Airlines in the Philippines

[seven13]

Has anyone seen the news article about PR canceling 8 option A321NEO from its first set of orders? From 65 Airbus orders down to 52 a/c from Airbus. Reason is NAIA can't handle all the aircraft PR ordered.

BTW, could someone help me understand what does "option order" means? Firm orders are of course committed purchases which will be delivered. What about options?

Let's use this excerpt from the news several years ago: "That order was for 45 single-aisle A321s and 10 wide-body A330-300 (high gross weight). The following month, the airline exercised its option to acquire 10 more A330-300s, raising total orders to a record 65 aircraft." When it says exercised its option to...does it mean those were already turned into committed orders for delivery?

[romantic_guy08]

Andito ka ba @airboy?

[Eurest]

An Option is an agreement to buy additional aircraft at a specified time at the same price as the firm orders.
Unlike orders, aircraft purchasers may either have deposits or not to secure options, and if the options are declined, they don't carry the same stiff penalty as a cancelled order.
If their was no deposit to secure the options, then there usually is no corresponding penalty this way as in this case, it is the aircraft manufacturer that included the option as an additional incentive to secure the firm order.
It's usually options that have deposits received by the manufacturer that are disclosed in the manufacturer's respective financials.
As a strategy, purchasers will likely decline options if the bluebook value of the aircraft has decreased since signing the order with the options.
Unlike orders, you cannot defer delivery dates for the options, there is actually a timetable to exercise these options or to decline them so as not to constrain the manufacturer's delivery slots.

So PR had 20 options for A321 NEOs during the initial 54 aircraft order which included 10 A321 NEOs.
When it converted 5 2015 A330s into A321 NEOs instead, it declined 8 of the 20 options for A321 NEOs leaving 12 options. Now, PR has further declined 8 of those options leaving the 4 remaining options mentioned in the article.

If anyone is interested, or might ask. An MoU just merely outlines the general terms and principles in an upcoming order. It's like a promissory note to buy aircraft except their are no financial penalties usually. Though, the airline manufacturer will usually decrease its' discounts to that purchaser that reneged on the MoU when it enters into a new transaction with them.

If NAIA congestion continues, we might see CEB and DVO revert to A330s and cancell out 2 to 3 A321 frequencies, opening up new routes for expansion.
So instead of 10 frequencies to Cebu with most of them operated by narrowbodies, you might see 5-6 frequencies instead with most of them widebodies so that PR allocates those 4-5 frequencies' landing and takeoff slots on to other destinations for expansion.
So the notion that PR bought too many A330's may not hold true, and in fact it may not be enough.
And now that the A330 NEO has launched requiring Airbus to fill up the backlog before the NEO's EIS, Airbus has increased the discounts on the A330 CEO further so that may indeed be cheaper than when PR odered in 2012.

[airboy007]

Yup but not in the video. I was too sick to want to be seen on cam. Haha. :-)

[Evodesire]

I just read that article about PAL finding a goldmine in ME routes. I remember before, they had a very hard time in this sector. It seems like RSA's magic is now working for PAL.

[seven13]

Thanks for this detailed explanation!

BTW, 2P cabin crew are undergoing business class training. I wonder what new set up will be introduced.

[swahi]

does anyone know what are they constructing in front of nayong pilipino? i noticed it from the window of my international outbound manila flight that was docked at the very end of t2. is that to provide additional parking for pal planes?

[chowpau]

Yup. Apron extension for T2

[RiverThames15]

Catch this if you can and may we (especially those from SSC) stop complaining so much about Philippine aviation.   From the UK's Channel 4, "Worst Place to be a Pilot" -- a show that follows the highs and lows in the lives of the young British pilots who work for Indonesian airline Susi Air.", via the episode guide.

http://www.channel4.com/programmes/worst-place-to-be-a-pilot/episode-guide

[Arianespace]

There is no complaint on this side of the planet. Just plain unadultereated exchange of ideas.  

