiser options and brought Robredo—tragically—to his death. 

Moreover, Bahinting ignored orders by air safety authorities to remain at 2,500 feet given the abnormal circumstances of the weather, the report said. Data from the air traffic control center in Manila showed that the plane climbed to 4,000 feet before the crash. The report also cited the testimony of Jun Abrazado, Robredo’s police aide and the lone survivor of the crash, that the plane veered to the left in its final approach to the runway, but the pilot appeared to have miscalculated and maneuvered the plane too late so that it shot off and crashed into the sea. 

A number of plane crashes in the last five years have been mostly attributed to pilot error. The worst took place in December 2011, when a cargo plane crashed into a neighborhood in ParaƱaque City, killing 14 people, including the pilot; 11 of those killed were on the ground. Like Bahinting, the pilot was considered relatively proficient but was unable to safely maneuver and land the plane. Both incidents involved engine trouble, which probers admitted would require the pilots to apply their skills of maneuvering so as not to aggravate an already bad situation. In both cases, the pilots fell short of the skills required. 

Similarly, a 2008 incident in which a C-130 cargo plane crashed in Davao Gulf involved a pilot of the Philippine Air Force much respected by his peers for smooth takeoffs and landings. The crash of the Air Force workhorse killed nine, mostly PAF men. While PAF officialdom at first discounted pilot error, later findings pointed to its likelihood. 

It is ironic that Robredo, who was in charge of public safety and order, should die because of safety infractions. It is even more ironic that even PAF pilots have perished due to factors that may include pilot error. In the case of the Robredo crash, the report blamed not only engine trouble and pilot error, but also the alleged connivance between Bahinting and CAAP personnel in the issuance of a certificate of airworthiness for his aircraft even without the necessary tests. The last finding is particularly worrisome, as readily admitted by President Aquino, who said he had read the report with “a mixture of sadness and disappointment.” 

“The pieces of evidence point to one thing,” the President was reported as saying. “If some people did their job, if the rules of the industry were followed, if those involved were only faithful to their obligations, the tragedy could have been avoided.” 

Even Robredo’s widow, lawyer Maria Leonor Robredo, while saying that “the crash report will not make me any sadder,” urged reforms in air safety regulation. She said she hoped that the results of the inquiry would lead to reforms to ensure the safety of air transport and prevent mishaps, such as the one that killed her husband, from taking place. Hers is an urgent, if plaintive, appeal. Going by recent air crashes traceable to pilot error and violations of air safety measures, with some connivance by regulators themselves, there appears a history of impunity in the breach of safety rules. This has got to stop—or the much-admired Robredo would have died in vain.

5J Cleared to Land in America

As DOT Clears Wet Lease to fly

November 16, 2012

Low Cost Carrier Cebu Pacific(CEB) is now permitted to fly the United States Of America (US), data from the US Department of Transport said.

Cebu Pacific applied to service the route on October 17, 2012 to the United States from Manila via intermediate points to Honolulu, San Francisco, Los Angeles, Guam, Saipan, and four additional points in the United States selected by the Philippines, the application shows.

The airline proposes to conduct its services pursuant to a wet lease arrangement with a duly authorized and properly supervised U.S. or foreign air carrier in view of the country's current FAA restriction. 

Cebu Pacific will introduce Guam and Saipan to its route network early next year followed by Hawaii. Preliminary unconfirmed talks by the airline suggest they would be letting the AOC of another Asian carrier based in Singapore. 

DOT restricted CEB's U.S. operations that forbid it to fly using its own aircraft and crews to the US because the Philippines is currently a Category 2 country under the FAA’s International Aviation Safety Assessment Program.

CAAP Cleansing Has Began

20 Employees purged from the ranks

CAAP Director General William Hotchkiss III and his Deputy Capt. John Andrews.

November 15, 2012

Civil Aviation Authority of the Philippines Director General William Hotchkiss announced Thursday the suspension of up to 20 CAA personnel's  involved in falsification of documents, one of them leading to the crash of Piper Sineca plane resulting to death of Secretary Jesse Robredo.

"Th investigating body has come up with names. These people will feel the brunt of the full implementation of Philippine Civil Air Regulations," Hotchkiss said.

The first strike was effected by CAAP Wednesday suspending airworthiness inspector Fernando Abalos for 90 days pending an administrative investigation into his culpability in the plane crash. 

"Previous actions of falsifying documents constitute gross dishonesty and grave misconduct. If proven true he would be remove from government service, and criminal complaints filed against him.” Hotchkiss adds.

Aircraft Accident Inquiry and Investigation Board (AAIIB)’s report found that Abalos approved a test flight permit for the renewal of the crashed plane’s airworthiness certificate without following PCAR procedures. However, no such record of the test flight exists in the aircraft logbook. There was also no record at Mactan-Cebu Airport that showed any flight plan for the plane supposedly filed on that day.

The investigation report found that Aviatour officials and some CAAP employees colluded to expedite the passage of the flying school’s airworthiness documents.

"We are still withholding the names of other employees pending the filing of formal charges against them" says Hotchkiss.

Meanwhile, AAIIB head Capt. Amado Soliman revealed that because of the investigation’s results, several air taxi operators and pilot schools will be re-audited, starting with inspections and certifications made by Abalos.

Soliman said they have the testimony of a witness Aviatour pilot who confessed to falsifying a document that led to the approval of the company’s Airworthiness Certificate.

“Captain Federico A. Omolon III, Aviatour Flight Instructor and supposed pilot of the test flight testified that Captain Jessup Bahinting, Owner of Aviatour and pilot of the fatal Seneca flight asked him to sign the Flight Test Report even though he did not fly the plane,” Soliman said.

“We will be re-auditing about 39 pilot schools and 24 maintenance organizations. We will also be reviewing 21 air taxi operators,”

Meanwhile,  The Civil Aviation Authority has ordered all aircraft operators to update their registration information before Jan. 1 next year to fully comply with the International Civil Aviation Organization’s (ICAO) safety standards.

The CAA directive (Memorandum Circular No. 27-12 Series of 2012) addresses one of two remaining significant safety concerns that an ICAO Validation Mission identified during its 10-day inspection last month. 

CAAP also approved the increase in the salary of flight safety inspectors to 50% from 30% of industry standards to entice more qualified inspectors to join the CAAP, which is other SSC of ICAO.

The Not-so Secret MOU to Dubai

PAL Cries Foul Over Emirates Refusal to Code Share 3rd Flight

November 12, 2012

Flag carrier Philippine Airlines (PAL) has asked the Civil Aeronautics Board (CAB) to reject the petition of Emirates Airlines (UAE) to add third daily flight starting January 1, 2013 between Dubai and Manila stating that the additional schedule was "counterproductive and unjustified."

