Strama Paper (Philippine Airlines)

I.     EXECUTIVE SUMMARY

 

The Philippine Airlines (PAL) is the national airline of the Philippine and Asia’s first airline. Philippine Airlines has been the dominant air carrier in the Philippines since its creation in 1941. Philippine Airlines rebranded itself as “Asia’s sunniest airline” to cap its new marketing and advertising trust.

 

We have identified the three (3) major competitors of Philippine Airlines which are Cebu Pacific, Cathay Pacific and Zest Airlines.

 

Our recommended strategy for Philippine Airlines is Product development strategy this includes providing more services to attract the customer as well as improving the products and services that they offer to gain more profit and to satisfy the customers. Many airline companies offer lower fares to gather customers. We suggest that PAL focus on differentiation by making their customers experience the “class” of flying to remind them the pleasure of taking flight in the skies. This strategy will require extensive employee training in proper etiquette and quality service, to ensure the portrayed brand image lines up with the experience of customers. Second to our priority is increasing the number of salespersons, increasing advertising expenditures, offering extensive sales promotion items, or increasing publicity efforts to enhance market share especially for the local flights.   

 

The Philippine Airlines must know the strengths and weakness of the management for the strategists to know what things to improve and maintain. Based on the result of the competitive profile matrix, Philippine Airlines fall behind the Cebu Pacific and this is due to the fall of its local flight segment. Garnering a decrease of total market share from 50% in May 2009 to 35.4% in late December of 2009

 

According to the SPACE Matrix that Philippine Airlines is financially a strong company that has achieved major competitive advantages in a growing and stable industry. Market Development, Product Development, and Horizontal integration is the suited strategy that can be used by PAL. 

 

In the Boston Consulting Group Matrix, the Philippine Airline is in the position of “star” because Philippine Airline remains stable with the market growth and continues to be successful in the field of airline industry. PAL is in the quadrant II that represents the organization’s best long-run opportunities for growth and profitability. Horizontal Integration is appropriate strategies for these divisions to consider. PAL should increased control over their competitor and takeovers among competitors allow for increased economies of sale and enhanced transfer of resources and competencies.

 

Base on the internal- external matrix of Philippine Airline that the company should hold and maintain. The company should pursue Intensive (market penetration and product development) strategies which can be the best and most appropriate things to do.  

 

With the standard of living of Filipino is improving gradually as well as the increase in tourism industry and lot of Filipino workers go abroad airline industry is stably increase, that is why given the rapid market growth of the airline industry. Philippine Airlines is in an excellent strategic position, for Philippine Airlines, concentration on product development is an appropriate strategy in terms of the specific circumstances that face the company.

II. COMPANY PROFILE

 

Philippine Airlines Vision and Mission

Mission 

To serve as a partner in nation-building.

Vision

To be the most preferred airline in Asia

 

Proposed Vision-Mission Statement

Vision

            To be the most Preferred, Admired, and Leading air transportation in the world.

III.  External Audit

 

A. Key External Factors

 

1. Economic Forces

In 1997, Philippine Airlines rebranded itself as “Asia’s sunniest airline” to cap its new marketing and advertising thrust. In addition to its re-fleeting program, Philippine Airlines commenced service to New York City (using Newark Liberty International Airport) via Vancouver. However, this caused the airline to be financially unstable, having acquired too many aircraft while matching them to unprofitable routes. The re-fleeting program was about halfway through when the full impact of the Asian financial crisis struck the airline industry early in 1998. By March 31, 1997, at the end of the 1996-1997 fiscal years, Philippine Airlines had reported its largest annual loss of P8.08 billion.

PAL shareholders approved a quasi-reorganization plan, reducing the par value of PAL shares to P0.20 from P0.80 per share. It will also increase its authorized capital stock from P16 billion to P20 billion divided into 100 billion shares at P0.20 per share.

Philippine Airlines income annual report showed an increase in revenues to US$1.634 billion, from US$1.504 billion the previous year, after carrying 17% more passengers due to acquisition of additional aircraft and growth in the domestic market.

However, the cost of operating more flights, which involved higher maintenance expense and compounded by record-high fuel prices, raised expenses to US$1.9 billion, from US$1.539 billion the previous year. Fuel comprised 44% of Philippine Airlines income operating expenses.

When the global crisis led to a travel slump in the latter part of the year, PAL’s passenger load factor fell to an average of 76.2%, three points lower than the previous year.

PAL also reported paying US$165.4 million in principal and interest to its creditors, bringing to US$2.4 billion the total paid from March 1999 to March 2009. Total assets decreased by US$60.6 million to US$1.971 billion, while total liabilities rose by US$239.5 million over the previous year.With the protracted recession, the International Air Transport Association (IATA) said its member-airlines are bracing for US$9 billion in total combined losses by the end of the current fiscal year.

 

2.1 Social forces

The Philippine airlines conduct a promo for there passenger especially who belong to there membership. They can earn miles points in every board with the code share partners (air Macau, Cathy pacific ,emirates, etihad , Malaysia airlines and other airlines that belong to that agreement. they also earn miles point in staying hotels around the Philippines and worldwide. example they can earn point rates  vary between 250 and 500 miles per stay in hotel. The points they earn can be donated to UNICEF or in PAL Foundation. Security control is a significant contributor to service quality, but service is underperformed in terms of efficiency, relative to passengers’ desired levels. Security needs to follow a similar pattern to safety. It is already part of IOSA, but I’m sure more can be done to formalize industry requirements. IATA and the various agencies around the world must find ways to harmonize security requirements. It is essential for the passenger experience, and it is essential for airlines. It would simplify operations considerably.At the same time, it is clear that security is a government responsibility. They should be paying for the majority of measures, especially at the airport. But airlines must show willingness too, and play their part. We can look again at security onboard the aircraft. Boarding -Airlines use a number of different group/zone boarding systems or boarding rules, the idea (there are numerous variations) it is significant to service quality. In-flight service is something that makes the passenger comfortable and relaxes while they are on board.

 

2.2 Cultural forces

Philippine Airlines (PAL) is the national flag carrier of the Philippines and the first and oldest commercial airline in Asia. It began operations in 1941 by making
one flight daily between Manila and Baguio. From its main hub at Ninoy Aquino
International Airport in Manila, Philippine Airlines now flies to 18
destinations in the Philippines and serves 26 destinations in Southeast Asia,
East Asia, Australia, Canada and the United States. Mabuhay Miles is the Philippine Airlines frequent flyer program. It was established in 2002 by merging all existing PAL frequent flyer programs prior to the Asian financial crisis: namely, PALsmiles, the Mabuhay Club and the Flying Sportsman, with PALsmiles and Mabuhay Club members being moved to the new program on August 1, 2002. The Flying Sportsman program was subsequently transformed into SportsPlus, a three-tiered, subscription-based program which gives extra baggage allocations for sports equipment on PAL flights, aimed specifically at golfers, bowlers, scuba divers, tennis and badminton players, anglers and cyclists. The SportsPlus program is available only to Mabuhay Miles base members, as Mabuhay Miles members on higher membership tiers automatically receive SportsPlus privileges. Mabuhay Miles members earn miles that can be redeemed at face value on most Philippine Airlines-operated flights, as well as on code-shared routes of partner airlines. Some promotional fares and all flights operated by Airphil Express, however, are ineligible to earn miles. Miles may also be earned by patronizing the services of Mabuhay Miles partners, or by purchasing miles. Membership tiers include Mabuhay Miles Base, Elite, Premium Elite and Million Miler.

