Philippine Airlines (PAL) is planning significant expansion of its long haul operation as it takes delivery of new widebody aircraft, including A350-900s. PAL’s long haul fleet is slated to expand from only 12 aircraft currently to 14 by the end of 2016, and to at least 17 aircraft by mid-2019.

After several months of negotiations PAL has finally committed to acquiring at least six A350s, three of which are tentatively earmarked as growth aircraft. The new high gross weight A350-900s will enable PAL to operate nonstop flights to the east coast of North America, as well as to add capacityto the west coast of North America and to Europe.

The Philippine flag airline currently has six long haul destinations, only four of which are served nonstop from Manila. PAL plans to add new long haul destinations, upgrade one-stop routes to nonstop, and launch new long haul routes from its secondary hub at Cebu as it expands its long haul fleet.

A350 deal supports PAL long haul expansion plan

In mid-2015 PAL committed to leasing two additional 777-300ERs for delivery in late 2016. The additional 777-300ERs will enable PAL to grow its long haul operation as its long haul fleet expands from 12 aircraft currently to 14 aircraft by the end of 2016.

The commitment for six A350-900s has been anticipated for several months to support further long haul expansion, as well as fleet renewal. CAPA stated in a 13-Jun-2015 report that along with the two additional 777-300ERs for delivery in 2016 PAL was seeking to acquire four to six new-generation widebody aircraft for delivery from 2017. “The A350-900 has emerged as the strong favourite as Airbus has informed PAL that it could use the type to operate nonstop services to New York. PAL was able to get a close look at the A350-900 in May-2015, when Airbus had a demonstration flight in Manila,” CAPA wrote in Jun-2015.

PAL to use A340s initially to launch new long haul routes

The A350-900 is also a good fit for potential new long haul routes. PAL is launching service from Cebu to Los Angeles in Mar-2016 and plans to consider other long haul routes from Cebu as its widebody fleet expands. PAL is also considering the launch of a destination in continental Europe, potentially by the end of 2016.
Cebu-Los Angeles and the other potential new long haul routes will be launched with A340-300s

Cebu-Los Angeles and the other potential new long haul routes will be launched with A340-300s as the 777-300ER is too large. PAL’s A340-300s have 254 seats in two-class configuration (economy and business only), making them even smaller than the A350-900s. However the A340s are inefficient, resulting in higher per seat costs even in a low fuel price environment.

As CAPA stated in the Nov-2015 report, PAL intends to keep operating each of its six A340-300s, which were acquired in 2013 and early 2014, until the engines require overhaul. For three of the aircraft the engines will come up for overhaul as the A350-900s are delivered in 2018 and 1H2019.

PAL has the flexibility to operate the other three A340s slightly longer, although it could accelerate their retirement if fuel prices increase. If the retirement of the last three A340s were accelerated, PAL would need to quickly exercise A350-900 options or adjust its long haul capacity plans.


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