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19
Jun

PAL expects to hit passenger volume target despite unrest

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By Imee Charlee C. Delavin | BusinessWorld Online

PHILIPPINE AIRLINES (PAL) is likely to hit its passenger volume target this year, despite the ongoing unrest in Marawi City in Mindanao and the dispute between Qatar and a bloc of countries in the Middle East.

PAL President and Chief Operating Officer Jaime J. Bautista said domestic travel is expected to boost its operations, amid recent cancellations and re-booking requests for flights to Mindanao after President Rodrigo R. Duterte declared martial law in the country’s southern island in May.

“I think we will [hit our target]. Although merong konting [there is a slight] slowdown in the bookings, but we think this is temporary,”Mr. Bautista told reporters when asked how developments here and abroad would affect PAL’s performance.

For 2017, PAL is projecting passenger volumes to hit 15 million, higher by nearly 12% from the 13.4 million passengers flown last year. In the first three months, traffic grew 16% to 5.12 million from 4.4 million.

“Domestic Filipinos continue to travel. In fact, for the first three months of the year, our growth in the domestic is around 12-13% and for the international, our growth is more than 17%. So I think there will be a slowdown because of this Marawi incident,” he said.

If the issue is resolved soon, he said the confidence of the riding public would be restored and they would continue to travel.

On May 23, Mr. Duterte placed Mindanao under martial law to prevent the spread of extremism in the region after security forces clashed with the Islamic State-linked Maute group in Marawi City, Lanao del Sur.

Firefight between government troops and the Maute militants continue, extending the battle for nearly four weeks. More than 300 people have been killed in the clash, which official estimates broke down as 225 militants, 59 soldiers and 26 civilians.

Despite this, the flag carrier said seat loads to Mindanao remains well.

“[For Mindanao], maganda pa rin loads namin (our loads remain good). Even [for] Cagayan de Oro, the loads are still good,” Mr. Bautista said.

He said the airline does not fly to Marawi since there is no airport in that city. The closest airport is in Iligan, which PAL also does not fly to.

“So the closest is Cagayan de Oro,” he said.

“The tourists, they know where to go to especially the Koreans, the Chinese,” he said. “Since they will go to the Philippines, they’ll look for places far from Marawi. They will go to Boracay, they will go to Cebu, they will go to Puerto Princesa and other Palawan destinations.”

Late last month, PAL said the tension in Mindanao would surely have an effect on the company, “which will result to reduction in revenue.” The airline has yet to come up with the full estimate, but said the impact would be “short term.”

Meanwhile, the diplomatic fallout between Qatar, United Arab Emirates (UAE), Saudi Arabia, Bahrain and Yemen, will post both positive and negative impact on the Lucio C. Tan-owned airline.

“It can be positive and negative. Positive in the sense that Qatar Airways will not be able to carry citizens from UAE or citizens of Saudi Arabia so those who travel via Doha will now travel by PAL,” he said.

“The negative aspect is if the government of Doha reduces the number of Filipino overseas workers, so mababawasan pasahero namin (so our passenger count will be reduced),”Mr. Bautista said.

PAL’s load will also be affected if the government limits deployment of Filipino workers to these countries, he added.

Five Arab states -- Saudi Arabia, the UAE, Bahrain, Egypt and Yemen -- severed diplomatic and trade relations with Qatar on June 5, accusing it of supporting “extremism” and their regional rival Iran. It also cut off land, air and sea travel to and from Qatar.

The Philippine carrier operates 30 flights per week to the Middle East (seven times weekly to Dubai; four times to Kuwait; four times to Doha; five times to Dammam; three to Jeddah and seven times to Riyadh).

PAL has direct Manila-Abu Dhabi (UAE), Manila-Dubai (UAE) and Manila-Doha (Qatar) flights.

Mr. Bautista said the effect of the dispute between the Middle East countries has a “50% [positive] and 50% [negative] impact” on PAL operations.