The reason, UAE already fly 14 times a week, the agreement with them say so. PAL cannot fly to the gulf state because of previous secret agreement with UAE set to expire in 2014.

Negotiations between the two airlines failed after Emirates refused to code-share the third flight saying that it doesn't owned the additional frequencies granted to the Philippines.

Earlier, Cebu Pacific (CEB) filed a complaint against PAL for forfeiture of its rights  to fly the United Arab Emirates arising from non-use of bilateral air traffic rights. CEB wants to fly to the middle east starting winter season next year but their plans to expand to the region was hampered by lack or inadequate flight entitlements which were all taken by PAL and its codeshare partners. CAB rules that PAL was actively flying the route. Consequently, the government of the Philippines and the Arab Emirates expanded their Air Treaty to cover 28 weekly frequencies between Dubai, Abu Dhabi and Manila.

According to PAL in its Opposition letter to Emirates Petition (CAB CASE No. EP-59079/HED102012-261) for additional third daily flight, the airline intends to introduce its own-operated flights to the United Arab Emirates by 2012 and 2014, “given the assurance that no more than 28 weekly frequencies are to be operated by each side on the agreed routes between the UAE and Manila.” 

PAL codeshared the routes to Dubai and Abu Dhabi via partners UAE and Etihad Airways (ETD) for a total of 28 flights between the two countries.

“As code share partner, PAL honors its existing code share arrangement which remains in effect until 2014. Our objection is to the proposed unjustified and counterproductive excess of seven frequencies, or for that matter any formulation that results in an EK operation in excess of 14 frequencies per week on the Dubai-Manila route,” PAL said. 

Further, PAL said that the new PAL-UAE Confidential Memorandum Of Understanding (CMOU) already provided for a maximum entitlement of 14 weekly frequencies for UAE as the exclusive designated UAE carrier under Category 1 Route 1. Category 1 Route 2 covers Abu Dhabi-Manila sector.

PAL also said that UAEs proposed petition would undermine the earlier negotiation of a new CMOU in September that was intended to usher in a new development era where the airlines of both the Philippines and the UAE would offer their own self-operated services in an environment of fair and healthy competition.

“As the board will noted, EK’s proposed 21 times weekly service will result in a total UAE carrier operation of 36 weekly frequencies when added to the existing 14 times weekly Abu Dhabi-Manila services of Etihad Airways, the UAE’s designated carrier for Category 1 Route 2 under the CMOU,” PAL said.

UAE argued however that PAL's interpretation is flawed.

Gigie V. Baroa, UAE Philippine manager explained that while both of them are entitled to fly 7 times a week for a total of 14 flights between Dubai and Manila which they are now doing, another 7 entitlements was granted by both Arab Emirates and Philippine government last September 11, expanding bilateral services between these two points.

"The United Arab Emirates awarded this additional entitlement to Emirates Airlines" says Baroa.

“It was in the fact the agreement of the aeronautical authorities of the two governments that the pre-existing borrowing of unused entitlements could continue alongside the additional daily services granted under the new confidential memorandum of understanding of Sept. 6,” Baroa said.

PAL did not get the new entitlements nor applied for the same. The seven additional frequencies are still to be divided between Cebu Pacific and Zest Air which applied to service the routes.(Air Philippines applied for this route after blog posting)

"The requested additional frequencies will not just benefit Emirates but the Philippine carriers as well" Baroa adds citing growth demands on the market.

The other 7 entitlements on the Philippines side is yet to be awarded by CAB. The applicants for the route were Zest Airways (EZD), and CEB and they were both asking for seven flights says a CAB insider.

The 40 Million Pesos Job

CAAP looking for Flight Check Aircraft, 
the final piece of the puzzle 

November 11, 2012
by Recto Mercene

THE Civil Aviation Authority of the Philippines (Caap) is offering P40 million for a one-year contract to a company, which can provide a flight-check aircraft to calibrate some 118 navigational aids (Navaids) throughout the archipelago.

A flight-check aircraft is specially designed to calibrate Navaids every six months to ensure they are beaming the correct signals for safe navigation.

Like any electronic equipment, Navaids are subject to the vagaries of weather and constant use—being on the air 24/7—and they get misaligned or deviate from their setting, according to Alger Ramo, a senior airport ramp controller.

The Caap hire or rent foreign flight-check aircraft to calibrate a few Navaids costing P3 million to P5 million when its flight-check airplane is under maintenance. It recently rented from a New Zealand company for a week.

Because of the high expense, the Caap bought its own flight check aircraft, a twin-engine Beechcraft “King Air.” However, it has been out of commission for years after its two engines required overhauling, the Caap said.

The engines were eventually repaired in India at a cost of P43 million, but problems still exist before they could be made operational.

Improperly aligned signals by a Navaid could lead to an aircraft going astray from air routes, which could spell disaster if not corrected on time, Ramo said.

Airplanes could also fail to be properly alignment in the runway if the signals are incorrect.

Clark, Subic and the Mactan-Cebu International Airports maintain their own Navaids. They are also designated alternate airports.

Ramo, a former pilot, said modern airplanes have redundant devices, such as Global Positioning System, relying on satellite signals to show the airplane’s location.

The efficient operation of all the Navaids is a requirement of the International Civil Aviation Organization, Ramo added.

PAL's UK License to America and EU

Goodbye CAAP, Hello CAACI?

November 10, 2012

George Town - The Philippines largest carrier may be going to United States of America and Europe after all with or without the Philippine Civil Aviation Authority's (CAAP) support or regulatory license when push comes to shove on Philippine Airlines (PAL) US$10 billion expansion plans.

San Miguel Corporation, one of Asia's largest food conglomerate, is currently in talks with Cayman government to sell substantial share of the airline to a Philippine-based corporation valued at US$ 25 million.

Cayman Primier McKeeva Bush in a statement to the Legislative Assembly said Cayman Airways (CAL) had received investment proposal from San Miguel Corporation which owns Philippine Airlines (PAL).

“These explorations are very preliminary,” the premier stated, adding that while there may be “great speculation in the media as to what may ultimately be agreed,” nothing has yet been confirmed and talks were continuing between CAL and SMC.

However, a leaked document suggests the company to be looking for a substantial chunk of preferential shares with an agreed dividend starting at 3% in the first year rising to 5% in the third year of its investment. It would then be seeking an option to convert the shares to ordinary ones which could give the firm as much as 49% of the airline.

Bush pointed out that any agreement to sell shares would require approval of Cabinet, the Legislative Assembly and ultimately the United Kingdom. The Cayman Islands is a British overseas territory.

“The introduction of preference shares as an additional class of shares is one of those considerations that could possibly be pursued to raise capital from any potential investors locally or otherwise,” says Bush.

“These non-voting shares provide for a stated return to the holders and provide an equity source of funding for the airline.” he said to legislators Friday.

