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27
Jul

PAL expansion goes into higher gear with jet deliveries

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By Loreto D. Cabañes | Manila Bulletin

The ongoing expansion program of flag-carrier Philippine Airlines (PAL) goes into high gear next year with the delivery of more aircraft from Airbus all geared for regional and  long-haul international flights.

Starting next year, PAL will take delivery of  half of the 21 A321neos jets ordered two years ago, Jaime Bautista, PAL President and  Chief Operating Officer Jaime Bautista disclosed in an interview in Toronto, Canada last week. List price for a A321 Neo jet is $100 million and that places the order for the 21 jets at $2.1 billion.

In June next year, Bautista said PAL will take delivery of the first of four A350 jets earlier ordered by PAL. List price for this aircraft is $200 million each, or $800 million for the entire order.

In the later part of this year, PAL will take delivery of the remaining two Boeing 777 ER300 jets ordered earlier. List price for this Boeing jets is $300 million. This will bring to 10 PAL’s fleet of Boeing 777 ER300 jets.

Altogether, PAL’s existing order for long-haul aircraft is valued at $2.5 billion based on their list prices. However, as is the common practice in the airline industry, bulk orders are priced lower than the list prices of the aircraft manufacturer.

With more aircraft on  its fleet, Bautista said the flag carrier is working on opening more destinations and increasing flight frequencies in North America and Europe, as well as in Australia and the Asian region.

Using the 376-seat Boeing 300ER jet PAL now flies to Los Angeles twice daily, and to San Francisco 14 flights a week. It also flies five times a week to New York, via Vancouver.  “The market continues to grow, we have the advantage because we are the only carrier that flies non-stop to US from Manila,” he said.

PAL has a load factor of more than 80 percent on its US routes, its most profitable, but it only accounts for 40 percent of the market, which means that those who travel to the US are using other airlines because it is already difficult to book for a flight if it has already attained 80 percent load factor

“The average 80 percent load factor means we are already fully booked especially during the peak season in December,” he said. Thus, the need for additional capacities.

Bautista said PAL will attain the 4-star airline by the end of this year, and hopefully, the five-start status five years from now. This ratings are conducted by Skytrax yearly based on surveys on customer satisfaction.

On the domestic front, Bautista said PAL hopes to regain dominance of the market with the acquisition of the all-new generation Bombardier Q-400 turboprop aircraft which, when fully delivered, will boost PAL’s domestic capacity by 20 percent.

PAL has ordered a total of 12 of this aircraft for delivery up to early part of 2018. PAL took delivery of the first Q400 last week in Toronto. With a list price of $31 million per aircraft, PAL was able to get it at a lower price because of bulk order.

Mitsui & Co. (Asia Pacific) Pte. Ltd. provided the lease financing for first three Bombardier Q400 plane, according  Noriyuki Moriyama,  Mitsui Manila Branch General Manager and Philippine Country Chairman, who also attended the turnover ceremony in Toronto, Canada last week. He said Mitsui was ready  to extend PAL similar financing arrangements for its aircraft acquisitions in the years ahead.

PAL became the launch airline in Asia for the new generation dual-class Bombardier Q400 plan, touted as ideal aircraft for the Philippine domestic market.

The first plane left Toronto last Friday for a 7-airport 4-day sortie to Manila and was expected to arrive last night.