 

2.3 Environmental Forces

In recent years, much attention has been given to the role of automobile emissions in climate change. But air travel—which has been rebounding since 9/11—is equally damaging to the climate, per mile of travel. Flight is one of the most fuel-guzzling forms of passenger transportation. Airplanes’ fuel use (and resulting emissions of carbon dioxide), per passenger and per mile, is almost as heavy as driving alone. Beyond their emissions of carbon dioxide, aircraft release other gases that have disproportionate but short-term effects on our planet’s climate. And data suggest that north westerners fly more passenger miles per capita than residents of most other states. Carbon dioxide has the same effects on the climate no matter when or where it is injected into the atmosphere. But other aircraft emissions-such as nitrogen oxides-have potent, climate-changing effects because of the elevation at which they are released. Over the short term, they more than double the effects of the CO2 alone Over time, these other pollutants disappear, but the carbon dioxide remains aloft capturing heat for decades.

 

These short-term climate-altering effects of air travel are concentrated, along with the residents of affluent nations, in the mid-latitudes of the northern hemisphere, which includes the Pacific Northwest.

 

The airline industries are responsible for about 11% of greenhouse gases emitted by the transportation sector. An aircraft engine contributes a global warming and global dimming even though it is least polluting forms of travel in the world. The rapid growth of air travel in recent years can contributes to increase the total pollution attributed to aviation and the reduction of achieved automobiles. The jet fuel can burned per passenger on a average 3200 kilometers airline flight about 353 kilograms.

 

2.4 Demographic Forces

The population of the Philippines was 88.57 million people as of August, 2007. The 2009 projected population is 92.23 million people. This is an inflation rate of +1.5%. The 2008 population was 90.348.437, making it the 12th most populated country in the world. The Republic of the Philippines is an archipelagic nation located off the coast of Southeast Asia.

 

Filipinos are descended from Austronesia people from Taiwan over a thousand years ago. The Aboriginal inhabitants consist of the Ati and Aetas, referred to as Negritos. Most of the country is comprised of Malayo-Polynesian ethnic groups including, the Tagalog, Visayans, Ilocano, Kapampangan, Bicolano, Moro, Pangasinense, Igorot, Lumad Ibanag, Mangyan, Badjao, Ivatan, and Palawan tribes. There is a significant group of other ethnic descendants including the Spanish, British, American, Japanese and Chinese due to the Spanish colonization and Americation occupation after World War II. These intermarried descendants are referred to as Filipino mestizos There are Twelve major regional languages each with over one million speakers: Tagalog, Cebuano, Ilocano, Waray-Waray, Tausug, Bikol, Kapampangan, Pangasinan, Kinaray-a, Maranao, Maguindanao and Hiligaynon. English and Spanish were both imposed on the country as official languages at one time in its history, so the languages can still be heavily felt within the country.

 

The airline’s first flight took place on March 15, 1941 with a single Beech craft Model 18 NPC-54 on daily services between Manila (from Nielson Field) and Baguio.  On July 22, the airline acquired the franchise of the Philippine Aerial Taxi Company. Government investment in September paved the way for its nationalization. PAL owns 30 Airbus aircraft and four Bombardier airplanes. The airline has also reconfigured its in-flight service to include first, business, and economy classes. PAL additionally offers flights to India and China, both among the world’s fastest-growing travel markets. The carrier offers almost 30 weekly flights to US destinations. In 2008 the company launched its low fare carrier unit, PAL Express, which serves mostly domestic island destinations.

 

3.1 Legal Forces

 

Data Privacy and Security policy 

Data privacy and security is a concern to all who access this website and therefore is the top priority of Philippine Airlines Inc. 

 

We understand that data privacy and security is a concern to all who access this website. This is also of top priority to PAL. In using PAL’s online booking facility, users’ personal information including credit card details are encrypted as it travels over the internet because PAL uses a Security Sockets Layer (SSL) protocol, an industry standard encryption to protect data. 

 

Governing Law

By accessing the website, you agree that the applicable law governing the use of this website including the contents thereof is the laws of the Republic of the Philippines and the courts, tribunals or quasi-judicial agencies of the Republic of the Philippines shall have exclusive jurisdiction over any case or dispute arising from the use of this website or the contents thereof.

 

3.2 Governmental and Political Forces

 

Notice of Government Imposed Taxes, Fees and Charges

The value on the ticket may include taxes, fees and charges which are imposed on air transportation by government authorities. These taxes, fees and charges which may represent a significant portion of the cost of air travel, are either included in the fare, or shown separately in the ‘TAX/FEE/CHARGE’ box (es) of this ticket. The passenger may also be required to pay taxes, fees or charges not yet collected. 

 

Act 4033 was passed to require a franchise from the Philippine government in order to operate an air service and to regulate foreign aircraft operations.

 

Philippine Legislative passed Commonwealth Act No. 168, better known as the Civil Aviation Law of the Philippines which created the Bureau of Aeronautics. After the liberation of the Philippines in March 1945, the Bureau was reorganized and placed under the Department of National Defense. Among its functions was to promulgate Civil Aviation Regulations.

 

Executive Order No. 94 which reorganized the government transferred Bureau of Aeronautics to the Newly created Department of Commerce and Industry and renamed Civil Aeronautics Administration (CAA).

 

Republic Act 224 created the National Airports Corporation which was charged with the management and operations of all national airports.

 

Republic Act No. 776, otherwise known as the Civil Aeronautics Act of the Philippines reorganized the Civil Aeronautics Board and the Civil Aeronautics Administration. It defined the powers and duties of both agencies including the funds, personnel and the regulations of Civil Aviation.

 

Executive Order No. 209 placed the Civil Aeronautics Administration under the administrative supervision and control of the Department of Public Works, Transportation and Communications.

 

Republic Act No. 776, otherwise known as the Civil Aeronautics Act of the Philippines reorganized the Civil Aeronautics Board and the Civil Aeronautics Administration. It defined the powers and duties of both agencies including the funds, personnel and the regulations of Civil Aviation.

 

Executive Order No. 209 placed the Civil Aeronautics Administration under the administrative supervision and control of the Department of Public Works, Transportation and Communications.

 

Executive Order No. 546, the CAA was renamed the Bureau of Air Transportation (BAT) and placed under the Ministry of Transportation and Communications.