The BBC documentary on BA is also a good thing to watch to learn the intricacies on how an airline operates. Well some of the guys there in dreamland never got a clue. Its all there in Youtube. Interesting stuff. Just sharing.

[romantic_guy08]

Airboy007 wrote

Yup but not in the video. I was too sick to want to be seen on cam. Haha. :-)

RP-C8786 is back doing mercy flights for our OFWs evacuated from Libya... this time via TUN...

[seven13]

5J Settles For Riyadh, Gives Up Jeddah

Low-cost carrier Cebu Pacific Air (CEB) is finally giving up the fight for slots in Jeddah held by flag carrier Philippine Airlines (PAL) after a protracted battle with the Flag carrier before Philippine and Saudi regulators.

Cebu Pacific will take the seven remaining slots out of the 21 granted by the Air Services Agreement with the Philippines, while the remaining fourteen entitlements are held by PAL.

The Kingdom of Saudi Arabia has granted the Philippines 21 traffic rights per week between Riyadh and

Jeddah to Manila, while both countries offers no flight restrictions between Dammam and Manila.

Cebu Pacific said that they will use all the seven entitlements to Riyadh while propose to begin introductory flight at leat thrice a week to Dammam and Riyadh using Airbus A330-300.

The airline said they will launch services to Saudi Arabia after opening flights to kuwait in 2 September hopefully around November or December this year.

CEB spokesman Alex Reyes said it can launch flights to Saudi Arabia within a few weeks from regulator's approval to start ticket sales to the Philippines.

Cebu Pacific first flew to the Middle East last year with Dubai as its first destination. Dammam and Riyadh will be its 3rd and 4th destination in the gulf region.

Meanwhile, PAL which currently serves Riyadh and Damman with four and three weekly A330 flights to Manila respectively, is expected to add two more flights to this Cities in the coming months while the long awaited flights to Jeddah is fortcoming with introductory flights at three times a week.
--------------------

Dec 1

[Arianespace]

It kinda excite me how PAL frustrate every move by 5J by pre-empting every launch they make. I'm reminded of DXB when CEB announced commencement of their first long haul flight more than 6 months before inaugurals, while there is no noise inside PAL and then suddenly explode with a big bang. I just love how RSA makes a move.

[Evodesire]

I do see that in RSA. It seems like he knows the Art of War by heart. He may not be speaker, but he sure is an expert in strategy.

[Darkknight30]

i love RSA's business mindset. He delivers positive results. He is a maverick tycoon. He transformed PR from red to black. I know he won't let go of PR. We still don't know what will be his next step on the issue of ownership of PR.

[Evodesire]

...and he is way better than arm chair CEO

[Darkknight30]

I definitely agree on that evodesire, Like the one other forum who feels like a CEO and doesn't know some business terminologies. I don't want to name names.hehehe

[Evodesire]

I now wonder how PAL will foil 5J's Sydney and Honolulu plans.... Seems like SYD is a very profitable sector for PAL and they would not want to lose the market...

[Evodesire]

Been reading around that PAL's OTP is getting worse (Plane Always Late may soon rise again) and their services are getting worse. Hope they order those newer aircraft soon. Their old A340s are pulling down their ratings.

[Arianespace]

I can see a semblance of Seoul traffic in the making for the land down under.

Yes, it will reduce airfare but not that much. PR and QF will still be there just like KE and OZ for ICN or SQ and 3K for SiN. Affected airlines will most likely be the one-stopper, those coming from Malaysia and Singapore as people will now tend to fly more direct route due to much reduce fare. The question now is will the people of MEL or OOL go to SYD just to ride 5J?

Like the ME, PR would most likely flood the market with seats assuming their 757 project comes into effect for DRW, PER and BNE taking further options away from SYD via 5J. This in fact was the same scenario in DXB. flooding the market will generally lead to losses. Heavy losses. And the next question is which  one has the deepest pocket?

That would be very interesting to watch next year.