PAL to spend around $2 billion on 15 new planes in 2018

PAL A350

Manila, Philippines – Flag carrier Philippine Airlines (PAL) is continuing with its fleet modernization program in a bid to push its newly acquired 4-star airline status to 5 stars.

“We are expecting to take delivery of 15 aircraft this year – 4 Airbus A350s, 6 Airbus A321neo (new engine options), and 5 Bombardier Q400 next generation planes,” PAL president and chief operating officer Jaime Bautista said in a briefing on Tuesday, February 13.

According to Bautista, the 15 aircraft will cost around $2 billion, including spare parts.

The first Airbus A350 will be delivered in June, said Bautista. It will have 295 seats with a 3-class configuration – business, premium economy, and economy. Business class will offer full-flat seats and personal entertainment systems.

“We will use it initially to regional destinations and in October we plan to use it on the nonstop Manila to New York route over the North Pole,” Bautista said.

He added that PAL is then expecting to receive one A350 plane in each of the months of September, October, and November, with two more A350s to be delivered in 2019.

These aircraft will take over routes currently being operated using the Airbus A340.

“We will start retiring some of the Airbus 340s, and hopefully by 2021 all the Airbus 340s will be retired from PAL’s fleet,” Bautista said.

PAL is also scheduled to take delivery of 6 A321neos spread over March, April, and August. It will have 168 seats, including 12 full-flat seats in business class.

Bautista said the A321neos will be used for nonstop Manila to Brisbane flights and also for the soon-to come India route.

The next generation Bombardier Q400s turbo-propellers, meanwhile, will be used for domestic routes.

The 15 new planes will bring PAL’s fleet to a total of 103 aircraft, though as Bautista noted, some of the older planes will be retired.

PAL carried 15 million passengers in 2017 and is targeting 16.5 million passengers in 2018.

Possible fuel surcharge

Bautista also said the airline has a pending petition before the Civil Aviation Authority of the Philippines (CAAP), filed last December, seeking permission for a fuel surcharge to be included in ticket prices.

Bautista noted that other countries allow such charges for airlines.

“The price of fuel has gone up more than 30% from the 2016 level which means that our additional cost of fuel is more than $200 million compared to [the] 2017 cost, and that’s the reason we wanted to ask government to allow us to collect a surcharge,” he explained.

“I think [the charge] won’t really be that much because we also cannot price ourselves out of the market. The fares continue to be low because of market forces. A small fuel surcharge will help us recover a portion of the cost of fuel,” he added.

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