The premier acknowledged that under the Public Management and Finance Law, and the Framework for Fiscal Responsibility, to issue preference shares the airline would need the Foreign Commonwealth Office (FCO’s) backing.

“The necessary due diligence and seeking of approvals all need to be conducted, but at this point it is suffice to say that the exploration is ongoing and I look forward to bringing more details forward if some of the ideas are commercially viable and acceptable under the PMFL.” said Bush.

SMC investment however raised serious concerns notwithstanding the exploratory nature of the talks.

Legislative Assembly (LMA) member Ezzard Miller noted that the parent company of PAL is and has been seeking ways to get around its own airline’s black listing status in Europe and FAA category two status in the USA as a result of the aviation regulators shortcomings at its home base in Manila.

“While I believe that if government is going to sell shares in CAL those shares should in the first instance be offered locally, if we are to seek overseas investors we need to be very careful,” Miller said. 

“It is very unlikely that SMC genuinely wishes to sink as much as $25 million into CAL for the dividend but because it may help it circumvent the problems it has with regulations in Europe and the United States which has prevented the airline from expanding its routes.” Miller adds.

Miller said he hoped that Bush has thoroughly explored the implications of attempting to assist an airline which could be an effort to by-pass, not only the British civil aviation regulations but the US Federal aviation regulations as well. 

“I am concerned that Cayman Airways could be punished as a result of this attempt to sidestep important international rules which are about airline safety,” he added.

Cayman Islands aviation industry conforms to the standards and recommended practices of the International Civil Aviation Organization (ICAO).---with reports from Cayman News Service

Hawaiian Flies A330 to Manila

November 7, 2012

Hawaiian A330-200 departing Las Vegas to Honolulu. The airline already connects Manila-Las Vegas via Hawaii

Honolulu, Hawaii - Hawaiian Airlines a subsidiary of Hawaiian Holdings (Nasdaq: HA), intensify its market hold on Manila  as it added capacity to its Honolulu-Manila service until 31 March 2013.

The airline which declared Manila its flagship route will deploy one of its newest and largest aircraft, the Airbus A330-200, to the Philippine capital aimed at improving its product against competition.

Manila remains the airlines goldmine after registering a positive growth rate since 2008 while its other route network suffered decline. Already, it has gain headway in traffic against inferior product offered by Philippine Airlines that prompted the latter to matched generous baggage allowance given by Hawaiian.

The transition from the 264-seat Boeing 767-300ER aircraft to the 294-seat A330 will add more than 2,500 new seats to the route during the winter travel period as it continue to expand the market, taking advantage of its competitors inability to upgrade its product due to FAA restrictions.

Hawaiian Airlines president and CEO Mark Dunkerley remarked that its flight to Manila is always full of Filipino passengers accounting almost 80% of its load. “The deep cultural and historic bond between the Philippines and Hawaii is another major reason for travelers to make more frequent trips." he quipped.

Durkerkley also said that Hawaiian Airlines is reporting a steady growth of Philippine passenger traffic with bookings mostly from US West Coast routes. It also reported increased bookings to Las Vegas after PAL announced termination of service effective January 15, 2013.

Hawaiian flies to Manila four times a week, departing Honolulu on Sundays, Mondays, Wednesdays and Fridays and returning the following day.

Hawaiian Airlines is Hawaii’s largest and longest-serving airline, and the second-largest provider of passenger air service between the U.S. Mainland and Hawaii. It also flies to Australia, American Samoa and Tahiti.

PAL Expands Down Under

Flies Darwin, Brisbane on December 10

November 6, 2012

Philippine Airlines (PAL) is adding Darwin and re-introduces Brisbane to its growing international network starting December 10 with four flights per week using Airbus 320 aircraft, reports from the Civil Aeronautics Board (CAB) bared yesterday. 

PR flight 221 leaves Manila at 22:30 every Monday and Friday arriving Darwin at 04:30 the following day, with departures at 05:30 for Brisbane every Saturday and Tuesday arriving 10:00. For days Sunday and Wednesday PR 221 leaves Manila at 21:10 arriving Darwin at 03:10 with departure at 4:10 for Melbourne every Monday and Thursday arriving at 10:00.

The return flight PR222 will leave 11:00 from Brisbane arriving Darwin 15:30 with departure at 16:30, and Melbourne arriving Darwin at 16:50 leaving 17:50 for Manila arriving 22:30 and 23:55 the same day, respectively.

"The flights to Darwin will proceed to Melbourne and Brisbane" according to CAB Hearing Examiners Division Chief Ma. Elben S. L. Moro.
The Manila-Brisbane route was operated by PAL from 1982 to 1998, and reopened briefly in 2009 until 2010 before this year’s return.

PAL’s inaugural flight to Sydney was on October 6, 1965, while the maiden service to Melbourne was on September 9, 1971.

PAL currently flies Manila-Sydney every Monday,Wednesday,Friday, and Sunday and Manila-Melbourne route every Tuesday,Thursday, and Saturday respectively using Boeing 777-300ER planes.

The four additional routes will be serviced by Airbus A320 aircraft which doesn't have the range to fly Melbourne, Sydney and Brisbane direct from Manila but can reach Darwin for technical stop onwards to those destination.

The flag carrier is also working on a twice a week service to New Zealand via Australia starting next year.


Philippine Airlines deferred its route expansion to Darwin for the the first quarter of 2013 due to delays in regulatory approval says PAL vice president for Marketing Support Felix Cruz. 

The San Miguel Strategy

November 5, 2012

Philippine Airlines Group takes a step back 
as budget brand drops several major domestic routes

The Philippine Airlines (PAL) Group is implementing a misguided new strategy that involves its budget airline subsidiary pulling off several domestic trunk routes. AirPhil Express, which is planning to be soon re-branded as PAL Express, has redeployed capacity from trunk to leisure and secondary routes, which it has taken over from PAL following a surprising decision by the Group that the two brands should remove nearly all overlap in their route networks.

The move, implemented on 28-Oct-2012, goes against the grain of typical two-brand strategy at Asian airline groups, which have discovered that they can successfully use their LCCs to operate alongside their full service brand. As Philippine Airlines and AirPhil Express (soon PAL Express) brands cater to different sectors of the market, the two should be able to co-exist on trunk routes with minimal cannibalisation. Most crucially, PAL Group needs the second budget brand on domestic trunk routes to compete with rival LCCs. The Philippines has a crowded and intensely competitive LCC sector and it will be the Philippines’ four other LCCs that stand to gain the most as the PAL Group removes its budget brand from several of the country’s largest domestic markets.

AirPhil continues to offer about 114,000 weekly domestic seats, giving the LCC about a 21% share of the Philippine domestic market. It remains the second largest domestic carrier and second largest LCC in the Philippines, behind market leader Cebu Pacific. But on 28-Oct-2012 AirPhil pulled out of seven major domestic routes from its Manila hub – Bacolod, Cebu, Davao, General Santos, Iloilo, Laoag and Tagbilaran.

