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Philippine Airlines may cut Middle East capacity and network, and end Etihad partnership

Philippine Airlines (PAL) is considering reducing capacity to the Middle East in 2017 while expanding in several other international markets, including Australia, China and the US. Yields in all seven of the group’s Middle East markets – all of which have been launched over the last three years – have been impacted by intensifying competition and weaker outbound demand.

PAL could suspend services to Abu Dhabi and terminate its partnership with Etihad. The airline group has not benefitted significantly from its Etihad codeshare, and may be better off partnering with another airline.

However, PAL is keen to continue growing its international operation. PAL is about to add capacity to the US using two additional 777-300ERs, and plans to add capacity to Australia in late 2017 following delivery of its first batch of A321neoLRs. New destinations in Europe and the US are under consideration for 2018, using its new A350-900 fleet.

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