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    Philippine airlines Philippine airlines Presentation Transcript

    • 1
    • PHILIPPINE AIRLINES Vincent Raymond A. Adriano Edwina M. Arceo Vivian T. Dabu Maria Farrah Feliciano Irish G. Sanchez 2
    • COMPANY PROFILE  PAL Holdings (PSE: PAL) – holding company, part of a group of companies owned by business tycoon Lucio C. Tan.  13th largest corporation in the Philippines in terms of revenue and 21st largest in terms of assets in 2005 Philippines’ Top 500 Largest Corporations.  61st largest airline in the world in terms of revenue passenger kilometers flown.Mission: to serve as a partner in nation-building 3
    • COMPANY PROFILE February 26, 1941 – established by a group of businessmen led by Andres Soriano and former Senator Ramon Fernandez, who served as its Chairman and President. March 15, 1941 – airline’s first flight with a single (twin-engine, 5-seater) Beechcraft Model 18 NPC- 54 between Manila and Baguio. September 1941 – Philippine government invested in PAL, paving the way for its nationalization. February 14, 1946 – resumed operations after WWII interruption servicing 15 domestic points with 5 Douglas DC-3s. 4
    • COMPANY PROFILE July 31, 1946 – first Asian airline to cross the Pacific Ocean with a chartered Douglas DC-4 ferrying 40 American servicemen to Oakland, California from Neilson Airport (Makati) with fuelling stops in Guam, Wake Island, Johnston Atoll and Honolulu. December 1946 – regular service between Manila and San Francisco. Designated as the country’s flag carrier. 5
    • COMPANY PROFILE 1950s – founding of the country’s own national airline. 1960s – first privatization with then PAL Chairman, Benigno Toda, Jr. acquiring a majority stake in the airline. 1970s – one airline policy under Marcos government; comprehensive modernization program implemented. 1980s – massive modernization of domestic fleet. 6
    • COMPANY PROFILE 1990s– re-privatization and second expansion  January 1995 – Lucio C. Tan became the new Chairman and CEO.  1996 – US$4 billion modernization and re-fleeting program aimed at making PAL one of Asia’s best airlines in 3 years.  1997 – rebranded itself as “Asia’s sunniest airline”; commenced unprofitable routes (eg. Manila to New York via Vancouver) 7
    • COMPANY PROFILE 1998 – full impact of Asian financial crisis, aggravated by industrial action by its union.  September 23, 1998 – complete shutdown of PAL operations, the first Asian airline to do so and one of the largest corporate failures in Philippine history.  October 7, 1998 – resumed operations with services to 15 domestic points out of Manila.  December 7, 1998 – submitted a “standalone” rehabilitation plan to SEC.  June 4, 1999 – SEC approved the rehabilitation plan after Lucio C. Tan and his associates infused another US$200M capital. 8
    • COMPANY PROFILE 2000s– returned to profitability with Php44.2M in its first year of rehabilitation after 6 years of heavy losses.  Continued with restructuring (outsourcing of maintenance and engineering division to LTP); aggressive marketing strategies (rewards programs and online booking); re-fleeting and modernization; and opening/restoring of domestic and international destinations.  October 4, 2007 – released from receivership. 9
    • COMPANY PROFILE IATA Operational Safety Audit  February 2007 – accredited by International Air Transport Association. Airline Turnaround of the Year 2007  November 2007 – granted by Centre for Asia Pacific Aviation for its "strategic contribution to the aviation industry through a significant transformation by successfully restructuring its operations through innovative cost-cutting measures resulting in operating profits.” Most trusted airline brand for Filipino consumers  May 2010 – granted by respected international publication Reader’s Digest in its annual, Asia-wide survey. 10
    • COMPANY PROFILE 2010s  Continued re-fleeting and modernization  Labor disputes vs. Outsourcing 11
    • PROBLEM IDENTIFICATION The approaches that PAL has used to stay competitive in the global airline industry. How service differentiation enables an airline such as PAL to stay ahead in the fight for market share? Does being first always translate into a successful marketing strategy? 12
    • A. PAL APPROACHES Re-fleeting and modernization program Adding/restoring international routes 13
    • A. PAL APPROACHES Strategic local routes 14
    • A. PAL APPROACHES Refurbishingof its Domestic Terminal 2 and NAIA facilities –  renovated Mabuhay Lounge,  exclusive check-in counter for Mabuhay Class passengers,  Express Counter,  refreshment bar,  medical clinic,  expansive waiting lounge  two baggage carousels in the arrival section 15
    • A. PAL APPROACHES Codeshare agreements as of February 2011  Cathay Pacific  Emirates  Etihad Airways  Qatar Airways  Gulf Air  Malaysian Airlines  Airphil Express  Garuda Indonesia 16
    • A. PAL APPROACHES SLOGANS AND ADVERTISING  Mabuhay  Asias First Airline  Welcome Aboard the Philippines  Shining Through - concurrent with the slogan The beauty of the Philippines that heavily promoted Philippines as a tourist destination. The TV advertisement clip won a finalist in Clio Awards.  Pilipino, Para sa Pilipino (Filipino, for the Filipino)  On the Wings of Change  Asias Sunniest  With You All the Way 17