 

Executive Order No. 125-A renamed the Bureau of Air Transportation the Air Transportation Office headed by the Assistant Secretary of Air Transportation.

 

Senator Edgardo J. Angara filed senate bill number 1932, otherwise known as CIVIL AVIATION AUTHORITY ACT OF 2007, authorizing the appropriation of funds therefore, and for other purposes.The bill abolishes the Air Transportation Office (ATO) and in its stead creates the Civil Aviation Authority (CAA), which is mandated to set comprehensive, clear and impartial rules of the aviation industry. Under the new law, the CAA shall be an independent regulatory body with quasi-judicial and quasi-legislative powers with corporate attributes and on March 4, 2008, President Gloria Macapagal-Arroyo sign into law.

 

 

4. Technological Forces

 

The Philippine Airlines (PAL) began embracing electronic commerce with the introduction of its Online Booking service that accepts ticket purchases and credit card payments for all flights. A new, improved website was also launched to serve the customers’ needs more quickly, efficiently and offers you complete travel guides with all the information about your destination.

 

They also have this Travel Guide that contains information about a destination city. It features basic fact, sightseeing, attractions, entertainment, hotels, restaurants, and maps. You may browse through the Destinations and Guides section of the website and select the city that you wish to download. The guides are distributed in PDF format FREE of charge.

 

Philippine Airlines and BancNet bring you another first in the airline industry. BancNet ATM carholders can now purchase Philippine Airlines domestic tickets without leaving home.

 

Philippine Airlines introduces its PAL Mobile Site www.philippineairlines.mobi – an interactive website designed to connect to PAL while you are on the go. The PAL Mobile site gives you more flexibility and convenience. With your web-enabled mobile phone, Blackberry or PDA, you can check the latest arrival and departure times, check the flight schedules, latest information about Mabuhay Miles, and know more about PAL latest news and promos.

 

PAL online booking features a fully automated facility called “Calendar Pricing,” which immediately displays the lowest fare available over a seven-day range – three days before and three days after the planned travel date – thus allowing travelers to decide quickly when it is most convenient and cheapest to fly. 

1. Rivalry within the Industry – HIGH

The airline industry market is absolutely saturated. Both local and international markets require more companies. These airlines are operating on the same destinations and competing for similar customer. The competition is continuous within these airlines in terms of prices, through offering different services, cut-fares, frequent flyer membership privileges and many more areas to grab more customers than other competitors. Low differentiation, excess capacity, customer service, switching costs for passengers, in-flight entertainment, fast changing technology and readily available prices via the Internet are other factors contributing to rivalry. The net result of this rivalry among companies is an overall slow market growth rate and the overall profit possible of this industry is low.

 

2. Threat to New Entry – LOW

            The gap for a newcomer is small even to clutch its way in since the airline industry is entirely saturated. The major reason for this is the cost of entry. One of the most luxurious industries is airline industry, due to the cost of buying aircrafts, security and safety measures, customer service and manpower. A huge investment is necessary.

            Another main obstacle to access is customer’s loyalty to their existing brands. It’s difficult to attract customer out of their existing brands.

            Extensive development period and high fixed cost are also huge obstacles to access.

 

3. Availability of Substitutes - LOW

Cars, buses, ships and trains are alternatives to air travel. Alteration costs among air travel and its alternative are quite low; the materiality of alternatives will alter according to convenience and customer-type.

            Philippine Airlines (PAL) accompanied several of its alternatives as they deem that it helps the growth and popularity of the airline industry.

 

 

4. Bargaining Power of Suppliers - HIGH

Boeing and Airbus are manufacturers which suppliers of airline industry are limited. Given that a small number of airplane suppliers worldwide, there is a small chance for bargaining as a result of increasing power of these suppliers.

Suppliers of fuel monopolize its production so it can also manipulate the price. The airline companies have no choice but to purchase fuel on whatever price the market dictated. Airports can manipulate over airline industry since it is necessary for airplanes an airfield to land. The employees in addition have the bargaining power basically because they are members of labor union.

 

5. Bargaining Power of Customers - LOW

Majority of airline customers are unable to coordinate and organize and it is the reason why the authority of individual buyer lessens.

The rivalry is fairly high in domestic airlines so customers have an opportunity to bargain however there are less options of bargain on international routes.

            Corporate discounting is a strategy where air fare and fees are lowered. Negotiations among corporations and airlines are involved. It is necessary for corporations to negotiate well in advance. Discounts depend on airline offers, demand forecast, and decisions.

 

 

 

 

 

 

 

 

 

 

 

 

C. Competitive Profile Matrix (CPM)

 

Basis: Industry Analysis, Company Profile

Competitive Profile Matrix (CPM)

Based on the result, Philippine Airlines is in the second place with a weighted score of 3.20 whereas Cebu Pacific shows a better performance against its competitor in the airline industry having a 3.34 score. Philippine Airlines performance is greatly affected by the fall of its local flight segment. Garnering a decrease of total market share from 50% in May 2009 to 35.4% in late December of 2009 this is due to customer disappointment when it comes to it service such as frequent delayed flights. Cebu Pacific is considered as the primary competitor of Philippine Airline when it comes to the local and international flights as Cebu Pacific garnered the highest number of passengers in local flight in 2009 and achieving as the second best in International flight right after the Philippine Airlines when it comes to the number of passengers.

 

D. External Factor Evaluation (EFE) Matrix

 

 

Basis: Industry Analysis, Company Profile, Experts reviews

 

External Factor Evaluation (EFE) Analysis

Philippine Airlines is performing average in their external environment. Most of Philippine Airlines opportunities and threats need to be addressed more aggressively, such as decreasing operating costs, expanding internationally, and increased competition.

The largest threat to Philippine Airlines is the increased competition with the low-cost sector and the industry itself. Philippine Airlines is highly dependent on the fluctuations of fuel costs. Since fuel is one of the largest costs to Philippine Airlines a slight adjustment can mean the difference between a loss and a profit. Along of fuel, labor costs are one of the largest costs to Philippine Airlines and a slight adjust can mean the difference between a loss and a profit.

 

IV. INTERNAL AUDIT

A. Internal Factor Evaluation (IFE) Matrix

 

 

Basis: Consumer’s review, Industry News and surveys

Internal Factor Evaluation (IFE) Analysis

Philippine Airlines score a 2.97 on the IFE Matrix. This matrix shows that Philippine Airlines is able to provide good service to its consumer while working on some of its weakness to turn it into strength.

 

V. OBJECTIVES

 

·   Boost sales of Pal Express (domestic Flights) in order to raise sales and market share significantly over the coming year, Increasing its annual sales from P19,020,945,000 to P24,727,228,000 (approximately a 30% inc.) which later on achieving a 15% average annual growth in sales and profit

 

·   To Reposition the Pal Express as better than Cebu Pacific and Zest Airlines because it is superior in terms of its overall quality and superior customer benefits regaining the lead in the market shares of domestic flights from 35.4% to 50%.

