PAL flights to Riyadh can stay if Dubai route is added

Business Mirror
Feb 13, 2006

PAL flights to Riyadh can stay if Dubai route is added

BY Lenie Lectura
Reporter

PHILIPPINE Airlines (PAL) said it would call off plans to suspend flights to Riyadh starting next month if it is allowed to service a new route between Saudi Arabia and Dubai .

In a letter to Transportation Secretary Leandro Mendoza, PAL president Jaime Bautista proposed that the country's air negotiating panel negotiate for the flag carrier to operate a Manila-Dubai-KSA ( Kingdom of Saudi Arabia ) route.

Specifically, PAL wants to pick up passengers in Dubai before it lands either in Riyadh or Jeddah. This set-up, said Bautisa, will make up for the losses that PAL continues to incur from the unprofitable three-times-weekly service to the Saudi capital.

"We believe that a small window of opportunity exists to save PAL's RP-KSA flights, if we are able to secure the necessary rights to operate via United Arab of Emirates (UAE) routing, with commercial traffic rights between KSA and Dubai . The resulting mix of short haul fifth freedom and long haul third and fourth freedom traffic would help give us a fighting chance to bring the losses down to a more manageable level," said the PAL official.

PAL already had intensive discussions with Saudi Arabian Airlines last week on this matter and related issues, and thus, it said, the next necessary step would be inter-action at the government level.

"We therefore urgently appeal to the government, through the DOTC and the RP Air Panel, to assist us in pursuing this opportunity with KSA authorities in the next few weeks, as it is perhaps the last chance to save our flag carrier's direct air links to the OFWs in the KSA," said Bautista.

PAL is set to suspend flights to Riyadh on March 2. It cited a massive oversupply of airline seats in the Middle East market and the continued increases in aviation fuel prices as the main reasons why the route was no longer profitable for the flag carrier.

Six national carriers of Gulf countries operate 43 flights weekly between Manila or Cebu and nine points in the Middle East .

In addition, five East Asian carriers serve the Gulf market from the Philippines with 33 flights weekly via their hubs. All of these airlines operate 76 flights a week between the Philippines and the Middle East , with a deployed capacity of over 1.12 million seats a year.

Saudi Airlines flies nine times a week to the Philippines from Riyadh and Jeddah.

"The impeding suspension of PAL's Manila-Riyadh flights is a sad and sobering event that has been forced on us by a most untenable situation: a massive oversupply in RP-Middle East airline capacity exploited by subsidized Arab Gulf carriers to distort and eventually eliminate competition from airline business enterprises like PAL," said Bautista.

PAL attributed its $10 million or about P545 million yearly losses to the grant of nearly 800,000 seats to Gulf Air carriers since 2002.