    • A. PAL APPROACHES SLOGANS AND ADVERTISING  Its About Experience - introduced after its 60th Anniversary. It attempts to highlight the fact that PAL is the first and longest- serving airline in Asia under its original name. The slogan was also used in the airlines ad spot featuring Kevyn Lettau, which incidentally featured her song, "Sunlight."  Love at Thirty Thousand Feet is the de facto theme song of the airline. It was composed by Jose Mari Chan and is still being used today. The song has many variations, including a version for the PALs Swingaround tour package advertisement.  Clearly no. 1  With us, Youre always no. 1  Asias First, Shining Through - introduced for PALs 70th anniversary, it combines two previous PAL slogans: Asias First Airline and Shining Through. 18
    • B. SERVICE DIFFERENTIATION Legacy airline - being the known flag carrier in the past, having carried past Presidents of the country, it augurs well to Filipinos abroad who are coming home for a visit or for good, after long absence. Availability and accessibility - with codeshare partners as well as presence in 31 international and 29 domestic destinations Comfort and style - Filipinos are very particular with “status symbol,” “comfort” and the perks that comes to with the “status.”  Mabuhay club members perks and benefits  2 classes: Mabuhay (business) and Fiesta (economy) 19
    • B. SERVICE DIFFERENTIATION TRAVELERS’ AMENITIES  Mabuhay lounges  Seating comfort – more leg room and space to recline.  Meals and beverages  LCD television screen showing actual time, altitude, temperature, estimated time of arrival and others.  State-of-the-art inflight entertainment systems 20
    • C. BEING FIRST = SUCCESSFULMARKETING STRATEGY? “The re-fleeting program enabled PAL to be dubbed as the first airline in the world to operate the full range of new-generation Airbus aircraft.” PAL is an example of a company that have tried to be first in service and product innovation but failed due to many factors.  One factor is acquiring too many aircrafts while matching them with unprofitable routes.  Union activism and employees discontent aggravated this. 21
    • MARKET ANALYSIS: AIR TRAFFIC DEMAND FROM PHILIPPINES(domestic & International) Year O&D % Change Market Leaders Passengers 2010 27,886,183 11.6 % Philippine Airlines (32.3%); Cebu Pacific (29.8%) 2009 24,997,378 9.3 % Philippine Airlines (35.1%); Cebu Pacific (28.9%) 2008 22,862,890 11.7 % Philippine Airlines (35.5%); Cebu Pacific (24.3%) 2007 20,473,663 11.5 % Philippine Airlines (35.2%); Cebu Pacific (21.1%) 2006 18,369,474 8.4% Philippine Airlines (36.1%); Cebu Pacific (15.7%) 2005 16,946,099 - Philippine Airlines (38.8%); Cebu Pacific (14.1%)Source: IATA BSP (January 2010 – December 2010) 22
    • IDENTIFICATION OF ALTERNATIVES Product - fly in style and comfort  Fiesta (Economy) class Pricing - vs. budget fares  Promo or seat sale Process - online booking People - labor unrest  Outsourcing and restructuring Communication - advertising 23
    • CRITICAL ISSUES LOW-COST CONCEPT OF BUDGET AIRLINES  From Manila to LAX/LAS/SFO Web fares from Manila to Las Vegas, Los Angeles or San Francisco.  PAL-Hilton Cebu Promo Avail of our irresistible package promo in Cebu and stay at world- renowned Hilton Cebu Resort and Spa. Valid for sale and travel from 15 September 2010 until 31 March 2011.  Special Web Fares – Calendar Pricing All-year-round special fares when you book online.  Regular Buy One Take One Enjoy our buy one take one offers on Mabuhay (Business) class for selected routes. Available for sale at any PAL Ticket office.  PAL Corporate Sales Special perks and added convenience for our corporate clients courtesy of PALs Corporate Sales unit.  Domestic Fares We offer special discounts for specific individuals. 24
    • CRITICAL ISSUES SELF-SERVICE TECHNOLOGIES – online booking service that accepts ticket purchases and credit card payments for all flights. 25
    • CRITICAL ISSUES OUTSOURCING AND RESTRUCTURING  in-flight catering to SkyKitchen Philippines  airport (cargo handling) services to Sky Logistics  call center reservation operations to ePLDT Ventus  downsize medical, IT and HR units  Results: Savings and improved employee- per-aircraft ratio 26
    • CRITICAL ISSUES OUTSOURCING AND RESTRUCTURING  Effects: ○ retrenchment of some 2,600 employees ○ help reduce its accumulated net losses and deficit  brought about by surging fuel prices;  the ban of its entry into 27 European Union member-states; and  the suspension of its remittance facilities by the International Transport Association. 27
    • ANALYSIS Asidefrom the news briefings, PAL has no aggressive marketing strategy to combat the negative issues besetting it:  labor unrest and its effects on its flight schedules, performance, and commitment;  affordability and accessibility of its flights;  on time arrivals and safe travel;  positive image of its Chairman and CEO; and  corporate social responsibility. 28
    • RECOMMENDATIONS LEGACY AIRLINE  FSC and not LCC  Improve on this distinction  Be involved in promoting the Philippines as a tourist destination  Be involved in the efforts of the government to assist distressed OFWs and calamity-stricken countries Continueits CALL FOR EXCELLENCE campaign to serve its market better.  Operational efficiency 29
    • REFERENCES 1. Philippine Airlines http://en.wikipedia.org/wiki/Philippine_Airlines http://en.wikipedia.org/wiki/Airline www.philippineairlines.com http://tourism-philippines.com/philippines-airlines-review/ http://www.skyscrapercity.com/showthread.php?t=859722 http://www.centreforaviation.com/news/2010/09/03/philippine- airlines-struggling-as-cebu-pacific-becomes-largest-carrier-in-the- philippines/page1 2. Marketing Management- An Asian Perspective http://www.pearsoned-asia.com/marketingmanagement asia /2/home.html 3. Differentiation Strategies, Differentiate Your Product, Differentiate Yourself http://www.1000ventures.com/business_guide/differentiation_ strategy.html 30
    • MABUHAY! Atty. Vivian T. Dabu Marketing for Managers Ateneo-Regis, AGSB Clark ian8dabu@yahoo.com 31