 

·   To increase the market shares under transpacific flights from 36.6% in 2008 to 50% in 2010 and to maintain the lead in market shares of international flights here in the Philippines at 31%. Becoming the Preferred Airlines both in Local and International market.

 

·   Fight back against growing price competition in the industry by

ü    Cutting down the cost of operation from PHP 21,183,135,000 to PHP14,828,194,000 (approx. 30% dec.)

ü    Enhancing Philippine Airlines offerings and selling them on the basis of benefits instead of price.

ü    Emphasizing our superior quality and by adjusting prices if necessary to retain business.

ü    Eliminating the causes of customer defections

 

·   Expand into new markets / territories to increase the size of its customer base

 

PHILIPPINE AIRLINES

CEBU PACIFIC

CATHAY PACIFIC

ZEST AIRLINES

Critical Success Factors

Weight

Rating

Score

Rating

Score

Rating

Score

 

Rating

 

Score

Advertising

Product Quality

Price Competitiveness

Management

Financial Position

Customer Loyalty

Global Expansion

Market Share

Reward Programs

Security

Production capacity

Human Resource Mgt

.14

.10

.12

.08

.12

.08

.06

.07

.03

.08

.07

.05

3

3

3

4

3

3

4

3

4

3

4

2

0.42

0.30

0.36

0.36

0.36

0.21

0.24

0.21

0.12

0.24

0.28

0.10

4

4

3

3

3

3

3

4

4

3

3

3

0.56

0.40

0.36

0.27

0.36

0.21

0.18

0.28

0.12

0.24

0.21

0.15

1

4

2

3

1

2

3

2

2

3

3

2

0.14

0.40

0.24

0.27

0.12

0.14

0.18

0.14

0.06

0.24

0.21

0.10

2

3

2

3

1

2

2

1

1

3

2

2

0.28

0.30

0.24

0.27

0.12

0.14

0.12

0.07

0.03

0.24

0.14

0.10

Total

1.00

 

3.20

 

3.34

 

2.24

 

2.05

Key External Factors

Weight

Rating

Weighted Score

OPPORTUNITIES

 

 

 

1. Facilities are better equipped compared to other airlines

0.09

3

0.27

2. Promos during peak season

0.07

3

0.21

3. Increase of Tourism Industry

0.10

4

0.40

4. Increase in the numbers of overseas workers

0.12

4

0.48

THREATS

 

 

 

1. A wide variety of promos are offered by their competitors

0.06

3

0.14

2. New entrant in the market

0.04

2

0.08

3. Continuous increase of gasoline price

0.08

1

0.04

4. Terrorism

0.09

4

0.18

5. Labor Cost increase

0.08

3

0.14

6. Ongoing global economic crisis

0.10

3

0.30

7. Increase in airlines’ maintenance cost

0.09

2

0.18

8. Rise of Labor union due to potential Lay-off

0.02

4

0.08

9. Ban from EU might ruin its reputation

0.06

1

0.06

TOTAL

1.00

 

2.56

Key Internal Factors

Weight

Rating

Weighted Score

STRENGTHS

 

 

 

1. Employee morale is excellent

0.09

2

0.18

2. Image is highly recognized

0.05

3

0.15

3. modes of Reservation

0.07

4

0.28

4. Customer Service

0.10

4

0.40

5. Maintenance and Convenience

0.13

4

0.52

6. User-friendly information system

0.02

2

0.02

7. Available electronic ticketing (E-ticketing) system for all flights

0.11

4

0.44

8. Attractive special discounts and promos being offered

0.10

3

0.30

9. Asia’s oldest carrier and still operating under its original name

0.08

2

0.16

11. Flagship carrier of the Philippines

0.03

3

0.09

WEAKNESSES

 

 

 

1. Space and Transportation for cargoes

0.03

2

0.06

2. Expensive fair

0.07

2

0.14

3. Space in arriving area

0.03

1

0.03

4. Delayed flights

0.04

3

0.12

5. Limited Advertising

0.03

2

0.06

6. Not part of an international Alliance

0.02

1

0.02

TOTAL

1.00

 

2.97

IV. INTERNAL AUDIT

A. Internal Factor Evaluation (IFE) Matrix

 

 

Basis: Consumer’s review, Industry News and surveys

Internal Factor Evaluation (IFE) Analysis

Philippine Airlines score a 2.97 on the IFE Matrix. This matrix shows that Philippine Airlines is able to provide good service to its consumer while working on some of its weakness to turn it into strength. 

Key Internal Factors

Weight

Rating

Weighted Score

STRENGTHS

 

 

 

1. Employee morale is excellent

0.09

2

0.18

2. Image is highly recognized

0.05

3

0.15

3. modes of Reservation

0.07

4

0.28

4. Customer Service

0.10

4

0.40

5. Maintenance and Convenience

0.13

4

0.52

6. User-friendly information system

0.02

2

0.02

7. Available electronic ticketing (E-ticketing) system for all flights

0.11

4

0.44

8. Attractive special discounts and promos being offered

0.10

3

0.30

9. Asia’s oldest carrier and still operating under its original name

0.08

2

0.16

11. Flagship carrier of the Philippines

0.03

3

0.09

WEAKNESSES

 

 

 

1. Space and Transportation for cargoes

0.03

2

0.06

2. Expensive fair

0.07

2

0.14

3. Space in arriving area

0.03

1

0.03

4. Delayed flights

0.04

3

0.12

5. Limited Advertising

0.03

2

0.06

6. Not part of an international Alliance

0.02

1

0.02

TOTAL

1.00

 

2.97

 

Mission 

            To provide excellent customer service and timely air travel at an affordable price for markets in the world.

 

Company History

 

Philippine Airlines (also known as PAL), historically as Philippine AirLines, is the national airline of the Philippines and Asia’s first airline.

 

The airline was founded on February 26, 1941 by a group of businessmen led by Andres Soriano, hailed as one of the Philippines’ leading industrialists at the time, who served as its general manager, and former Senator Ramon Fernandez, who served as its chairman and president. The airline, headquartered in the Philippine National Bank Financial Center in Pasay City, was founded in 1941 and is the oldest commercial airline in Asia operating under its original name. Out of its hubs at Ninoy Aquino International Airport of Manila and Mactan-Cebu International Airport of Cebu City, Philippine Airlines serves nineteen destinations in the Philippines and twenty-four destinations in Southeast Asia, East Asia, Australia, Canada and the United States.