AirPhil Express drops five of its 10 largest routes

Five of these are among the 10 biggest domestic routes in the Philippines with Manila to Cebu, Devao and Iloilo being the three largest in the country. Five of these routes were also previously among AirPhil’s 10 largest routes (see Background Information).

Domestic routes AirPhil Express have dropped: as of 28-Oct-2012
Route Market
cap share
cap share
cap share
 Competitors and
their current capacity shares
Manila-Cebu 1 1  17%  31% 39% Cebu (42%), Zest (8%), SEAir (11%) 
Manila-Davao 2 9   12%   28%  38% Cebu (41%), Zest (11%), SEAir (10%)
Manila-Iloilo 3 10  14%  25% 29% Cebu (46%), Zest (19%), SEAir (6%)
Manila-Bacolod 8 6  23%  31% 43% Cebu (46%), SEAir (11%)
Manila-Tagbilaran   10 8  18%  32% 52% Cebu (15%), Zest (33%)
Manila-General Santos 14 *  20%  31%  44% Cebu (56%)
Manila-Laoag 21 *  19%  49% 73% Cebu (27%)

PAL has added capacity in all seven routes dropped by AirPhil but in almost cases has not added as much capacity as AirPhil has dropped. In some cases, the amount of capacity PAL has added is significantly less than the capacity AirPhil dropped, resulting in market share gains for PAL's LCC competitors.

Overall PAL has reduced its domestic capacity by about 10% as the network changes were implemented, from about 106,000 seats for the week commencing 22-Oct-2012 to about 95,000 weekly seats for the week commencing 29-Oct-2012.

While PAL has added seats on the seven routes dropped by AirPhil, this does not entirely offset the seats it had offered on the routes it has dropped and handed over to AirPhil. In addition, PAL reduced capacity on a few routes in which for now both the AirPhil and PAL brands continue to operate alongside each other.

Domestic routes which PAL has dropped: as of 28-Oct-2012
Route Market
PAL prior
capacity share
AirPhil prior
capacity share
 AirPhil current
capacity share
Competitors and
their current capacity shares
Manila-Puerto Princesa 6  15%  25%  36%  Cebu (32%), Zest (26%), SEAir (6%)
Manila-Dumaguete* 12  37% N/A  44%  Cebu (56%)
Manila-Zamboanga 15  30%  35%  50%  Cebu (50%)
Manila-Butuan 16  21%  15%  27%  Cebu (73%)
Manila-Cotabato 24  28%  36%  50%  Cebu (50%)
Manila-Dipolog* 25  45% N/A 51% Cebu (49%)

The routes PAL has dropped are smaller secondary routes or trunk routes which are leisure-focused and therefore have limited demand for premium or business passengers. For example while Manila-Puerto Princesa is the sixth largest domestic route in the Philippines, Puerto Princesa is predominately a leisure destination as it is the main airport serving the resort island of Palawan. The PAL Group determined that lower-cost AirPhil Express/PAL Express was a better fit for these routes than PAL as it aims to have just one brand on almost all domestic routes.

AirPhil has significantly increased capacity on the routes that have been dropped by PAL and has launched services to Dumaguete and Dipolog to fill the void left by PAL. Damaguete is also a leisure destination near popular beaches and dive sites.

Second phase could see PAL hand over more routes to AirPhil Express

There are only a handful of domestic routes now remaining that are now served by both the PAL and AirPhil Express/PAL Express brands. These could be handed to one brand – in most cases AirPhil Express/PAL Express  – as part of a second phase. On 28-Oct-2012 AirPhil increased capacity on three of these routes – Manila to Kalibo, Tacloban and Legaspi – while PAL reduced capacity although for now maintains a small presence.

Mainline PAL now accounts just 18% of total capacity in the Philippine domestic market, compared to almost 20% one week ago. The PAL Group now accounts for just under 39% of domestic capacity, compared to 41% prior to the implementation of the network changes.

Four other LCCs operate domestic services in the Philippines and account for the remaining 59% of the market, led by Cebu Pacific with a 46% share. With the implementation of the northern hemisphere winter schedule, Cebu Pacific’s domestic capacity has increased by 4% according to Innovata data, resulting in a 2ppt rise in its capacity share.

Philippines domestic capacity share (% of seats) by carrier: 29-Oct-2012 to 04-Nov-2012

Source: CAPA – Centre for Aviation & Innovata

The Philippines has the highest domestic LCC penetration rate in the world, about 80%, among major domestic markets. The Philippines had about 11 million domestic passengers in 1H2012 with LCCs accounting for 79% or just nine million passengers.

Cebu Pacific, Zest and SEAir stand to benefit from PAL Group route rationalisation

Cebu Pacific, Zest Airways and Tiger Airways affiliate SEAir are the main beneficiaries of the network changes at AirPhil as there is now one less competitor in the markets AirPhil has dropped. The Philippines’ fifth LCC, AirAsia Philippines, will only benefit marginally from the network changes as it only operates from Manila's alternative airport Clark, and serves only one of the seven affected markets, Davao, with one daily flight.

AirPhil predominately operates out of Manila International but earlier this year launched three low frequency domestic routes from Clark – Cebu, Kalibo and Puerto Princesa – which are being retained as PAL does not operate at Clark. AirAsia Philipines now competes against AirPhil in all three of these markets although it is dropping Clark-Puerto Princesa service on 30-Nov-2012. Cebu Pacific also predominately operates from Manila and has only one domestic route from Clark, Cebu, while Zest only serves Manila International.

Consolidation in the Philippines market is seen as inevitable given the intense competition and resulting over-capacity, which was exacerbated when SEAir in 3Q2012 became the fifth LCC to operate domestic trunk routes. Manila to Cebu, Davao and Bacolod were among the seven domestic routes launched by SEAir in late Jul-2012 and early Aug-2012 as additional A320 family aircraft were delivered from part-owner Tiger Airways.

It is unlikely these markets could have continued to support so many competitors. But AirPhil, as it is backed by PAL, was seen along with market leader Cebu Pacific as the strongest players. By exiting these markets, AirPhil is essentially handing market share to its LCC competitors and significantly improving their outlook. There could still be consolidation in the Philippines as markets such as Manila-Iloilo may be unable able to support three LCCs. But it is certainly a better scenario than having four LCCs competing directly.

Meanwhile, the network changes at AirPhil have left Cebu Pacific as the only LCC linking Manila from General Santos and Laoag. It is likely SEAir and/or Zest will seek to fill the void left by AirPhil in these markets. SEAir also currently does not serve Taglibaran but may now be tempted to include this relatively large market in 2013, when it is expected to pursue further fleet and network expansion.

