PAL defers flights to New York

MANILA, Philippines - The prolonged buyout talks between taipan Lucio Tan and diversified conglomerate San Miguel Corp. (SMC) for 100 percent ownership of Philippine Airlines Inc. has affected the planned return to New York of the nation’s flag carrier.

A source said the planned flights to New York have been pushed back to March next year instead of October this year.

PAL and SMC president and COO Ramon S. Ang had said the national flag carrier would mount flights to New York in October after the US Federal Aviation Administration (US-FAA) upgraded the aviation safety rating of the Philippines back to Category 1 from Category 2.

PAL used to fly to New York but was forced to suspend the operations in 1997 due to the financial crisis that battered Asia.

Instead of a direct flight, the source revealed that the flight to New York would have a stopover in Vancouver, Canada with a frequency of four times a week.

Last March 29, the Philippines and Canada signed a new air agreement doubling the number of flights to 14 a week from seven a week between the two bilateral trading partners to boost investments and tourism.

The new air agreement amends the existing Philippine – Canada Air Services Agreement signed last December of 2008. Both countries also agreed to increased fifth freedom to five per week from four per week and to allow airlines from the Philippines and Canada to enter into a third country code sharing.

The fifth freedom rights allow airlines from a resident country to fly passengers to third countries from a country where it has an existing air services agreement.

On the other hand, third-country code-sharing allows airlines to market indirect services between two countries via cooperative agreements with third-country airlines.

Starting next month, PAL is increasing the number of flights to Hawaii and Guam. It would mount daily flights to Honolulu in Hawaii and Guam starting Oct. 26 from the current flights of five times a week.

The airline has also upgraded the aircraft used for its Los Angeles and Las Vegas routes to Boeing 777 after it decided to retire its aging fleet of Boeing 747.

Talks are ongoing for the Tan Group to buyback SMC’s 49-percent stake in PAL.

In April 2012, SMC’s wholly-owned subsidiary San Miguel Equity Investments Inc. (SMEII) acquired a 49-percent equity interest in Trustmark Holdings Corp. for $500 million.

Trustmark owns 97.71 percent of PAL Holdings which in turn owns 84.67 percent of PAL through PR Holdings Inc.

After taking back full control of PAL possibly within the month, the Tan Group is likely to take in Abu Dhabi-based Etihad Airways as partner for a 40 percent stake in the national flag carrier.

Ang is still hopeful that the buyout talks would be completed within the third quarter of the year.