 

Formerly one of the largest Asian airlines, PAL was severely affected by the 1997 Asian Financial Crisis. In what was believed to be one of the Philippines’ biggest corporate failures, PAL was forced to downsize its international operations by completely cutting operations to Europe and eventually Southwest Asia, cutting virtually all domestic services excluding routes operated from Manila, reducing the size of its fleet and terminating the jobs of thousands of employees. The airline was placed under receivership in 1998, gradually restoring operations to many of the destinations it formerly serviced. PAL exited receivership in 2007 with ambitious plans to further restore services to its previously-serviced destinations, as well as diversify its fleet.

 

Philippine Airlines is the only airline in the Philippines to be accredited with the IOSA (IATA Operational Safety Audit) by the International Air Transport Association and has been awarded a 3-star rating by Skytrax.

PAL through the years

Since then, PAL deeply involved itself in shaping the course of historic events. With its every takeoff and touchdown, PAL planted the seed of growth.

PAL has become one of the most respected airlines around the world with a young and modern fleet of aircraft and a route network that spans 33 foreign cities and 29 domestic points.

Service excellence

PAL’s excellent service has won the hearts of travelers worldwide. This trademark has distinguished it from the pack and has stood guard in an environment that has grown more competitive by the day.

But PAL does not sit on its laurels. Realizing that it owes its success to its loyal passengers, PAL launched a campaign called “Call for excellence” to serve its market better.

Products and Services:

 

Philippine Airlines operates several aviation facilities in the Philippines. These include various training facilities for pilots and cabin crew, catering services, as well as a data center and a flight simulator.

 

Training facilities. Philippine Airlines maintains training facilities both for its pilots and other crew. This is composed of the PAL Aviation School, the PAL Technical Center and the PAL Learning Center.

 

Before Flight

 

Medical Equipment

For your special medical requirements, they offer a wheelchair service at the airport, as well as oxygen or stretcher equipment during your flight.

For passengers that need special medical attention, they have the Medical Information Form (MEDIF) available for download.

 

At The Airport

 

Check-in

Express check-in counters are now available for all Philippine Airlines flights from Manila (NAIA2) and Mactan airports.

Open to passengers without check-in baggage and to senior citizens with up to two travelling companions.

 

Airport Lounges

Mabuhay (Business) Class passengers and Mabuhay Miles Million Miler, Premium Elite and Elite members may relax in a warm and bright place while partaking of some light refreshments before boarding their flight.

 

Baggage Assistance

You may approach the Baggage Assistance Counter located at the Arrival Area for any inquiries regarding your baggage.

If no claim for PR tagged on-hand baggage is made within five (5) days after the baggage was found, PAL will turnover unclaimed baggage to Customs for disposal.

If the baggage is not found by the fifth day after the baggage was reported missing then the baggage shall be considered lost and necessary claim shall be filed.

 
Connecting Flights

A one stop check-in for passengers originating from any PAL station with connecting flight to any PAL destination.


Storage Service

PAL has space for your baggage at the airport.

 

During Flight 

 

Cabin Amenities

For your relaxation, we offer amenities for total inflight comfort.  Philippine Airlines launched a new, fresh and refined design of its Amenity Kits for Mabuhay (Business) Class on all its long-haul flights.

 

Entertainment

            Flights of Fancy, Philippine Airlines’ inflight entertainment program, takes you to a higher level of inflight entertainment programming guaranteed to heighten your viewing, listening and reading pleasure in the air.

 

Meals and Beverages

A wide range of inflight meals and beverages that we offer on Mabuhay (Business) Class and Fiesta (Economy) Class.

 

Comfort and Safety

Safety information and inflight well-being tips to help you travel the healthy and relaxing way.


Free Transfer Service

 

Between Centennial Terminal 2 and new Terminal 3

Passengers transferring via Manila with confirmed connecting flight on Philippine Airlines and PAL Express shall be provided with free airside shuttle service to and from Centennial Terminal 2 and Terminal 3.

 

Between NAIA1 and Centennial Terminal 2/new Terminal 3

Passengers transferring via Manila on Philippine Airlines, PAL Express and International Code share flights shall be provided with free shuttle service to and from NAIA Terminal 1, Centennial Terminal 2 and the new Terminal 3. The passenger is requested to proceed to the Transfer Desk Service at NAIA Terminal 1. 

 

About Baggage

 

Free Baggage Allowance

Know the size, number of baggage and weight requirements you can check-in and hand carried baggage you can bring into the cabin free of charge.

 

Online Baggage Tracing

As part of our service, we give you online access to know the status of your baggage. A reference number will be given to you by PAL station office once you reported your missing or mishandled baggage. Input your reference number to access it now.

Cargoes

 

Express Service

Rapid Handling of Urgent Shipment

In compliance with Republic Act No. 9337, an act amending the National Internal Revenue Code, a 12% VAT is added to the total amount on all transactions involving purely domestic services only.

 

Our airport-to-airport express service with the following features:

  • handled with highest priority
  • guaranteed uplift once booking is confirmed with money back guarantee
  • shipment is released within 3 hours upon arrival at destination

All cargoes within the minimum weight requirement and brought in 2 hours before the scheduled departure time gets the RHUSH special handling.

 

Automatic confirmation for shipments weighing up to 50 kilos can also be sent through RHUSH. All you have to do is call us 6 hours before the scheduled departure time and tender the goods 2 hours before the flight.

 

Cargo Classification

In compliance with Republic Act No. 9337, an act amending the National Internal Revenue Code, a 12% VAT is added to the total amount on all transactions involving purely domestic services only.

 

Special Cargo 

Commodities that require special or advance arrangement, packing, handling and in certain cases, documentation. Acceptance of these type of cargo are subject to specific regulations.

Examples of Special Cargo are the following:

  • Baggage and special effects that are treated with special care and stored at a special location.
  • Perishables are shipments which are so labeled and are stored under specific temperature.

 

Valuable Cargo are shipments with very high commercial value. 

Restricted Articles or Dangerous Goods like inflammables, explosives, radioactive materials and corrosive substances like acids that may endanger the safe operations of the flight. 

Livestock, Live Animals and Plants are shipment that needs special attention and care.

General Cargo

All articles or materials that are not included in the list of Special Cargo are considered General Cargo or General Commodity

V. OBJECTIVES

 

·   Boost sales of Pal Express (domestic Flights) in order to raise sales and market share significantly over the coming year, Increasing its annual sales from P19,020,945,000 to P24,727,228,000 (approximately a 30% inc.) which later on achieving a 15% average annual growth in sales and profit

 

·   To Reposition the Pal Express as better than Cebu Pacific and Zest Airlines because it is superior in terms of its overall quality and superior customer benefits regaining the lead in the market shares of domestic flights from 35.4% to 50%.

 

·   To increase the market shares under transpacific flights from 36.6% in 2008 to 50% in 2010 and to maintain the lead in market shares of international flights here in the Philippines at 31%. Becoming the Preferred Airlines both in Local and International market.

 

·   Fight back against growing price competition in the industry by

ü    Cutting down the cost of operation from PHP 21,183,135,000 to PHP14,828,194,000 (approx. 30% dec.)