New PAL Group owners make unexpected determination

The decision by the PAL Group to have PAL become the only brand in seven key domestic markets is puzzling and according to PAL Group sources has raised eyebrows within the group. The change in strategy was made by PAL Group’s new owners San Miguel, which took a majority stake in both PAL and AirPhil in Apr-2012, following a recommendation made by LEK Consulting.

Originally San Miguel was expected to retain the previous two-brand strategy at PAL Group, which has been in place since Air Philippines was branded as AirPhil Express in early 2010 and adopted the LCC model. The PAL Group has since used AirPhil to operate alongside the PAL brand on trunk routes where there is a mix of business and leisure traffic, with AirPhil steadily expanding its fleet of A320s while PAL has gradually been shrinking its domestic operation. AirPhil has added five A320s over the last year, giving it a fleet of 13 A320s along with eight Bombardier Dash 8 turboprops.

Having its two brands serve major trunk routes where there is a mix of business and leisure traffic made sense as PAL was able to focus on premium and connecting passengers while AirPhil was able to focus on point-to-point budget passengers. This two-brand strategy, in place at PAL since 2010, was similar to the successful strategy at two-brand pioneer Qantas Group, which has had its LCC brand Jetstar complement Qantas on several domestic Australia and international routes for several years. It also follows the strategy at Garuda, which is now using its fast-expanding Citilink subsidiary alongside the Garuda brand on main trunk routes. Singapore Airlines and Thai Airways short-haul low-cost affiliate carriers Tiger Airways and Nok Air, respectively, also operate alongside the full service brand.

As it has a higher cost structure than AirPhil, PAL will struggle to compete against LCCs in the point-to-point market. As the only full service and network carrier in the Philippines, PAL should retain a presence on major domestic routes, particularly in those markets that have some demand from premium passengers. But PAL should not be afraid to have its AirPhil brand continue to operate in these markets as the LCC subsidiary caters to a different profile of passengers and is a more effective competitor against LCCs.

PAL Group sources say AirPhil was making money on domestic trunk routes including Manila-Cebu and Manila-Davao while most of its smaller routes have been unprofitable. Sceptics of the new strategy within the PAL Group expect PAL will struggle to compete against its LCC competitors on the trunk routes and say there could be a push to reverse the current strategy and put AirPhil back onto trunk routes once it becomes clear these routes have become less profitable.

Using AirPhil for secondary and leisure routes is logical strategy

On the secondary and leisure domestic routes, the switch to AirPhil is logical as the group looks to reduce its losses in these types of markets while maintaining service. While these routes will likely remain in the red, the losses incurred by AirPhil should be less than the losses incurred by PAL.

On the secondary routes being dropped by PAL, Cebu Pacific is now the only competitor and giving Cebu Pacific a monopoly is not an acceptable proposition for the PAL Group. PAL has struggled to compete against Cebu Pacific on these routes as nearly all passengers in these markets are budget-conscious. Switching to AirPhil’s all-economy product and lower cost base should reduce the losses.

The routes cannot be abandoned altogether as they have some value to the group’s overall network. PAL will still be able to offer connecting services onto its international network for passengers from these smaller markets through a codeshare with AirPhil. The two PAL Group carriers have already been codesharing but previously the codeshare was limited to a one-way block space agreement only covering AirPhil-operated turboprop flights.

PAL to pursue comprehensive codeshare with AirPhil/PAL Express

The Group is now working on expanding the AirPhil-PAL codeshare to include AirPhil-operated jet flights, including on routes PAL has dropped. It will also be extended to include PAL-operated flights, allowing AirPhil to continue selling tickets on the trunk routes it has dropped.

The two carriers will also start codesharing on a free-sale rather than more restricted block space basis. PAL and AirPhil have both just migrated to a common IT system from Sabre, which allows the two carriers to easily implement a two-way free-sale codeshare across their domestic networks (and their international networks if they see a need).

AirPhil initially took over PAL’s turboprop routes and fleet Bombardier Dash 8s in 2008. The operation was initially branded PAL Express until the current AirPhil brand was adopted in 2010. The PAL Group is now waiting for regulatory approval for AirPhil to readopt the PAL Express brand, which will cover both the turoboprop and jet operations.

The AirPhil turboprop operation, which primarily links Manila with regional airports which cannot accommodate jets, will be maintained as part of the revised strategy. Cebu Pacific also operates a fleet of ATR 72 turboprops as several high demand markets in the Philippines are not suitable for jets due to runway length limitations.

For example, Caticlan, the gateway to the popular resort island of Boracay, can only accommodate turboprops but high frequency operations from Cebu Pacific and AirPhil make Manila-Caticlan the ninth largest domestic route in the Philippines. None of the other routes which Cebu Pacific and AirPhil now compete on with turboprops are among the top 20 routes in the Philippines. The two carriers are also the only competitors on several point-to-point secondary jet routes from Cebu, the second largest city in the Philippines. More point-to-point flights from Cebu and other regional centres such as Davao and Iloilo have been the focus of Cebu Pacific as congestion at Manila makes further expansion at the capital difficult to pursue.

AirPhil/PAL Express has bright domestic outlook if proper strategy is pursued

Unlike Cebu Pacific, AirPhil is predominately a domestic operator. Currently 94% of the carrier’s seat capacity is allocated to the domestic market. The carrier now only operates scheduled services on five international routes, according to Innovata data. While AirPhil is planning to expand its international network, with a focus on routes which PAL does not currently operate, the airline is expected to remain a major player domestically. Further domestic expansion could occur if PAL realises it has made a mistake in removing the AirPhil brand from seven important domestic markets.

Given the drastically different strategic direction other airline groups have taken in the Asia-Pacific region, and the intense competition among LCCs in the Philippine domestic market, it seems inevitable PAL will again adjust its two-brand strategy. When it does, growth will be further accelerated at AirPhil/PAL Express as the budget brand will likely resume service on all trunk routes while remaining the only brand in secondary and leisure-focused routes.

PAL and its new owners the San Miguel Group need to recognise nearly all the growth in the Philippines is at the lower end of the market and pay attention to the successes and mistakes of its peers. Citilink, for example, was initially used on secondary routes before Garuda realised it had made a mistake and needed to use its budget brand alongside the main brand on trunk routes to compete with LCC Lion Air, which became Indonesia’s largest domestic carrier in 2009. PAL is in a similar situation with an LCC, Cebu Pacific, as a larger competitor. While the group is fortunate to have new owners with deep pockets, PAL cannot afford to continue to make strategic mistakes. It should reconsider its latest network adjustments and reverse the changes before it loses more ground to its LCC competitors.

This is the first in a two-part series on the new PAL Group Strategy. The second part will look at the group’s two-brand strategy for the international market.

