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PHILIPPINE Airlines (PAL) is withholding plans to expand
its United States (US) route, the flag carrier’s
single-biggest revenue maker at 30 percent, after the US
Federal Aviation Administration (FAA) downgraded the
country’s aviation safety to Category 2.
Under
Category 2, PAL is prohibited from increasing its 33
flights a week to the US and its territories and from
changing the type or increasing the number of aircraft
used on these routes.
Also to
be affected is the delivery of six brand-new Boeing
777-300ER airplanes that are to be deployed by PAL on
the transPacific flights. Two planes are due for
delivery starting end of 2009; another two will arrive
by 2010; and the remaining by 2011.
The six
wide-bodied Boeing aircraft carries a list price of $1.5
billion. Acquisition cost, however, is usually just a
little over half of the quoted price.
“We
cannot add capacity to the US routes which PAL currently
services. We cannot also fly to new US routes which we
plan to with the new Boeing aircraft. We can still fly
to the US routes but we have to use our existing
airplanes,” said PAL president Jaime Bautista in a talk
with reporters Tuesday.
PAL
plans to open service to
San Diego,
Chicago, New York, Seattle and Saipan. It was eyeing to
mount three-weekly flights to these new routes also
using the new Boeing aircraft.
These
new routes were projected to boost PAL’s US revenue by
10 percent, said Bautista. The
US
operations comprise PAL’s most vital and high-traffic
region.
“Our US
operation is 30 percent of our total revenues. The
number was expected to go up by 10 percent with the new
routes but we are now recomputing our projections not
only for the US but for our entire operations as well.”
At the
moment, PAL flies to
Los Angeles,
11 fights a week; San Francisco, nine; Las Vegas via
Vancouver, five; Honolulu, three; and Guam, five.
All five
of PAL’s Boeing 747-400 aircraft are deployed to Los
Angeles and San Francisco. Other PAL aircraft utilized
on the transPacific routes are Airbus A340-300 (Los
Angeles, San Francisco, Las Vegas, Honolulu); Airbus
A330-300 (Honolulu and Guam); and Airbus A320 (Guam).
PAL
plans to mount additional three-weekly flights to Los
Angeles and San Francisco will likewise be affected by
the downgrade. For
Honolulu,
it was eyeing up to two more weekly flights.
Bautista
also said ongoing talks with Canadian authorities to fly
to Winnepeg from Honolulu were put on hold.
PAL will
only be permitted to add a flight or route if it
wetleases an aircraft from an airline coming from a
Category 1 country, as PAL did back in mid-1990s.
Under a
wetlease agreement, PAL is charged for the use of
another carrier’s aircraft, its crew, maintenance and
insurance cost.
Right
now, Bautista said PAL is still figuring out what to do
with the new Boeing planes once these are delivered.
“That is
what we are working on now. Where do we deploy the new
aircraft if the Category 2 is not lifted by the time
when the delivery starts? We were also projecting a
10-percent increase in revenues for our US routes. Where
do we divert that projection now?” asked Bautista.
Flying
back to Europe is not an option for PAL, either. “It is
not profitable yet because of high-operating costs and
low-passenger yield. So, we cannot use the new Boeing
planes to fly again to Europe,” added Bautista.
PAL had
stopped flying to
Europe in 1998.
Bautista
said PAL laments FAA’s decision. He hopes that the Air
Transportation Office (ATO) will soon be able to rectify
the assessed deficiencies in its air-safety oversight
functions so the country can revert to Category 1.
The last
time the
Philippines
was downgraded from Category 1 was in 1995. It took two
years for the country before it was rated Category 1
again.
“We are
willing to offer any assistance the ATO needs from us.
We can offer PAL’s resources such as equipment, pilots,
crew, etc.,” said Bautista.
The ATO
said that the only way for them to meet the standards is
for the President to sign the Civil Aviation Authority
of the Philippines bill so they would have enough
financial resources to fund safety, maintenance and
improvement programs.
“If they
can sign it in the next six months then fine. The
President should consider it as an urgent bill,” said
Bautista. |
