Philippine Airlines (PAL) has set a clear goal to reestablish itself as a major airline in Asia. PAL President and COO Capt. Stanley Ng recently discussed expansion plans in a media report, including transforming Cebu into a transit hub for flights between Asia and the United States. Here’s my personal analysis and take, citing why PAL will need a robust fleet of fuel-efficient and new jets to support its future plans.
Reading between the lines, this shift marks PAL’s expansion beyond primarily serving balikbayans and OFWs, facilitating transit passengers from Asia to the US via its Philippine hubs. However, to support such ambitious plans, the upcoming fleet of 9 Airbus A350-1000s plus the current fleet will not suffice. The airline will need more long-range aircraft, such as Boeing 787s and more A350-900s.
Transforming the Philippines into a transit hub could significantly boost tourism and contribute to the country’s growth. Geographically, the Philippines is strategically located, similar to Hong Kong and Taiwan, but it also boasts numerous natural tourist attractions compared to its Southeast Asian neighbors.
The Long-Term Plan
Analyzing PAL’s recent moves and announcements, it appears that the airline plans to leverage the Philippines’ strategic location as a transit hub, not only for Asia to the United States but also for the Australia to Europe ‘Kangaroo Route.’ This strategy seems to be a combination of the point-to-point model and the hub-and-spoke model. PAL aims to provide direct connections from other countries to the Philippines, allowing Filipinos to choose between hubs in Manila or Cebu, based on proximity. For instance, people from the Visayas region won’t need to fly to Manila for a Los Angeles flight; a direct Cebu to Los Angeles connection offers an easier travel option and also helps to decongest Manila’s airport.
Furthermore, a dual-hub strategy in Manila and Cebu might help transform the Philippines into a major Asian transit hub, catering to passengers traveling from Asia to the US, and from Australia to Europe. This approach could see both hubs working in synergy.
The Planes Needed
PAL may require a substantial number of planes – potentially hundreds – including a mix of widebody and narrowbody aircraft, to realize its ambitious expansion plans. Long-range widebody planes, in particular, will be crucial. Currently, PAL operates 9 Boeing 777-300ERs and 2 Airbus A350-900s for long-range routes, supplemented by 10 Airbus A330-300s primarily used for Middle East and regional routes. However, with only 11 long-range aircraft, the airline’s capacity to expand into more destinations and routes is limited, especially with plans to operate from two hubs.
Ideally, PAL’s future fleet needs to consist of a mix of long-range widebody aircraft, offering the range and flexibility needed to serve diverse markets with varying traffic demands. Analyzing their expansion strategy, I feel that a good widebody fleet for them would be a mix of Airbus A350-1000s, A350-900s, and Boeing 787-9s. While the A330-300s currently serve as workhorses for PAL, especially for Middle East and regional assignments, they will eventually need replacements, possibly with A330-900neos or Boeing 787-10s.
For long-haul flights, the Airbus A350-1000 will serve as a key asset for PAL, particularly on high-traffic routes to North America, which has historically been the airline’s most lucrative market. While PAL is considering deploying some A350-1000s on European routes, the focus remains predominantly on North America.
The Airbus A350-900 remains an ideal aircraft for ultra-long-haul routes like New York JFK and Toronto from Manila. However, PAL will likely need more of these aircraft to achieve its expansive plans. The A350-900 may complement the A350-1000 on certain routes and is well-suited for major US destinations from Cebu, including Los Angeles and San Francisco. Additionally, it’s an excellent choice for PAL’s planned European destinations.
Regarding the Boeing 787-9, this aircraft is optimized for long-range flights with a lower passenger load compared to the A350s. Capable of carrying 290 passengers in a 2-class configuration (or around 275 in a 3-class setup), the 787-9 might offer PAL the flexibility to operate on European routes with less demand, both from Manila and Cebu. This aircraft may provide PAL with the versatility to manage transpacific routes from Cebu during off-peak seasons.
