PAL plans to build own airport

Posted at 08/31/12 7:42 AM

MANILA, Philippines - Flag carrier Philippine Airlines Inc. (PAL) is contemplating on putting up a new international airport near Manila as it undertakes a massive re-fleeting program that involves the acquisition of 100 aircraft within the next few years.

In a press conference after the company’s stockholders’ meeting yesterday at the Century Park Hotel, PAL president and chief operating officer Ramon Ang said the airline would put forward a presentation of the proposed international airport to Malacañang either by January to February next year.

Ang told reporters that the proposed international airport would be situated in a 2,000-hectare property and would boast of a modern passenger terminal and four runways.

With two initial runways, he explained that the proposed international airports could handle 1,500 events (landing and take-off) per day putting the Philippines at par with the airports in Sydney, Australia as well as Heathrow in London.

PAL currently exclusively occupies the government-run NAIA Terminal 2 also known as the Centennial Terminal while Cebu Air Inc. (Cebu Pacific) of John Gokongwei and other airlines operate at the NAIA Terminal 1 and NAIA Terminal 3.

Furthermore, he said the proposed airport would be accessible via elevated six-lane highways and would also feature hotels, malls, and other facilities.

He added that the proposed international airport would co-exist with the congested Ninoy Aquino International Airport (NAIA). The NAIA was voted as the world’s worst airport by the interactive website “The Guide to Sleeping in Airports.”

The Department of Transportation and Communications (DOTC) has ordered a reduction in traffic at NAIA due to delayed and cancelled flights.

The PAL chief executive refused to divulge other details of the project including the total cost as well as the exact location of the proposed international airport.

Ang revealed that the company would tap other investors to put up the proposed international airport that would be completed within three years.

He said an additional equity infusion of $500 million from existing shareholders would be enough to raise the financial requirement of the new international airport.

According to him, the airline is looking at tapping a Korean contractor to put up the proposed international airport.

This way, the multi-million dollar international airport project could be funded through a soft loan from the Export-Import Bank of Korea.

The airline could also tap the bond market to raise funds to bankroll the proposed international airport.

The government has been pursuing the development of the Clark International Airport to shift traffic away from the congested NAIA in Manila.

However, Ang pointed out that the airline has dropped plans to move to Clark because travel time to the former US military naval base is about two hours drive from Makati City.

PAL’s ongoing major fleet modernization program undertaken with the entry of diversified conglomerate San Miguel Corp. (SMC) involves the acquisition of 100 new aircraft.

It entered into a $7 billion contract with Airbus for the purchase of 54 aircraft comprising of single aisle A321s and widebody A330-300s wherein the first batch would be delivered early next year.

The $500 million fresh equity infused by SMC through San Miguel Equity Investments Inc. allowed the airline to undertake the modernization program. SMC controls about 49 percent of Trustmark Holdings. Trustmark and affiliate Zuma Holdings own PAL Holdings and sister airline AirPhil Express.

PAL currently maintains and operates 39 aircraft comprising of five Boeing B747-400s and three B777-300ERs as well as four Airbus A340-300s, eight A330-300s, 15 A320-200s, and four A319-100s.

Meanwhile, PAL is set to revive the PAL Express brand through the rebranding of AirPhil Express (Air Philippines Corp.) that would focus on regional and domestic flights.

Ang told reporters yesterday that the proposed rebranding to PAL Express from AirPhil Express has been submitted to the Securities and Exchange Commission (SEC).

PAL Express (short for Philippine Airlines Express) used to be the low-cost regional airline brand of Philippine Airlines. However, it ceased operations in March of 2010 and transferred all service to Airphil Express.

It used to operate from Mactan-Cebu International Airport in Cebu City, with smaller operations from PAL’s main hub in Manila, flying primarily intra-regional routes in the Visayas and Mindanao, as well as secondary routes to smaller airports in island provinces that are not able to accommodate mainline PAL jet aircraft.

Ang explained that PAL Express would continue to focus on regional and domestic destinations while PAL would be aggressively pursuing long-haul flights.