Is it Amsterdam, Rome, Paris or Hamburg? These are the destinations which Philippine Airlines (PAL) is studying as part of its expansion plans to Europe.
PAL is looking at these new destinations as it awaits the delivery of its Airbus 350 acquired earlier this year for its long-haul flights. “We will be able to fly to new destinations in Europe when we take the delivery of our Airbus 350 which will be in 2018. But as early as now, we are already conducting a study on which of the destinations in Europe we’ll fly to,” he said.
Currently, PAL is expanding its operations with a new destination, Saipan. This is the 44th international destination of PAL and will commence this June 15. This will be available twice a week using the Airbus A320.
PR 1571 will depart Manila every Wednesday and Sunday at 9:20 p.m., and arrive in Saipan at 3:35 a.m. local time. PR 1572, meanwhile, will leave Saipan every Monday and Thursday at 4:35 a.m. and arrive in Manila at 6:45 a.m.
PAL is also set to begin taking advantage of fifth freedom rights on the Manila-Taipei-Osaka route by June.
Fifth freedom is the right to pick up passengers from a foreign country after flying from country of origin, and to bring them to another country or final destination.
Bautista said the Manila-Taipei-Osaka service would be offered daily.
TROUBLE WITH KUWAIT
PAL earlier complained it could not exercise its fifth freedom to pick up passengers from Dubai enroute to Kuwait after the Arab state disallowed it.
Last Jan. 17, the flag carrier launched a four-time weekly service (Monday, Wednesday, Friday, Saturday) between Manila and Kuwait via Dubai, to serve the travel needs of Filipino workers in Kuwait using an Airbus A330.
PAL said there was more volume of Filipino passengers, especially OFWs, in Dubai rather than in Bangkok.
The Kuwaiti government prevented the flag carrier from exercising its right to avail of fifth freedom traffic rights, while Kuwait Airways had been freely availing of Fifth Freedom traffic rights between Bangkok and Manila for close to 20 years.
PAL president and COO Jaime Bautista told reporters the airline is in talks with a potential strategic partner to ensure continued growth.
As it struggles to revive sales of the world’s largest passenger aircraft, Airbus plans to cut production of A380 in 2017. Compared with the current rate of two per month, Airbus informed its suppliers to slow production to sustain an assembly of 1.7 aircraft per month by next year.
It is unclear however when the slowdown would be felt in the company’s assembly plant in Toulouse. Airbus declined to comment on talks with suppliers.
“We can’t comment on any discussions which may or may not have happened,” a spokesman said.
Sales of the A380 is badly affected by the improvements of the smaller but efficient two-engine models. Compare to 544 seats to fill, these twin engine planes are much easier to fill.
Since 2007, Airbus has delivered 143 A380s. Last year, it delivered 27 super jumbos and it expects to continue to break even based on similar deliveries in 2016. Meanwhile, it continues to stem costs in an effort to lower the breakeven point of 20 aircraft per year.
Based on a full year, which Airbus counts as 11.5 months, the new production rate would yield 19.6 superjumbos a year.
In February Airbus Group Chief Executive Tom Enders said it had between 20 and 30 A380s on its delivery list for 2017.
RBC Capital Markets analyst Rob Stallard said he estimates Airbus will deliver 24 A380s next year, with its profit margin on the jet staying at zero, or exactly breakeven.
At the end of March Airbus had 135 aircraft on its books that have been sold and are waiting to be produced, mainly for leading customer Emirates which recently topped up its order. But after deducting aircraft that are unlikely to be delivered, analysts say the order situation is weaker.
Air France has said it plans to cancel two A380s listed on the Airbus order book. Another 10 listed anonymously are believed to have been cancelled by Hong Kong Airlines and 20 are allocated to leasing firm Amadeo, which are seen as unlikely to enter production until the lessor places them with airlines.
Analysts also say Qantas and Virgin Atlantic are unlikely to take a combined total of 12 of the jets.
The project received a boost earlier this year when Iran announced a preliminary order for 12 superjumbos as it emerges from sanctions, but doubts remain over how quickly the order can be finalized as Iran faces continued financial restrictions.
Airbus says it is working on several sales campaigns.
THE COMPOUND annual growth rate (CAGR) for air travel in the Philippines will catch up with the rest of the Association of Southeast Asian Nations (ASEAN) bloc to average 5.8% from 2015 to 2020 — propelled by the aggressiveness of budget carriers and liberalization of skies in the region, Nomura said.
The Philippines handled 65 million passengers in 2015, Nomura said in an April 14 report titled “ASEAN airlines: Supply-demand dynamics not favouring all.” It forecasts an increase to 69 million this year, 74 million in 2017, 78 million in 2018, 82 million in 2019, and 86 million by 2020.