ü    Enhancing Philippine Airlines offerings and selling them on the basis of benefits instead of price.

ü    Emphasizing our superior quality and by adjusting prices if necessary to retain business.

ü    Eliminating the causes of customer defections

 

·   Expand into new markets / territories to increase the size of its customer base

 

VI. STRATEGY ANALYSIS

A. SWOT Matrix (TOWS)

 

 

Recommended strategies

            Market penetration strategy seeks to increase market share for present products or services in present markets through greater marketing efforts. This includes increasing the number of salespersons, increasing advertising expenditures, offering extensive sales promotion items, or increasing publicity efforts. Product development usually entails large research and development expenditures. In airline industry, the company always pursuing product/service development, because customers increasingly are willing to pay more for the products and services with excellent facilities or technology

 

External Opportunities:

·     Facilities are better compared to other airlines. A great facility is a big factor for customers in choosing an airline. With this new market trends, there’s a big potential opportunities for Philippine Airline to be the number one.

 

·     Promos during peak season. Family and barkadas usually go out and have fun during holidays. Philippine Airline can offer a promos and discounts for their customers.

 

·     Increase in tourism industry. Tourism plays an important role for the growth of the country. This is a great opportunity for PAL to offer their services for customers.

 

·      Increase in the number of overseas workers. Today, there are many Filipinos who go out of country looking for job. PAL is committed to show a quality services for them.

 

·      

External Threats:

§ Wide variety of promos offered by other airlines. Other Airlines offer promos lower than the PAL. PAL goes for fair fare with a quality service.

 

§ New entrants in the market. For an entity who wants to engage in airline industry, they must first understand its customers. PAL continues to be a customer-oriented company.

 

§ Terrorism. Terrorism affects the tourism in our country. Passengers might be afraid of traveling.

 

§ Ongoing economic crisis. The economic crisis has a big impact in airline industry. The passenger traffic decrease. Many airlines reported loss because of hedging costs and fluctuation of fuel price.

 

§ Increase in airlines’ maintenance costs. Cost of operating more flight means a higher maintenance costs. PAL’s expenses exceed their revenue.

 

§ Employee strike due to potential lay-off. PAL is in the process of restructuring and reducing their costs. Thousands of employees and their family are affected. Also, it can give an idea to the customer that their quality service might be compromised.

§ Ban from European Union.  Because of ban, the flight of the PAL in the west is affected. PAL can’t add flights nor use their new and fuel efficient planes to other countries.

 

§ Continuous increase of fuel price.  Airlines are dependent on the fluctuation of fuel costs. Since fuel is one of the largest costs to PAL, a slight change in price affect the difference between a loss and a profit.

 

§ Labor cost. Aside from fuel, labor costs are one of the largest costs of Philippine Airlines. Without well-trained and excellent employees, PAL may not be known at all.

 

Internal Strengths:

§ Employee morale is excellent. Each employee undergone a training to improve their skills and to develop their attitude. Attitude is important for them to gain respect and trust from the customers. PAL is committed to deliver excellence which enables them to carry out a quality service to their customers.

 

§ Image is highly recognized. PAL is a well-known international airline that started in 1941. Its brand has several unique elements that have helped them create a special bond with their customers.

 

§ Modes of reservation. PAL has a 24-hour phone-in service and they can inquire through the internet.

 

§ Customer service. PAL is indeed known for their quality services. Customers keep on coming back to PAL because they are provided with comfort and safe trip.

 

 

§ Maintenance and convenience. It is an added strength to the company. PAL performs an outstanding quality of customer service.

 

§ User-friendly information system. Looking through website instead of going to their office is a great convenience for customers. Simple and easy to navigate.

 

§ Availability of Electronic Ticketing System. Before, the customers had wait in line at the ticket office to get their ticket. Now, PAL enhanced its service by allowing customers to receive their ticket thru fax or email without leaving their home or office.

§ Special discounts and promos offered. PAL offers special discounts and promos all year round, domestic or international.

 

§ Asia’s oldest carrier and still operating under its name. Even if it is greatly affected by the economic financial crisis, PAL is able to return by striving harder and they still continue to serve their customers.

§ Flagship carrier of the Philippines. PAL brings pride to the Filipinos on all the places they touch down.

 

Internal Weaknesses

§ Expensive fare. PAL equates their fare with the service they provide. The fare is depends on the fuel, maintenance costs and the flight schedule.

 

§ Space and transportation for cargoes. There are limitations in the cargoes as defined in their legal notice.

 

§ Space in arriving area. Space in the arriving area at the airport is limited.

 

§ Limited advertising. Advertising is one way of showing to people how committed is you. Some people might not be aware of what PAL can be capable of.

 

§ Not part of an international alliance. International alliance is an agreement between two or more airlines to cooperate at substantial level. PAL can have a benefit and also its passengers.

 

§ Delayed flights. This is what the passengers hate the most. Sometimes, it can’t be helped when it involves fortuitous event. PAL is striving to meet the customer’s issues and resolving it in shortest possible time.

 

B. Strategic Position and Action Evaluation (SPACE) Matrix

 

INTERNAL

FS = (4 + 5 + 6 + 3) / 4 

                 = +4.5

 

CA = (-1 + -3 + -3 + -1) /4

                     = -2

 

EXTERNAL

 

ES = (-2 + -2 + -3 + -4) / 4

                 = -2.75

 

IS = (3 + 6 + 5+ 5) / 4

    = +4.75

 

BASIS:           IFE and EFE

 

CONCLUSION:        X axis = (IS + CA) = 4.75 – 2 = + 2.75

                                    Y axis =(FS + ES) = 4.5 -2.75 = + 1.75

 

SPACE (Strategic Position and Action Evaluation) Matrix

 

 

 

 

 

 

CONSERVATIVE

 

AGGRESSIVE

 

                                                               

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

C. BCG MATRIX

 

 

To understand more the market situation faced by our product and company, we should understand its relative market share in its industry. We decided to use a BCG (Boston Consulting Group) Matrix for this reason.

            By understanding our product and company’s market share, we would learn the strengths and weaknesses of our product and improve it squarely.

 

Star

  • Philippine Airlines International Flight services fall under star because 80.90% of the transport revenues of PAL comes from this division. Also, it has the most passengers throughout the competitors here in the Philippines.  It has expanded its foreign destination from 30 to 33, 25 on-line points and 8 points under joint service/share code arrangement. The domestic network covered 18 cities and towns in the Philippines.
  • Philippine Airlines On Flight Services fall under star because the airline provides a complete cabin interior which gives a comprehensive aircraft cabin, bannered by its reconfiguration from a tri-class to bi-class layout. The airline also provides cabin amenities, entertainment, meals and beverages, duty free sales and most of the entire airline make sure the safety and comfort travel of their passengers this was best evidenced by the IOSA an accreditation given by the International Air Transport Association and a 3-star rating awarded by Skytrax.