Top 30 routes on Philippines domestic market (ranked by seats): 29-Oct-2012 to 04-Nov-2012

Source: CAPA – Centre for Aviation & Innovata

AirPhil Express top 10 domestic routes ranked by capacity (seats): 22-Oct-2012 to 28-Oct-2012

Source: CAPA – Centre for Aviation & Innovata

AirPhil Express top 10 domestic routes ranked by capacity (seats): 29-Oct-2012 to 04-Nov-2012

Source: CAPA – Centre for Aviation & Innovata

Takes two step up with new long-haul LCC

The Philippine Airlines (PAL) Group is looking at launching a low-cost long-haul operation, potentially in 2013, as part of the Group’s revised two-brand strategy. Allocating some of PAL’s newly acquired A330-300s to its budget brand will help the Group stay competitive with archrival Cebu Pacific, which is planning to launch its own low-cost long-haul operation in mid 2013. A long-haul operation from AirPhil/PAL Express would also allow the Group to re-enter markets in the Middle East, which it has dropped in recent years and is the main target for Cebu Pacific’s new A330 operation.

PAL Group sources say AirPhil Express, which is currently awaiting approval to be re-branded as PAL Express, is expected to receive several of the A330-300s PAL ordered in Aug-2012 for delivery from 2013. Sources say the aircraft will be operated in all-economy configuration and likely be used initially on routes between Manila and destinations in the Middle East.

PAL poised to become third Asian FSC group with low-cost long-haul operation

AirPhil/PAL Express would become the fifth low-cost long-haul operator in the Asia-Pacific region, joining Jetstar, AirAsia X, Scoot and Cebu Pacific. PAL would become the third full service airline group in the region to launch a low-cost long-haul operation, joining Qantas and Singapore Airlines (SIA).

PAL’s entry in the nascent but fast-expanding low-cost long-haul sector could persuade other Asian carriers to launch long-haul low-cost subsidiaries or units. The Thai Airways Group is also considering entering the long-haul low-cost sector.

The A330s are part of a new strategy for AirPhil/PAL Express that is being implemented by the carrier’s new owners, San Miguel, which took control of AirPhil and PAL in Apr-2012. San Miguel has already adjusted the domestic strategy at AirPhil which resulted, in late Oct-2012, in the LCC dropping service on several trunk routes while taking over from PAL several leisure-focused and secondary domestic routes. As a result the AirPhil and PAL brands now only overlap on a handful of domestic routes.

AirPhil/PAL Express to focus on international routes not already served by PAL

The PAL Group’s revised two-brand strategy also envisions minimizing overlap on international routes. AirPhil/PAL Express is expected to only use its anticipated fleet of new A330-300s on routes that PAL doesn’t currently serve.

AirPhil/PAL Express will also focus on new markets to the PAL Group as it expands its narrowbody international operation, which currently only consists of five scheduled routes. For example, PAL Group sources tell CAPA that AirPhil is planning to launch services from Manila to Hanoi and resume services on the Singapore-Cebu route. Cebu Pacific is currently the only Philippine carrier on both routes (Singapore-based Tiger Airways and SilkAir also serve Singapore-Cebu).

PAL Group sources say there will be exceptions and AirPhil will be allowed to continue operating on PAL international routes that AirPhil holds international traffic rights on, such as Manila-Singapore and Cebu-Hong Kong. The PAL Group would not want to risk giving up traffic rights in these key markets to competitors and these routes are large enough to support both budget and full service brands. Manila-Singapore and Cebu-Hong Kong are now AirPhil’s two largest international routes.

AirPhil’s international routes by capacity (seats): 05-Nov-2012 to 11-Nov-2012
Source: CAPA – Centre for Aviation & Innovata
Note: MNL=Manila, SIN=Singapore, HKG=Hong Kong, CEB=Cebu, CRK=Clark, KUL=Kuala Lumpur

AirPhil, which was known as Air Philippines until 2010, has its own traffic rights as it was previously an independent carrier. The Lucio Tan Group acquired Air Philippines and PAL separately in the 1990s and kept the carriers separate for several years. Air Philippines became the group's budget brand in 2010 after adopting the LCC model and starting to work more closely with PAL. Lucio Tan continues to own large stakes in both carriers but has ceded management control to San Miguel.

The PAL Group’s new focus on avoiding overlapping networks between its two brands contradicts the strategy used at other airline groups in Asia-Pacific, including Qantas and SIA. Jetstar serves a large number of domestic and international routes which are also operated by Qantas. SIA also allowed Scoot to make one of SIA’s biggest routes, Singapore-Sydney, its launch route (albeit at very different scheduled times) while partially-owned Tiger overlaps extensively with SIA.

While PAL should reconsider this strategy and allow its budget brand to operate alongside the main PAL brand on major domestic and international short-haul routes, on long-haul routes the separation will not be as big of a factor in limiting the success of AirPhil/PAL Express. There are several long-haul routes PAL is now unable to viably serve, giving AirPhil/PAL Express plenty of opportunities to build up a long-haul network without overlapping PAL’s relatively limited long-haul network.

PAL looks to use budget brand to re-enter Middle East market

AirPhil/PAL Express in particular could be used to re-establish PAL’s presence in the Middle East. PAL has pulled out of all Middle East markets in recent years due in part to intense competition from Gulf carriers, which have the advantage of offering the Philippine market connecting flights throughout the Middle East as well as to Africa and Europe.

Once Emirates launches it third daily flight to Manila in Jan-2013, Middle Eastern carriers will have almost 50,000 weekly seats to and from Manila. PAL’s long-haul network, in comparison, has less than 14,000 weekly seats, all of which are deployed on routes to North America (see Background Information).

Philippines to Middle East capacity by carrier (one-way seats per week): 
19-Sep-2011 to 21-Apr-2013
Source: CAPA – Centre for Aviation & Innovata

PAL now relies on codeshare partnerships with four Gulf carriers – Emirates, Etihad, Gulf Air and Qatar Airways – to cover the Middle East. While PAL will likely extend its existing codeshare with AirPhil to include any routes to the Middle East that AirPhil/PAL Express launches, PAL will be able to continue covering the premium end of the Philippines-Middle East market through existing codeshare agreements with Middle Eastern carriers.

While the local Philippine-Middle East market is large enough by itself to sustain carriers without having to rely on onward connections, this market is extremely price sensitive as it primarily consists of migrant worker traffic and visiting friends and relatives (VFR) traffic. The market is generally considered too low yielding to support full service carriers and could be better served by low-cost carriers. The Gulf carriers serving the Philippines carry some point-to-point traffic but rely more on higher yielding connecting traffic.

When deciding in early 2012 to launch a long-haul operation, Cebu Pacific said a majority of migrant worker traffic between the Philippines and the Middle East were travelling on cheaper one-stop flights rather than the non-stop flights on the Gulf carriers. Cebu Pacific believes it can offer lower prices than these one-stop offerings and take advantage of the fact that most Filipinos prefer to fly Philippine carriers when given the choice.