“With a slew of new deliveries entering the market for Cebu Pacific and Philippine Airlines (PAL Group), we see competition intensifying in the domestic market, notably at the Cebu-Mactan airport, which is the Philippines’ second busiest airport, and a sizeable operating base for both Cebu Pacific and PAL Group,” Nomura said.
International yields of foreign airlines entering the market will be affected due to “overcapacity,” but the impact will be much less compared to the effects on the domestic market.
“However, we expect local carriers operating out of the congested Manila airport should be cushioned from the yield downside, as there is no room for added capacity at the said airport,” the Japanese financial services group said.
Philippine AirAsia is also in a “favorable” position as it is isolated from the heated competition at the Cebu-Mactan airport.
CAGR for passenger traffic at stood at 6.8% last year, and Nomura projects another 6.8% this year and 7.4% in 2017. However, CAGR is expected to decline to 5% from 2018 to 2020, translating to a 5.8% average for those five years.
“We expect that ASEAN, as a whole, will continue to see commendable growth in air travel in 2016 onwards,” Nomura said.
It cited “aggressive air fare discounts” due to intensifying competition amid capacity expansion in the Philippines, along with Vietnam, Indonesia, Laos and Thailand.
Nomura also pointed out the liberalized policies for air traffic rights, which removes “monopolistic barriers” such as restrictions on frequencies, route rights, air fare pricing regimes and equity ownership structures. This brought in new players and paved the way for increased competition.
“ASEAN has set a road map for air liberalisation, and the Philippines’ consent to comply with Protocol 5 and 6 implies that unlimited fifth freedom rights on ASEAN capital cities could be foreseeable in the future across all ASEANmembers,” Nomura said.
In an earlier statement, the Department of Transportation and Communications (DoTC) said President Benigno S. C. Aquino III signed on Feb. 3 Protocols 5 and 6 of the ASEAN Multilateral Agreement in Air Services, allowing local airlines to have “unlimited frequencies” to Asean member states. The DoTC and the Civil Aeronautics Board are assisting Philippine air carriers in securing additional flight schedules with each of the Asean’s nine other member states, and the government targets to have new flights operational by August.
Nomura said yesterday that other cross-bilateral agreements between ASEAN and other countries — such as China, India and the European Union — are also being discussed.
“The continued strong economic growth and favourable demographics [outside Singapore] should propel a passenger traffic CAGR of 5.9% over 2015-20F (2020 forecast),” the report read.
“While we expect improved earnings outlooks across the board on the back of low oil prices, we think investors should look beyond the earnings growth trajectory and be selective in their stock picks, as supply and demand dynamics may not be entirely positive across the sector.”
Despite an existing air services agreement between PH and Kuwait which allow 5th freedom rights, the State of Kuwait disallowed the carriage of passengers and cargo between Dubai and Kuwait, the flag carrier complained.
Fifth Freedom is the freedom to pick up passengers and cargo from a foreign country and carry them to a second country, which is the final destination.
Last January 17, 2016, PAL launched a four times weekly service (M-W-F-S) between MNL and Kuwait (via Dubai) to serve the travel needs of Filipinos in that State using a 414-seater Airbus A330.
But Kuwait’s Directorate General of Civil Aviation (DGCA) only allowed PAL to carry passengers and cargo traveling solely between the Philippines and either Kuwait or Dubai.
In short, the Kuwaiti government barred PAL from exercising its right as a Philippine-designated carrier to avail of fifth freedom traffic rights.
The Philippines-Kuwait Bilateral Air Services Agreement of 1977, as amended in April 1995 and February 2009, clearly granted PAL with such a right.
Hence, in an official communiqué addressed to Department of Foreign Affairs (DFA) Secretary Jose Rene Almendras, PAL President and Chief Operating Officer Jaime J. Bautista urged the state agency to intervene on the issue.
“We request for DFA assistance in taking the appropriate measures to help PAL secure Kuwaiti authorization for our Dubai-Kuwait fifth freedom rights, including diplomatic protests and special representations with the Government of the State of Kuwait,” he stressed.
“The Directorate General of Civil Aviation’s disapproval undermines the principle of reciprocity in availing the grant of aviation rights and the commitment to ensure a level-playing field among parties in the ASA (Air Services Agreement),” the PAL President reiterated.
“It’s unfortunate that the Government of the State of Kuwait, through its Directorate General of Civil Aviation (DGCA) has disallowed PAL from carrying ‘fifth freedom’ passenger and cargo traffic between Dubai and Kuwait.”
