Exclusive: Philippine Airlines Is Now In Process Of Joining An Alliance

Philippine Airlines (PAL) is an airline on a mission. Not only is the airline determined to strengthen its position in the Asian airline market, to better compete with the likes of Cathay Pacific, Singapore Airlines & Japan Airlines, but the airline is also in the midst of an internal campaign which works towards one goal: becoming a ‘Skytrax’ 5 star airline.

Philippine Airlines’ (currently a ‘Skytrax’ 4-star airline) determination for ‘the extra star’ shapes and influences their corporate decisions, acquisitions of new aircraft, and investment in cabin products. While there is some doubt in the industry over the legitimacy of the star-awarding company — notably from Turkish Airlines, who is voluntarily exempting itself from all future ‘Skytrax’ audits, citing a lack of trust in the firm — Philippine Airlines say it has complete faith in the ‘Skytrax’ audits, and hence it will continue to work towards the fifth star.

Alex Macheras & Jaime Bautista
Onboard A350 XWB delivery to Manila — Alex Macheras with President of Philippine Airlines, Jaime Bautista

In what is Philippine Airlines’ latest step towards becoming a 5-star airline, Mr Jaime Bautista (President, Philippine Airlines) has exclusively revealed to me that the airline is ‘now in the process’ of joining one of the three major airline alliances. Bautista told me “the alliance has told us it’s probably going to to be a 2 year process, but nevertheless it’s a process that has already started”

For now, the exact alliance Philippine Airlines is in the process of joining has to remain confidential, but what Bautista can say is “the alliance membership will help give Philippine Airlines access to more interior points in Europe and North America, as well as the continents of Africa and South America where we can tap new sources of traffic.”

The news is long overdue, Philippine Airlines has been the only major Southeast Asian flag carrier that is not in a global alliance for over four years. Philippines’ ‘premium’ routes, such as London, are more challenging for the airline compared with their neighbouring Asian flag carrier counterparts, as Philippine Airlines cannot rely on connecting traffic to keep the route profitable. Furthermore, there is heavy competition in the London-Manila market, and Gulf carriers such as Emirates and Qatar Airways offer relatively swift one-stop options that have the ability to connect secondary city European flights with Manila bound long haul flights.

Philippine Airlines Boeing 777-300ER at London Heathrow Airport (LHR)

Potentially Ruling Out: Star Alliance (the largest alliance, in terms of airline members)  

A lot can change in three years, but Star Alliance’s position on Philippine Airlines joining as a member probably hasn’t. Back in 2015, Star Alliance Chief Operating Officer Jeffrey Goh, told local Filipino media “There is no immediate need to be focusing on recruiting a member from the Philippines. I would not say that we see Philippine Airlines as a prospective new member. Clearly, if you just think about the network of Philippine Airlines today, they have overlapping services with some of our members.”

Of the 27 member carriers of Star Alliance, Ethiopian Airlines, United, Turkish Airlines, Thai Airways, Air China, Asiana, Singapore Airlines, Eva Air and All Nippon Airways operate at Manila Airport — with the last six operating from the same continent. However, it’s not the most ‘solid’ business case for declining Philippine Airlines membership, as most of the alliances have multiple members from the same continent, or sometimes region.

oneworld alliance and Skyteam

Skyteam has a strong presence in Asia, with most of China’s large carriers as members. For Philippine Airlines, the isn’t a need for intra-Asia connections, as the airline covers most of Asia through its short-haul network, and PAL Express airline subsidairy. However, what SkyTeam would provide for Philippine Airlines’ passengers, is access to some of Europe’s biggest carriers (Air France/KLM), along with the opportunity to feed Delta Air Lines passengers in the US onto their New York-Manila service.

For oneworld — it seems like a no brainer. Philippine Airlines has been rumoured as ‘the next member’ for quite some years, but being the an Asian airline knocking on the doors of alliances well-stocked with Asian airlines has proven to be difficult. There is an obvious attractiveness to the alliance that overshadows the other alliances, given oneworld’s three largest members: American Airlines, British Airways, and Qatar Airways. With oneworld membership, Philippine Airlines would have access to a year-round, solid flow of passengers from Europe, the Americas, and Africa via the Middle East.