 

Cash Cow

  • Philippine Airlines Cargo services fall under this cash cow because the cargo services of the airline do not have promotions and placement. Because of the low growth of the airline, promotion and placement investments are low. If there will be investments into supporting the cargo services the airline can improve more efficiency and increase cash flow

 

Question Mark

 

  • Philippine Airlines Domestic Flight services fall under cash cow because currently the market share decrease from 50% in May 2009 to 35.4% where in 19.1% of the transport revenues of PAL comes from this division. It has expanded its domestic destination from 20 in 2007 to 29 currently. Providing a potential increase in its market growth.

 

 

 

D. INTERNAL-EXTERNAL MATRIX

 

Text Box: EFE Total Weighted Score = 2.56IFE Total Weighted Score = 2.97

 

 

Internal- External Analysis

Based on the EFE and IFE matrices in the previous chapters, with the resultant scores at 2.56 and 2.97 respectively, the combined effect of the external and internal analysis falls in cell V for IFE TWS of 2.91 and EFE TWS of 2.65.

This IE Matrix of Philippine Airlines tells that the company should hold and maintain. The company should pursue Intensive strategies such as Market Penetrationand Product development which is the best and most appropriate things to do.  They must increased market share for present services in present markets through greater marketing efforts, introduce present services into new geographic area, and increased sales by improving present products or services or developing new ones.

E. Grand Strategy Matrix (GSM)

 

Text Box: 1.	Market development 2.	Market Penetration 3.	Product development 4.	Forward Integration 5.	Backward Integration 6.	Horizontal Integration 7.	Concentric diversification

1.    Market Development

2.    Market penetration

3.    Product development

4.    Horizontal Integration

5.    Divestiture

6.    Liquidation

 

 

Y axisX axisStrong Competitive PositionWeak Competitive PositionSlow Market GrowthRapid Market Growth 

 

 

 

Q-IIQ-I

1.    Concentric diversification

2.    Horizontal diversification

3.    Conglomerate diversification

4.    Joint ventures

  Text Box: 1.	Retrenchment 2.	Concentric Diversification 3.	Horizontal Diversification 4.	Conglomerate Diversification 5.	Divestiture 6.	Liquidation Q-IIIQ-IV

 

 

 

 

logo_pal

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

           

Basis: Space Matrix

 

 

 

 

Philippine Airline is located in the Quadrant 1 due to the following reason:

With the standard of living of Filipino is improving gradually, airline industry stably increase, that is why given the rapid market growth of the airline industry.

            Philippine Airlines is in an excellent strategic position, for Philippine Airlines, concentration on current (product development) is an appropriate strategy in terms of the specific circumstances that face the company.

 

The strategies both identified in SPACE and Grand Strategy Matrices are defined as follows:

1.     Market Development, which is introducing present product and services into new geographical areas;

2.     Market Penetration, which is seeking higher market share through greater marketing efforts;

3.     Product Development, which is seeking increased sales by improving present products or developing new ones; Forward Integration, which is gaining ownership over distributors and retailers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F. Table of Outcomes of Strategies in the Matching Stage

 

 

 

 

 

 

 

 

 

 

 

G. Quantitative Strategy Planning Matrix (QSPM)

INTERNAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXTERNAL

Strengths(S)

1.      Employee morale is excellent

2.      Image is highly recognized

3.      Modes of reservation

4.      Customer service

5.      Maintenance and convenience

6.      User-friendly information system

7.      Available electronic ticketing (E-ticketing) system for all flights

8.      Attractive special discounts and promos being offered

9.      Asia’s Oldest carrier and still operating under its original name

10.    Flagship carrier of the Philippines.

Weaknesses(W)

1.      Space and transportation for cargoes

2.      Expensive fair

3.      Space in arriving area

4.         Delayed flights

5.         Limited advertising

6.        Not part of an international alliance

Opportunities(O)

1. admission of new airline company in different country

2. Promos during peak season

3. Increase in tourism industry

4.Increase in the number of overseas workers

S-O Strategies

·   Launching new events to increase recognition of the PAL

·   Developing modern facilities and technology

·   Tie ups with the department of tourism

·   Expansion of branches and flight coverage internationally and locally

·   Taking advantage of economies of scale by increasing the size of its operations.

W-O Strategies

· Offering discounted price scheme before closing time

· Initiate marketing strategies emphasizing advertisement and promotion

· Proper flight scheduling and imposing strict regulation involving departure time

· Upgrade and improvement of facilities

Threats(T)

1.         A wide variety of promos are offered by their competitors

2.      New entrant in the market

3.         Continuous increase of gasoline price

4.         Terrorist

5.      Labor cost

6.      Ongoing global economic crisis

7.      Increase in airline’s maintenance cost

8.      Employee strike due to potential lay-off

9.     Ban from EU

S-T Strategies

·   Intensifying the marketing strategies, programs and promos.

·   Improving the efficiency of our production processes

 

 

W-T Strategies

· Increase and develop new advertisements and offer products and services at affordable price.

· Substituting cheaper materials in order to cute manufacturing costs

 

 

SPACE (Strategic Position and Action Evaluation) Matrix

INTERNAL Strategic Position

EXTERNAL Strategic Position

Y axis

Financial Strength (FS)

Environmental Stability (ES)

( +1 worst, +6 best)

( -6 worst, -1 best)

Return on Investment

+ 4

Technological changes

-2

Leverage

+ 5

Rate of Inflation

-2

Liquidity

+ 6

Demand elasticity

-3

Cash Flow

+ 3

Taxation

-4

AVERAGE

+ 4.5

AVERAGE

-2.75

Total Y axis score: + 1.75

X axis

Competitive Advantage (CA)

Industry Strength (IS)

( -6 worst, -1 best)

( +1 worst, +6 best)

Market share

-1

Growth potential

+ 3

Product quality

-3

Barriers to entry

+ 6

Product life cycle

-3

Access to Financing

+ 5

Brand and Image

-1

Consolidation

+ 5

AVERAGE

-2

AVERAGE

+ 4.75

Total X axis score: + 2.75

 

 

RELATIVE MARKET SHARE

 

 

HIGH

LOW

MARKET GROWTH RATE

 

 

(Cash Usage)

asda

HIGH

Star

 

International flight

 

On Flight Service

  • Cabin amenities
  • Meal and beverages
  • Comfort and safety

 

 

 

 

untitledQuestion Mark

 

PAL Free Transfer Service

 

Domestic Flight

 

LOW

Untitled.jpgCash Cow

 

 

Cargo Services

  • Express service
  • Cargo classification
  • Special cargo
  • Valuable cargo
  • General Cargo

mask-dog.jpgDog

 

 

 

 

 

 

 

 

4.0

STRONG

3.0-4.0

 

 

 

3.0

AVERAGE

2.0-2.99

 

 

 

2.0

WEAK

1.0-1.99

 

 

 