“Ironically, Kuwait Airways had been freely availing of 5th freedom traffic rights between Bangkok and Manila for close to 20 years.”
To address the imbalance, the Philippines’ Civil Aeronautics Board (CAB) suspended Kuwait Airways’ Bangkok-Manila fifth freedom privileges effective March 27, 2016.
Nevertheless, the CAB permitted Kuwait Airways to increase its flights to Manila from six to eight weekly, a move which PAL vehemently opposed.
“We intend to exhaust all available avenues to resolve this issue,” according to PAL SVP Legal and General Counsel Atty. Siegfred Mison.
“We urge the CAB to reconsider any grant of additional rights to Kuwait Airlines, until and unless PAL is granted its basic air rights as allowed under existing agreements.”
Indian Ocean airline Air Austral dropped its order for two A380 planes. Air Austral originally aimed to configure the planes with a staggering 840 seats, the highest capacity seat layout in the history of civil aviation.
The aircraft, widely labeled as “flying sardine cans,” were removed from Airbus’s order backlog in a monthly update published Monday, confirming a cancellation that had seemed likely after Air Austral repeatedly delayed their delivery.
Based on the island of La Reunion, Air Austral ordered the double-decker A380s in 2009, saying they’d be used for single-class budget flights on the “heavy-traffic route” to Paris. It didn’t reveal an exact seating plan — or specify how many galleys and bathrooms the planes would need for their mammoth passenger load.
While the A380 was certificated for a maximum 853 people based on evacuation trials, most airlines operate the model with 450 to 550 seats in three or four classes, with Dubai-based Emirates, the biggest operator, introducing a two-class 615-seat version.
Even with the density that had been planned by Air Austral, the A380 would still have wider seats and wider aisles in economy class than Boeing Co.’s 787 Dreamliner and the planned 777X, Airbus has said.
Airbus’s website also showed new orders for two A380 superjumbos, though the identity of the operator wasn’t revealed.
Cebu Pacific Air is the first airline in the Asia-Pacific region to order Recaro’s SL3510 seat model for its 30 new A321neo aircraft.
With a weight around 9kg, the SL3510 is currently one of the lightest economy class seats on the market, with approximately 40 percent less weight than conventional economy class seat models. RECARO Aircraft Seating managed to significantly reduce the weight of the seat. Instead of conventional foam, an innovative netting material is used to form the core of the backrest. This makes it possible to reduce foam thickness and makes the backrest much lighter.
Weight reduction was achieved without sacrificing seat quality, design or passenger comfort. To achieve this, RECARO engineers focused specifically on the seat’s ergonomic qualities. The backrest angle is pre-defined at 15 degrees for a relaxed sitting position and the netting material conforms to the shape of the passenger’s spine. Even in high density seating, passengers have more living space thanks to the SL3510, as the netting material makes the backrest much slimmer, increasing the distance between seat rows.
An additional benefit is a simplification of maintenance, due to the reduction in the number of different parts used in the seat.
This weight-optimized concept received the 2009 Crystal Cabin Award in the industrial design/interior concept category.
Cebu Pacific’s (CEB) net profit increased by 414% to P4.4 billion last year.
With sustained growth in passenger volume on key domestic and international destinations Cebu Pacific Air group’s total revenues went up by 8.7% to P56.5 billion.
The airline’s improved presence in emerging markets, supported by a conservative fleet expansion plan, likewise contributed to the upward trend.
“CEB’s market grew exponentially in two decades, thanks to the continued trust and patronage of our guests and the support of airline regulators and stakeholders both in the Philippines and abroad,” stated Atty. JR Mantaring, CEB Vice President for Corporate Affairs.
The airline’s passengers now number over 125 million since its inception – “a testament to our commitment in enabling everyone to fly, through our extensive and most affordable flight network.”
In 2015, CEB flew a total of 18.4 million passengers, up 8.9% from the 16.9 million passengers flown in 2014. The record numbers boosted passenger revenues to P42.7 billion, an increase of 6.2% year-on-year.
Cargo revenues likewise posted an upsurge of 10% to P3.5 billion, while ancillary revenues increased by 19.6% to P10.4 billion due to improved online bookings and a wider range of ancillary revenue products and services.
Last year, the number of flights soared by 7.6% year-on-year with the launch of new routes such as Manila – Doha and Cebu – Tokyo (Narita), and increased frequencies of existing routes.
The airline ended 2015 with 55 aircraft, following the acquisition of five brand-new, wide-bodied Airbus A320 and A330 aircraft with a respective configuration of 180 and 436 all-economy class seats.