A Last Interview With Philippine Airlines Longtime President Jaime Bautista

Transcript

Jaime Bautista:What does it mean for Philippine Airlines? Well, first, we are very happy that ANA trusted Philippine Airlines and that they invested 9.5% in the share of our holding company. The investment would mean more cooperation with ANA in terms of operations. We can continue our existing codeshare agreement and our existing Mileage loyalty program. And we're looking at other areas of cooperation like ground handling, catering, helping each other in getting slots in Manila or in Japan. Well, that's one. I think we can talk about it with them when they start attending board meetings because we just elected new members of the board from ANA. We had our annual stockholders meeting last week and we elected Mr. Maida to be the representative of ANA Holdings. I think ANA is already happy with the existing shareholdings. We have not discussed the possibility of them adding the investment. Well, we may, we may have Other strategic partners or strategic investors, but we have not really discussed this fully in the board. Well, yes, we are interested in becoming a member of one of the alliances. Right now, we have discussion with with one, although I think it will really take some more time for us to be accepted in that alliance. Yeah, of course, alliance. Is important because this will allow us to extend our market reach. Because right now, we only fly to 43 international destinations. So with the alliance membership, we should be able to have connectivity to more cities in the world. Yes, we just took delivery of our sixth Airbus 350. So we are now complete in terms of the 350 orders. We're flying these airplanes to New York. We have a daily flight to JFK from Manila nonstop. We have daily flight to Toronto from Manila nonstop. We're using the airplane also to London Heathrow, and we're very happy about the performance of the aircraft. The New York and Toronto load factors are very encouraging. We hope that this will continue. The utilization of the airplane is, I think, one of the best utilization in the world in terms of A350 operations. We're flying this airplane more than 15 hours a day, and we're really happy about the performance of the aircraft. Fuel consumption is quite good. It's very fuel efficient. Our passengers Passengers love the airplane because we have a very nice configuration of this aircraft. Our business class seats have all aisle seats. The economy and premium economy are very comfortable. There were discussions internally about reconfiguring the 777-300ER, but it will cost the company a lot of money. So what we plan to do is to dedicate these aircraft to certain routes. For example, the 777 will be dedicated only for San Francisco and Los Angeles and Vancouver so that the market will know that the products that we offer in these cities are only business class and premium economy— no, business class and economy, rather. The forward booking on these additional flights are very encouraging. Because we're adding capacity to 2 matured markets, San Francisco and Los Angeles. There are many Filipinos in these 2 cities, and I think we are still the preferred carrier because we're the only airline that flies nonstop between Manila-San Francisco, Manila-Los Angeles. Actually, the 6th freedom traffic is increasing slowly. Because we have also good connections to other ASEAN cities. So the increase in capacity of LA and San Francisco allows us also to carry more passengers coming from other ASEAN cities. There will be adjustments depending on the season. Sometime in maybe September, October, we may reduce the 17 flights maybe to 14 flights. Flights in LA, and also there will be times that we will reduce the double daily flight to San Francisco to maybe ten flights a week. So we have already we have already identified the time that we will do this because you know there are lean seasons also from Manila to California. Vancouver, Vancouver we will maintain a daily flight. Toronto will maintain a daily. New York will maintain a daily flight. It's only in San Francisco and Los Angeles that we may reduce the flight from 17 to 14 or 14 to 10. But generally it will be the regular schedule, 14 flights to San Francisco and 17 flights to Los Angeles. Right now we operate only 5 times a week to London. Admittedly, we're not making Making money in London, so we're looking at other possibilities. We may we may fly to Paris and make arrangements with another foreign carrier for our passengers to be flown to London or to Italy or to Spain. So we're we're studying that very carefully. So we want our European flights to be profitable first. Where admittedly we're not making money in our European operations. We decided not to because it would mean investing in these destinations right now, and we would like to make our operations in the US profitable. Because admittedly, new routes, we will not make money. We have already finalized our plan. We'll operate this to LA, to New York, Toronto, and Europe. So 6 airplanes is just enough for these 3 destinations. Plus, to further maximize the airplane, there are times that we fly this regionally. Well, operationally, it's doing very well. We fly the A321neo to Brisbane and to Sydney. The loads are quite good. Passengers are happy because although it's a narrow body, the seats are very comfortable. The business class seats are full flat, and the economy seats have longer seat pits so that passengers are comfortable. It's equipped with one of the best in-flight entertainment systems in the industry. Passengers are happy. Economically, these are doing good. Fuel efficiency is now being felt on the operations of this 321neo. We're taking delivery of our next A321neo this June, end of June, and then the other one in September. But this time it's not with a center tank, so we'll use this only for our regional operations, the normal regular regional operations. So we don't need to fly this 6 or 7 hours or 8 hours. In fact, to make it more comfortable, we have reduced the number of seats from 199 to 195 with one additional lavatory so that it becomes more comfortable. And enjoyable for our passengers. The next 2 will be replacement aircraft, but there's a little growth because this will replace 2 old A320s with 156 seats to 195 seats. So the growth is on the number of seats. After these 2, we still have 13, 13 A321neos up to 2024. We're taking delivery of the last 2 Dash 8s on the last quarter of this year. And this will replace the old ones. You know, we had— we were operating 9 old Dash 8s and we're replacing them with 12 brand new Dash 8s with more seats. Our old Dash 8, we have the Q300 with 50 seats, 4 of them. We have 5 Q400 with 72 seats. Now we're replacing this with 12 Q400 new generation with 86 seats. Well, it's doing Good. We're using these airplanes in Clark. We have moved our operations of the Q of the turboprop from Manila to Clark and Cebu, so that we will use the bigger airplanes in Manila so we can carry more passengers to Manila and use the turboprop in Clark and in Cebu and in Davao. Well, just like all the other carriers, the on-time performance has been affected. Although we're working closely with. Government so that we improve the on-time performance of all the operators. We have, with our reduction of flights of the Q400 to Manila, we have also improved our on-time performance in Manila. We're hoping that the new consortium of 7 conglomerates will be able to implement their proposal of modernizing and expanding the existing terminals so that we can add capacity. We can make the experience of our passengers more pleasant in Manila. This year we're hoping that we will be back to profitability. We have improved our load factor. We're now experiencing more than 80% load factor compared with a little over 70% in the last 2 years. But of course, there's still a challenge in terms of yields. But with the operations of more fuel-efficient aircraft, we should be able to make 2019 a better year and a profitable year. We're expecting an increase of more than a million passengers this year. Last year we carried almost 15 million, and hopefully this year we're looking at 1 to 1.5 million more passengers, domestic and international. We're hoping that there will be more passengers in Clark and Cebu. Because Manila, as I've mentioned, is— we cannot add more flights in Manila because of slot issues.

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