This proposed fleet combination would provide PAL with the flexibility needed to serve various long-haul markets and routes using a hub-and-spoke strategy. With this approach, PAL wouldn’t solely rely on Filipinos and tourists traveling directly to and from the Philippines.
However, for the strategy to be effective, narrowbody jets and turboprops are crucial. PAL currently operates 8 Airbus A321neos, with 13 more slated for delivery starting in 2026. They also have 18 A321ceos, some of which PAL Express uses. Given the aging fleet of PAL Express’ A320ceos, a fleet update is necessary. A robust selection of narrowbody aircraft is vital for operations from two major hubs in the Philippines, enabling PAL to execute an effective hub-and-spoke strategy. These aircraft are essential for transiting passengers to and from the Philippines and connecting them with regional destinations.
You might be asking me, Why not the A330neo? Although Cebu Pacific’s 460-seat configuration shows that the A330neo can accommodate a high passenger density, it lacks the range and payload capabilities of the Boeing 787-9.
In reality, all these will depend on the PAL’s fleet planning number crunchers.
An Airport is Crucial to This
Even with the most modern and diverse fleet, PAL’s ambitious plans could be hampered without a supporting airport infrastructure. While the Mactan Cebu International Airport’s Terminal 2 (MCIA2) may not have the same capacity as the combined NAIA terminals, it offers superior facilities, making it an ideal candidate for a transit hub.
However, the current situation at NAIA, operating beyond its capacity and lacking the necessary facilities to function as a transit hub, particularly when compared to other major Asian airports like Singapore’s Changi and Hong Kong’s Chep Lap Kok International Airport, is a significant bottleneck. To realize PAL’s vision, there’s a clear need for a larger and more advanced airport. Such an airport would accommodate more planes and passengers, allow for more simultaneous take-offs and landings, and reduce delays, ultimately supporting PAL’s expansion and the country’s aviation sector as a whole.
NAIA airport requires significant enhancements, including an efficient transfer system between terminals, additional shops, more seating and sleeping quarters, restaurants, and other facilities.
Challenges
Capt. Stanley Ng recognizes several challenges the airline currently faces. The primary issue is the lack of aircraft, compounded by a global shortage of spare parts, which also affects the possibility of leasing additional planes. The ongoing Pratt & Whitney engine issue is another significant hurdle. Geopolitical tensions also pose a challenge. However, Capt. Ng is optimistic that once these issues are resolved, PAL can fully embark on its expansion plans.
PAL executives are undoubtedly aware of the requirements needed to realize their ambitious goals, with fleet modernization and network expansion being a priority. Yet, with the airline industry experiencing a surge in widebody plane orders, PAL might need to act soon to avoid potential delivery delays. The high demand and current production rates from both Airbus and Boeing mean that any delay in placing orders could result in some setbacks for PAL’s expansion strategy.
Revenge Travel
Revenge travel is expected to continue growing, potentially surpassing pre-pandemic levels. In anticipation of this demand, budget carriers are already planning substantial orders for 100 to 150 narrowbody aircraft from either Airbus or Boeing. This move reflects a strong optimism about travel demand to and from the Philippines.
PAL is also gearing up for this trend, as evidenced by Capt. Stanley Ng’s acknowledgment of the staying power of revenge travel.
The perspectives shared in this article are based on my personal analysis. The year 2024 is shaping up to be a pivotal one, as I am hoping (and keeping my fingers crossed) to hear announcements about new aircraft orders from PAL. The airline is poised to receive leased widebody jets to meet the increasing demand while awaiting the delivery of their A350-1000s. Additionally, Capt. Ng has previously hinted at the possibility of ordering more widebody aircraft. While the specific model remains unconfirmed, I am hoping that these might be Boeing 787s. However, as of now, there is no confirmation, and I can only speculate about PAL’s next strategic move in fleet expansion.
First love never dies. I fell in love with airplanes and aviation when I was a kid. My dream was to become a pilot, but destiny led me to another path: to be an aviation digital media content creator and a small business owner. My passion for aviation inspires me to bring you quality content through my website and social accounts. Aviation is indeed in my blood and blog!
