MANILA, Philippines—Few companies in local corporate history can lay claim to a past as storied as that of Philippine Airlines. Formed just before World War II reached the Pacific, the airline quickly rose to prominence on many fronts, becoming the first airline in Asia to operate regular flights for paying passengers on March 15, 1941, with flights between Baguio and Manila, from the Nielsen Airport where the Ayala Triangle in Makati City now stands. And since the end of the war, the company has grown steadily—albeit with its fair share of turbulence—to where it stands today: a modern airline facing and coping with a changing environment that is forcing the aviation industry to adapt or die. “The airline business has become very challenging and very competitive,” PAL chairman Lucio C. Tan says in an interview with the Inquirer. “But we are ready to compete. We know what needs to be done.” And what needs to be done is nothing short of revolutionary for an airline that was once a government-run monopoly, now forced to compete with smaller competitors that are not saddled with the so-called “legacy issues” facing PAL. Humble beginnings Soon after inaugurating its Manila-Baguio service in 1941, PAL began regular flights between Manila and Cebu. This was interrupted by the outbreak of the war, but resumed in 1946 with the airline using military surplus Douglas DC3s to reach 15 local destinations. PAL became the first Asian carrier to cross the Pacific immediately after the war, when it used chartered DC-4s (the four-engined cousin of the DC-3) to ferry American soldiers home. According to the airline’s records, trans-Pacific flights those days took a total of 41 hours—just seven hours short of two whole days—since the “short-legged” DC-4 had to make four refueling stops before reaching the US west coast. It was also during this period that PAL initiated flights to Hong Kong. To this day, PAL’s flights to the US mainland and Hong Kong are its most profitable routes. The airline has earned many honors for the country. It was once among the top 10 airlines in the world, making it a favorite of VIP travelers. Its catering service was also honored by the Chaine des Rotisseurs, the Paris-based international gastronomic society, as being one of the best in the industry. “We are proud of our past, we take inspiration from it in building the foundations of a better future in an environment that can be extremely challenging,” PAL president Jaime J. Bautista says in an interview. And challenges are something PAL has had no shortage of. The government privatized the airline in the early 1990s with the Lucio Tan group eventually taking control of the flag carrier and embarking on a massive re-fleeting effort that gave it one of the youngest and most modern fleets in the world. In 1997, however, the region was laid low by the East Asian financial crisis, pushing most airlines into the red, PAL included. Coupled with a pilot’s strike, PAL declared bankruptcy and entered into receivership. Despite this, the airline emerged from receivership a decade later, and was cited as the “Airline Turnaround of the Year” in 2007 by the Center for Asia Pacific Aviation. More challenges Today, the airline is flying into similar headwinds, with the global aviation industry reeling from the effects of high fuel prices, declining business travel demand, increased competition and its own local labor issues. Despite this, Bautista is confident that PAL can weather the turbulence and emerge into clearer skies. “As it is, we are operating with one hand tied behind our back,” he says, referring to the issues the airline is facing on the regulatory and labor fronts. “We’re surviving, but we can do a lot better if both our hands are free.” Recently, PAL took delivery of two brand-new Boeing B777-300ERs which it had originally planned to use for its trans-Pacific route in lieu of the B747-400. “For almost a similar capacity, the B777 can fly trans-Pacific using only two engines, while the B747 has four,” Bautista says, explaining, however, that PAL is prohibited from swapping aircraft types by the country’s existing Category 2 restrictions imposed by US aviation regulators. “We are hoping we can switch to the B777 soon so we can take advantage of its efficiencies,” he adds. The airline is also wrestling with its militant labor unions, which are opposing “rationalization” plans that will see unprofitable PAL units spun off into separate companies. “If we are to survive and eventually prosper, we have to improve our cost structure,” Bautista says. “I hope that our employees, the regulators and the public understand this.” Proud of PAL Whatever the outcome is, the PAL president is proud of his company. “We are the only Asian airline still operating under the same name [since the company’s foundation],” he says. More importantly, Bautista points out—with a mixture of pride and sadness—that PAL is the only national carrier in the region operating without government support. “All the big national airlines are either owned or subsidized by their governments,” he says. “We are not even asking for that kind of support,” Bautista adds. “All we need to be able to keep flying for the net 70 years is for them to untie our hands. That’s all.” |
Source: Philippine Daly Inquirer
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