Cebu is also now considering using its new fleet of A330s to take over some of its A320 flights to north Asia, particularly slot congested airports such as Beijing. Flights to Australia and the US are also a possibility. But the bulk of capacity from Cebu Pacific’s new low-cost long-haul network is expected to be allocated to Middle East routes. There are about 2.3 million Filipinos working in the Middle East, including over one million in Saudi Arabia and over 600,000 in the UAE.

In Oct-2012 Cebu Pacific and PAL both requested from Philippine authorities traffic rights to Saudi Arabia, made possible by a new bilateral between the two countries. The UAE and the Philippines also recently expanded their bilateral, which could lead to flights from both Cebu Pacific and the PAL Group. Currently PAL holds the only rights to both Saudi Arabia and the UAE but dropped Saudi Arabia flights in 2011 and only serves the UAE on a codeshare basis.

AirPhil/PAL Express and Cebu Pacific both opt for A330s in single-class configuration

Cebu Pacific has committed to acquiring at least 12 A330s in single-class configuration with about 400 seats, for delivery starting mid-2013. PAL Group sources say AirPhil also plans to outfit its A330s with all-economy seating. While Jetstar, AirAsia X and Scoot are all operating aircraft in two-class configuration, AirPhil and Cebu Pacific believe the long-haul budget market in the Philippines would struggle to support a two-class product if migrant worker routes are the main target.

PAL in Aug-2012 placed orders for 10 A330-300s for delivery starting in 2013 and has said it is seeking to purchase another of 10 of the type. The Group at the same time also ordered 44 A321s/A321neos which are expected to be used to renew the narrowbody fleet initially at PAL and eventually AirPhil/PAL Express. Both PAL and AirPhil now operate A320s but PAL’s aircraft are older.

PAL already operates eight A330-300s on regional international routes within Asia as well as on some domestic trunk routes. The 20 additional A330s-300s are intended for growth and will be delivered in the new High Gross Weight (HGW) variant. Air Phil/PAL Express could be allocated some of the eight existing A330-300s if the Group decides to have PAL operate the new aircraft.

PAL brand to focus on long-haul expansion in North America and Europe

PAL is also committed to renewing its long-haul fleet, having ordered six 777-300ERs in 2008. More 777-300ER orders or lease commitments are expected as PAL, under San Miguel, seeks to replace its fleet of 747-400s and A340s as well as accelerate expansion of its long-haul network.

San Miguel has said it aims to have PAL re-enter the European market and expand in North America. It is unlikely PAL will resume services to the Middle East as it is more logical to have its budget brand operate these services.

The carrier in Sep-2012 unveiled plans to launch three weekly flights from Manila to Toronto on 30-Nov-2012, following delivery of its fourth Boeing 777-300ER. Manila-Toronto will be its longest route and its first to the eastern portion of North America. The flight will be operated as a non-stop eastbound but will stop in Vancouver on the return westbound sector.

PAL now serves Vancouver in Canada as well as Los Angeles, Las Vegas and San Francisco in the US. But service to Las Vegas, which is now served four times per week as a tag with Vancouver, is being dropped in Jan-2013. PAL will continue to serve Vancouver with four weekly 777-300ER flights, excluding the three weekly flights which will stop in Vancouver on the return leg from Toronto.

PAL is still aiming to expand significantly in the US once the Philippines regains Category 1 status under the FAA’s safety assessment programme. New destinations on the east and west coasts are being evaluated, including New York.

PAL initially ordered the six 777-300ERs primarily for the US market but has been forced to use the aircraft in other markets because under Category 2, Philippine carriers are unable to add new flights or change the gauge of existing flights. PAL has had to continue using its 747-400s and A340s on all its US services.

As Las Vegas was served via Vancouver, PAL also has been forced to operate four of its seven existing weekly frequencies to Vancouver with A340s. Terminating Las Vegas, while not ideal, allows the carrier to transition to an all-777 service to Vancouver, giving premium passengers a more uniform product as only the 777-300ERs feature new generation lie-flat business class seats.

Philippine carriers need authorities to pass audits from US, Europe and Japan

PAL is hopeful the Philippines will finally regain Category 1 status in 2013. If this occurs, PAL will be able to place the two remaining 777-300ERs from its current order, which are to be delivered in 2013, on US routes. It would also likely quickly finalise plans to acquire additional 777-300ERs and potentially redeploy 777-300ERs from Australia and Japanese routes to US routes.

But the carrier has been saying for some time that it is hopeful of a near term upgrade for the Philippines to Category 1. In early 2011 PAL even took the unusual step of hiring a consultant to help Philippine authorities meet Category 1 standards, thinking at the time that an upgrade could be secured within one year.

Cebu Pacific would also benefit from Category 1 status as the carrier recently applied for traffic rights to the US. The carrier intends to initially operate using more expensive wet-leased aircraft until Category 1 can be achieved.

While Cebu Pacific is seeking rights for several US destinations, including in the mainland, Guam and Hawaii are the most logical destinations. Guam can be served from Manila with A320s and Hawaii with A330s but A330-300s do not have the range to serve the US mainland non-stop.

As Cebu Pacific had already stated that the US was not a focus for its new long-haul low-cost operation, it is unclear if the carrier would use its US traffic rights, if awarded, for any market other than Guam. AirPhil is also not likely to use its A330s to fly to the US given the US is now one of PAL’s largest markets and the PAL Group prefers to use AirPhil in markets PAL is not already serving. 

PAL’s international expansion plan under San Miguel also hinges on Philippine authorities passing audits from the EU and Japan. Philippine carriers are currently on the EU black list although San Miguel has flagged Paris as a potential destination with the two 777-300ERs to be delivered in 2013.

Philippine carriers are also now prohibited by Japan’s JCAB from adding capacity or launching services on any Japanese route until Philippine authorities can demonstrate they are in compliance with ICAO requirements. South Korea also now prohibits any new Philippine carrier from launching services to South Korea although existing carriers in the Philippines-Korea market are able to add capacity.

AirPhil currently does not serve South Korea or Japan but is interested in launching flights to both countries from secondary destinations in the Philippines such as Cebu and Kalibo, where there is large inbound demand. This could occur once Philippine authorities prove they are in compliance with ICAO requirements.

China and more flights to Southeast Asia also likely as PAL Group expands budget brand

AirPhil/PAL Express is also keen to launch services to China. The carrier would likely launch scheduled flights to secondary destinations in China as PAL now serves the country’s two largest destinations – Shanghai and Beijing – as well as Xiamen.

Unlike South Korea or Japan, AirPhil is not prohibited from launching scheduled flights to China. However, the carrier is waiting for tensions over the Scarborough Shoal, which has led to plummeting demand on China-Philippines flights in recent months, to ease.

