Everything old is new again

Now it’s free to bring in new 777s and up its presence. Not only will it launch four weekly services from Manila to New York, where it hasn’t flown since 1997, next March but it will also increase flights to San Francisco and Los Angeles, as well as Honolulu and Guam.

Upping the ante on transpacific flying to North America certainly makes sense. It’s where the money is. Some 250,000 Filipinos live in New York and in the surrounding catchment there are 90,000 more in east Virginia, 75,000 in Washington DC and 31,000 in Philadelphia. Filipinos in the US East Coast account for 15 per cent of the 3. 4 million Filipinos living in the US, making it a natural base market for PAL operations. “If we get just 30 per cent of this, we will be very successful indeed,” says Bautista.

In other directions, Bautista is taking a more cautious approach. He says European service will be focused on London for the time being and the current five-times-weekly service will be increased to daily. PAL recently won clearance to overfly Russia giving it a shorter, more economic route to Europe. Plans to launch to Rome and Paris have been deferred, as have new Middle East destinations. The thinking is that PAL will still be able to expand its presence in Europe and the Middle East through a codeshare arrangement it has with Etihad Airways. In Japan and elsewhere in Asia it can also expand its presence via its codeshare arrangements with All Nippon Airways. “This is the trend in the industry, expanding your routes by code shares, joint ventures and other programs of cooperation,” Bautista pointed out.

So far it seems all the tarot cards are falling the right way up.

He did have one surprise up his sleeve, announcing the new PAL will be looking for a strategic investor sometime in the next three years. Tan bought back San Miguel’s 49 per cent stake for around $1 billion, about twice what he sold it for in the first place. But Bautista said the airline doesn’t need additional equity right now. “We will require equity infusion as we expand in the future,” he explained, saying it would target a strategic investor who will “preferably be an airline or a company with investments in airlines”.

Long-haul flying may be presenting plenty of opportunities for PAL but it also has more than enough challenges at home to handle. It is no longer the Philippines’ biggest domestic carrier. That honour goes to ambitious budget operator Cebu Pacific which is not only flying domestically and regionally but longer haul as well. It also has North America in its sights. On top of that the rapid growth of LCCs across the region – they now dominate market share in three countries – Malaysia, the Philippines and India – is a constant headache to full-service airlines which are having to fight tooth and nail to retain their piece of the air traffic pie.

Bautista is also taking a long hard look at fleet development. PAL currently has 53 aircraft: six 777‑300ERs (ordered by Bautista during his previous tenure), four 747‑400s, eight A340-300s, 13 A330‑300s, 12 A320s, six A321s, and four A319s. While San Miguel was in charge it embarked on a $9. 5 billion re-fleeting program, placing an order with Airbus for 44 A321s and 10 A330-300s. Bautista says the delivery schedule is being reviewed and some may be deferred.

As for Tan, he clearly has a deep affection for PAL. Why did he buy the airline back? “Because I love PAL and PAL loves me back,” he told staff after retaking control. But as everyone in the airline industry knows, a lot more than love is needed to succeed in the airline business.