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
DEMAND AND SUPPLY
By Boo Chanco
March 28, 2011
DEMAND AND SUPPLY
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.
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?
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.
| 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:
|
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.
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.
Reciprocity
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.
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.
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
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).
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
By GINA ABUYUAN
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.
Subscribe to:
Posts (Atom)