PAL to shun non-profitable routes
Flag carrier Philippine Airlines (PAL) plans to stop operating on money losing routes amid skyrocketing fuel costs
“There are routes that are not making money, so we will stop flying to these destinations,” PAL president Jaime J. Bautista, said when asked how the Lucio Tan-led airline is coping with rising fuel prices.
The continued spike in oil prices is putting the squeeze on airline costs. Since June 2017, oil prices have risen by more than 50 percent to around $68 per barrel.
“The review of the routes is a continuing process. We have a Corporate Planning Group that looks at all destinations and if the destinations turn out to be unprofitable, we will discontinue service,” Bautista added.
Last May 16, PAL dropped its service to Kuwait due to weak demand and stiff competition.
PAL’s fuel expense soared by $200 million to $749 million last year from 2016.
According to data from the International Air Transportation Association, jet fuel prices jumped by 42 percent to $91.4 a barrel as of May 25.
PAL expects to consume a total of 11 million barrels of jet fuel this year. This will translate to $143 million in additional costs for the airline.
To mitigate the cost of soaring fuel prices, PAL filed a petition before the Civil Aeronautics Board (CAB) to impose a fuel surcharge of between P51 and P207..