Final Thought

This is incredibly overdue news for the flag carrier of the Philippines, but it’s exciting too. While there’s still some time until PAL are a firm member of any alliance, it’s reassuring to hear that the airline is already in the process (as of mid-2018).

Personally, I believe Philippine Airlines would be best suited as a member of the oneworld alliance. Compared with SkyTeam, the oneworld alliance is not as heavily saturated when it comes to Asian airline members, and it’s been a while since oneworld introduced a new member airline to the alliance.

Which alliance would you like to see take on Philippine Airlines as a new member?

5 thoughts on “Exclusive: Philippine Airlines Is Now In Process Of Joining An Alliance

  1. If they’re going to join oneworld and partner with BA, it will be more complicated in the future as it is now as the UK is in the process of Brexit. Right now most passengers from MNL going to Schengen zone don’t want to connect at LHR because they’re required to have a separate UK visa. KLM is the only EU carrier serving MNL and they have a substantial market in the Philippines for Schengen zone and they’re attractive because of their various connections in Europe, and that’s why PAL can only serve LHR at the moment due to that competition. Unless, they partner with Iberia at MAD, which is also part of IAG. It will also be culturally significant given the historic ties between Spain and the Philippines and PAL is also interested to serve MAD and BCN.

    It was also once rumoured that PAL was in talks with QR as PAL intends to sell as much as 40% stake to a foreign airline that reportedly ‘has a consistent reputation for service awards’ to better achieve their goal of becoming a 5 star airline. With the intense competition with ME carriers in the EU market, with QR aggressively investing in other airlines and whom does not seem to be gravely affected by the blockade, oneworld is a logical possibility. But I’m not sure if the current diplomatic crisis between Qatar and other Arab countries will influence this, especially there is a big migrant worker population in Saudi Arabia and UAE, and the Philippines doesn’t want to compromise any diplomatic relations with either country as much as possible.

    PAL also used to codeshare with AF/KLM to AMS and CDG until 2004. Given that historic partnership and experience, Skyteam is also a strong possibility. The political climate is also changing with the warming of diplomatic ties between China and the Philippines and the number of Chinese tourist arrivals is constantly growing. PAL might also consider tapping the Chinese market and they’ll be better poised if they join Skyteam and partner with China Southern and/or China Eastern.

    Ultimately, I do not think there is still much of a significance in joining an alliance just to access interior points in this case Europe and North America. The airline industry has shifted and according to Ben Schlappig, airlines are now willing to partner with competitors from competing alliances. Take for example, CX has partnered with Lufthansa Group to access more interior points in Europe. Today, it is now more of mutual benefits and interests between airlines than between alliances. PAL has to weigh in the benefits of joining an alliance first. But joining an alliance can significantly benefit their own frequent flier program and make them more competitive ie. lounge access and redeeming points.

    1. *Erratum

      “With the intense competition with ME carriers in the EU market, and with QR aggressively investing in other airlines and whom does not seem to be gravely affected by the blockade, an investment by QR will also pave the way for PAL to enter oneworld and PAL will benefit from QR’s European networks.”

      Just now, Garuda has dropped plans to serve LAX and has instead codeshared with JAL via NRT to serve LAX and JFK. This is despite the two 5 star carriers coming from competing alliances. It is now a different epoch, there’s not much significance in joining alliances now. Airlines can now partner with each other regardless of their alliances. But knowing PAL’s current and serious efforts today to be recognized globally and trusting heavily on Skytrax despite its eroding credibility, joining an alliance could also boost their brand image and international recognition. Oneworld is also consistently voted annually as the best of the three alliances.

  2. There have been insider info as well that it was Delta that PAL was inviting as a potential investor, as they want more access points to the US. This would have paved the way for SkyTeam. Also, PAL is also eyeing flights to CDG in winter next year. They could partner with AF/KLM so SkyTeam is a logical possibility. But it seems the talks between PAL and Delta have not borne fruition.

  3. Now that we know ANA is investing to acquire a 10% stake in PAL. one wonders if Star is the likely alliance option. Which may be predatory to keep SkyTeam and OneWorld from gaining this opportunity.

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.