1) Philippine Airlines (PAL) is the flag carrier and largest airline of the Philippines, established in 1941. 2) Over the decades, PAL has undertaken various approaches to remain competitive such as fleet modernization, expanding routes, codeshare agreements, and rebranding. 3) While being a pioneer provided name recognition for PAL, simply being first did not always translate to success due to factors like taking on too many aircraft and routes without sufficient demand. Service differentiation through amenities and brand reputation have better enabled PAL to maintain market share.

1. 1

2. PHILIPPINE AIRLINES
Vincent Raymond A. Adriano
Edwina M. Arceo
Vivian T. Dabu
Maria Farrah Feliciano
Irish G. Sanchez
2

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. COMPANY PROFILE
 2010s
 Continued re-fleeting and modernization
 Labor disputes vs. Outsourcing
11

12. 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

13. A. PAL APPROACHES
 Re-fleeting and modernization program
 Adding/restoring international routes
13

14. A. PAL APPROACHES
 Strategic local routes
14

15. 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

16. 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

17. A. PAL APPROACHES
 SLOGANS AND ADVERTISING
 Mabuhay
 Asia's 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
 Asia's Sunniest
 With You All the Way
17

18. A. PAL APPROACHES
 SLOGANS AND ADVERTISING
 It's 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 airline's 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 PAL's Swingaround tour package
advertisement.
 Clearly no. 1
 With us, You're always no. 1
 Asia's First, Shining Through - introduced for PAL's 70th
anniversary, it combines two previous PAL slogans: Asia's
First Airline and Shining Through.
18

19. 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

20. 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

21. C. BEING FIRST = SUCCESSFUL
MARKETING 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

22. 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

23. 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

24. 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 PAL's Corporate Sales unit.
 Domestic Fares
We offer special discounts for specific individuals.
24

25. CRITICAL ISSUES
 SELF-SERVICE TECHNOLOGIES – online
booking service that accepts ticket purchases
and credit card payments for all flights.
25

26. 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

27. 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

28. 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

29. 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

30. 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

31. MABUHAY!
Atty. Vivian T. Dabu
Marketing for Managers
Ateneo-Regis, AGSB Clark
ian8dabu@yahoo.com
31