Over the last year AirPhil had been aiming to increase its international operation in an attempt to lower its cost base through higher utilisation of its A320 fleet. Most of the carrier’s international flights are operated in the middle of the night, using its fleet of 12 A320s which during the day operate domestic flights. Cebu Pacific has a much higher utilisation rate for its A320 fleet, due to its much larger international network with frequent night flights, giving it a lower cost base and a competitive advantage over AirPhil and other Philippine LCCs.

In Southeast Asia, the PAL Group plans to use AirPhil/PAL Express mainly to compete against LCCs in markets that PAL does not serve. For example, AirPhil earlier this year launched three weekly flights on the Manila-Kuala Lumpur route and the carrier is now planning to increase this service to daily. Manila-Kuala Lumpur is a natural AirPhil route as it is no longer served by PAL but is served by Cebu Pacific and Zest Air. AirAsia also serves Kuala Lumpur from Manila alternative airport Clark.

AirPhil could also be used by the PAL Group to enter international routes where Cebu Pacific is now the only carrier such as Manila-Siem Reap, Manila-Bali and Manila-Kota Kinabalu. These are all primarily leisure routes which PAL would struggle to viably serve. Extending the AirPhil-PAL codeshare to such international routes in Southeast Asia could also provide feed for PAL's expanded operation to North America.

AirPhil currently only has a 2% share of international capacity in the Philippines, compared to about 17% for Cebu Pacific. PAL has an approximately 24% share.

But on international routes between the Philippines and other Southeast Asia countries, Cebu Pacific currently has about a 31% share of capacity, according to Innovata data. LCCs account for about 61% of capacity in this market. The PAL Group only has about a 23% share of this market – including only a 4% share with AirPhil. The PAL Group needs to accelerate expansion at AirPhil to ensure it does not cede more market share to rival Cebu Pacific and other LCCs.

Philippines international capacity share (% of seats) by carrier: 05-Nov-2012 to 11-Nov-2012
Source: CAPA – Centre for Aviation & Innovata

Philippines-Southeast Asia international capacity by carrier: 05-Nov-2012 to 11-Nov-2012
Source: CAPA – Centre for Aviation & Innovata
Philippines can support higher LCC penetration rate in international market

Having a budget carrier for both the short-haul and long-haul international markets is logical given the strategy at PAL’s Asian peers and the fact the Philippines is predominately a budget market. While there will be some growth in the premium market as the Philippines economy expands, most of the growth in the country is at the lower end of the market. To capture this growth, the PAL Group needs a strong budget brand for the domestic, international short-haul and international medium/long-haul markets.

The Philippines already has one of the highest LCC penetration rates in the world, about 60% according to Innovata data. While the domestic LCC penetration is unlikely to grow significantly as it is already above 80%, the approximately 32% international LCC penetration rate will continue to increase as regional markets such as Japan open up and as Philippine LCCs expand into the long-haul market.

The PAL Group needs to make sure it has the budget market fully covered to keep up with larger Cebu Pacific. An A330 operation at AirPhil/PAL Express is logical and would allow the PAL Group to join the long-haul low-cost party at a relatively early stage.

Philippine Airlines international capacity by region: 05-Nov-2012 to 11-Nov-2012
Source: CAPA – Centre for Aviation & Innovata

Low-tech approach to woo away birds at NAIA

Noisy Motorcycles?

Bird Aircraft Strike Hazard (BASH). From January to July this year, 39 bird strikes have been reported at the Ninoy Aquino International Airport (NAIA), 50 percent more than the same period last year, data from the Manila International Airport Authority (MIAA) showed.

By Recto Mercene 
November 4, 2012

IF anything, the wild birds at the Ninoy Aquino International Airport (Naia) cannot be accused of being bird-brained.

Their obstinacy to remain within the runway environment to adopt and adjust, despite various efforts to drive them away, seems to imbue them with intelligence.

Science calls it instinct.

For years, airport authorities have tried practically everything to chase them off the airport compound, pressured by the rising incidents of bird-plane collision, or bird strike in aviation lingo.

Authorities have employed firecrackers, shotgun blasts, painted pictures of birds of prey hoisted on banners, piercing noise and, for a while, peregrine falcons.

This year alone, more than 50 bird strikes occurred at the Naia, according to General Manager Jose Angel Honrado.

During a recent media conference, Honrado said the birds, mostly egrets and other migratory birds, eventually get acclimatize to the noise and no longer fear them.

Last Friday Civil Aviation Authority of the Philippines (Caap) Director General William K. Hotchkiss, his deputy, Capt. John C. Andrews and Honrado led members of the media for a demonstration of their latest brainchild to finally put an end to the birds’ domination of the field.

They brought a motorcycle with the muffler removed, emitting a noise from its motor Captain Andrews believes would drive the birds crazy and eventually hie off permanently to where they come from, probably China.

“We will buy four motorcycles, assign eight drivers in shift to work 12 hours a day, from 6 a.m. to 6 p.m. starting December 1.”  He said the drivers would undergo training so that they will understand the dos and don’t’s of airport operations.

The experiment will last for four months.
CAAP personnel prepare to use a noisy 150cc motorcycle with specially modified twin exhaust pipes to see if it will drive birds away from the end of Runway 13-31, where birds often flocked in big numbers. NAIA pond waterways is home to more than a hundred birds of different specie.

Armed with a radio for direct contact with the control tower to avoid aircraft taking off and landing, the drivers are to proceed to where the flocks are gathered and rev up their motors to scare them.

Asked how much money is set aside to fund the project, Captain Andrews refuses to reveal.

For demonstration, one motorcycle was dispatched to the gathered flocks at the catchment basin, a place filled with runoff water and thriving with swamp cabbage (kangkong) near runway 13-31.

The motorcycle’s motor, devoid of a silencer, was revved-up, emitting a deep machine-gun like din, only a few decibels below those from taking off jets nearby.

The birds, about a dozen, flew away to the other side of the runway and after a few minutes of hovering, came back to the same spot to resume their interrupted feeding.

Four times, the same technique was employed and the birds, getting used to the noise, simply flew away to the other side of the runway, hover and probably thumb their noses (or bills) at the offenders before reclaiming their territory. They continue to feed nonchalantly.

If they had learned to adapt to the jetliner’s noise, how much more a puny motorcycle’s noise, asked one media kibitzer.

Friday’s demonstration seems to indicate that being bird-brained does not belong to the fowls but probably to somebody else.

Records at the Naia show that on October 22, a Philippine Airlines Airbus A320 with 152 passengers onboard collided with a bird while landing at the Naia. Two days later, another Pal aircraft had a birdstrike after take-off from the same airport.

Luckily, no one was hurt in both incidents.