Philippine Airlines (PAL) announced plans to withdraw its Manila-Riyadh service from 02-Apr-2011, citing losses on the sector for the decision (The Philippine Star/AME Info, 13-Mar-2011). "There are not enough passengers taking this flight to justify its continued operation. Revenues earned are not enough to cover cost of operations," PAL said. The carrier resumed its Riyadh services in Mar-2009 after initially halting operations in Mar-2006.
Philippine Airlines to drop Riyadh route
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Philippines-China air service growth to lift Philippines' Chinese tourism as Duterte changes horses
First bananas, then people. China's lifting of a trade ban against bananas from the Philippines bodes well for aviation. Relations between China and the Philippines turned negative in 2012. The issue was primarily over China's claims to uninhabited islands – a debate that also caused China-Japan relations to turn sour. China banned Filipino banana imports and issued a travel warning against the Philippines. Travel warnings from China carry more weight than in other markets since state-owned/linked travel agencies essentially stop selling the impacted market. Diplomatic rows have resulted in drastic reductions in outbound passenger flows from China.
Japan has more than recovered but the Philippines' underexposure to China is well evident: the Philippines has received the least number of Chinese tourists in Asia. Laos and Cambodia, far smaller than the Philippines, each received more Chinese tourists than the Philippines.
New Filipino President Rodrigo Duterte is pivoting Manila's allegiance away from the US – to China. His presidency is young and the calculation has its sceptics, but China appears to be warming. Following the lifting of its ban on banana trade, China is expected to use President Duterte's visit to Beijing to lift its travel warning against the Philippines. This will likely stimulate large air service growth between China and the Philippines. Yet for existing markets, there is some concern that the Philippines presents new competition.
Philippine Airlines Part 2: more expansion to Australia and China as A321neos arrive in 2017
Philippine Airlines (PAL) is planning more international growth over the next year or two with a focus on Australia, China, the US and potentially Europe. Nonstops for Brisbane and more capacity for Sydney are in the pipeline for Australia, while in the Chinese market PAL is looking to launch Chengdu.
In Europe PAL is considering adding a second European destination in 2018, with Frankfurt and Rome under consideration. PAL has already added capacity to Europe this year by upgrading its London Heathrow service to daily.
This is the second in a series of analysis reports on the Philippines market. The first report focused on PAL’s Middle East operation, which could be reduced in 2017 amid intensifying competition and weakening demand.