1.0

HIGH

3.0-4.0

 

 

 

3.0

I

II

III

MEDIUM

2.0-2.99

 

 

 

2.0

IV

V

VI

SLOW

1.0-1.99

 

 

 

1.0

VI

VIII

IX

Competitive Advantage (CA)

Industry Strength (IS)

( -6 worst, -1 best)

( +1 worst, +6 best)

Market share

-1

Growth potential

+ 3

Product quality

-3

Barriers to entry

+ 6

Product life cycle

-3

Access to Financing

+ 5

Brand and Image

-1

Consolidation

+ 5

AVERAGE

-2

AVERAGE

+ 4.75

 

MATRIX

Strategy

SWOT

SPACE

BCG

IE

GSM

Total

Integration Strategy

 

 

 

 

 

 

1.Forward Integration

 

 

 

2

2. Backward Integration

 

 

 

2

3. Horizontal Integration

 

 

 

2

Intensive Strategy

 

 

 

 

 

 

1. Market Development

 

 

3

2. Market Penetration

 


4

3. Product Development

5

Diversification Strategy

 

 

 

 

 

 

1. Related Diversification

 

 

 

 

 

0

2. Unrelated Diversification

 

 

 

 

 

0

Defensive Strategy

 

 

1. Retrenchment

 

 

 

 

 

0

2. Divestiture

 

 

 

 

1

3. Liquidation

 

 

 

 

 

0

KEY FACTORS

WT.

Market Development

Market Penetration

Product Development

Strengths

 

AS

TAS

AS

TAS

AS

TAS

1. Employee morale is excellent

0.09

2

0.18

4

0.36

2.Image is highly recognized

0.05

3

0.15

4

0.20

3

0.15

3.Modes of reservation

0.07

1

0.07

3

0.21

3

0.21

4. Customer service

 

 

0.10

4

0.40

4

0.40

4

0.40

5. Maintenance and convenience

 

0.13

1

0.13

2

0.26

3

0.39

6. User-friendly information system

0.02

1

0.02

1

0.02

2

0.04

7. Available electronic ticketing (E-ticketing) system for all flights

0.11

1

0.11

3

0.33

4

0.44

8. Attractive special discounts and promos being offered

0.10

2

0.20

3

0.30

3

0.30

9. Asia’s oldest carrier and still operating under its original name

0.08

4

0.32

2

0.16

1

0.08

11. Flagship carrier of the Philippines

0.03

4

0.12

3

0.09

Weaknesses

 

 

 

 

 

 

 

 

1.Space and transportation for cargoes

 

0.03

 

4

0.12

2. Expensive fair

 

0.07

 

2

0.14

4

0.28

3. Space in arriving area

 

0.03

4

0.12

4. Delayed flights

0.04

4

0.16

5.Limited advertising

 

0.03

 

2

0.06

4

0.12

1

0.03

6. Not part of an international Alliance

0.02

2

0.04

 

1.00

 

 

 

 

 

 

Opportunities

 

 

 

 

 

 

 

 

1. Facilities are better equipped compared to other airlines

 

0.09

 

3

0.27

3

0.27

3

0.27

2. Promos during peak season

 

0.07

 

1

0.07

4

0.28

4

0.28

3. Increase of Tourism Industry

0.10

2

0.20

4

0.40

4

0.40

4. Increase in the numbers of overseas workers

0.12

2

0.24

3

0.36

3

0.36

Threats

 

 

 

 

 

 

 

1. Wide variety of promos are offered by other airlines company

0.06

4

0.24

0.42

2. New entrant in the market

0.04

1

0.04

3

0.12

4

0.16

3. Continuous increase of gasoline price

 

0.08

——

3

0.24

4. Terrorism

0.09

2

0.18

5. Labor cost

 

0.08

 

1

0.08

2

0.16

6. Ongoing global economic crisis

0.10

1

0.10

1

0.10

1

0.10

7. Increase in airlines’ maintenance cost

0.09

-

3

0.27

8. Rise of Labor union due to potential Lay-off

0.02

-

1

0.02

9. Ban from EU might ruin its reputation

0.06

2

0.12

2

0.12

Sum Total Attractiveness Score

 

 

2.50

 

4.38

 

6.10

VII. RECOMMENDATION

A. PRIMARY STRATEGY (Product Development)

In view of the fact that the Philippine Airlines has been recently banned from entering the airspace of European Union for safety deficiencies, we recommend hiring expert engineers to ensure the maintenance and quality of the airplanes. This will establish the implementation of adequate corrective actions to reduce the effect of the downgrade in international aviation rating.

People from all walks of life don’t take pleasure in being delayed. Therefore, we want to give emphasis on strict regulation of departure time. Other airlines also have this problem so it will be a competitive advantage if PAL can be recognized as of the airlines who prioritizes time and convenience of travel.

Many airline companies offer lower fares to gather customers. We suggest that PAL focus on differentiation by making their customers experience the “class” of flying to remind them the pleasure of taking flight in the skies. This strategy will require extensive employee training in proper etiquette and quality service, to ensure the portrayed brand image lines up with the experience of customers.

Since there is a continuous increase in the price of fuel, we propose making fuel conservation programs like installing a computer system that helps the pilot time the plane’s take-off and landing in a fuel-efficient manner or lessening unnecessary cargoes to reduce heavy loads that increases fuel consumption.

B. SECONDARY STRATEGY (Market Penetration)

Given that customers can easily transfer from one airline to another due to low switching costs, we recommend that Philippine Airlines provide some kind of membership card options for domestic flights to maintain local customers. This may be in a form of “one flight=one point wherein 5 points is entitled to a free flight” or a similar promo.

 

Because online booking is essential and currently gaining popularity among passengers, it would be more effective if the security for the payment of reservations will be ensured by PAL. Thus we recommend utilizing the Secure Socket Layer (SSL) technology. This system ensures that only the customer and booking sector of the company will view credit card information. This in turn further enhances the credibility of transactions between the customers and the company.

 

With regards to information concerning the PAL, we recommend that PAL link their website to virtual shopping sites, social networking sites, travel sites, and other frequently visited sites. Popular sites will make the detailed information about PAL more appealing since they are well recognized. Another way is by collaborating with the tourism industry. This will benefit both the country and PAL in many ways. Thus, gaining the support of the government and its citizen in patronizing the flag carrier.

 

C. TERTIARY STRATEGY (Market Development)

As Philippine Airlines has proven that international expansion is a more profitable opportunity than adding domestic flights, we recommend that the company pursue this market by expanding to new territories. This strategic move builds on Philippine Airlines’ current lead position in international travel, and it avoids low-cost competition from Cebu Pacific which is continuing to expand and dominate domestic markets.


 

X. STRATEGY IMPLEMENTATION

 

 

 

 

 

 

Activities

 

Objectives

 

 

Person(s) Involved

 

 

Time Frame

 

Budget

 

 

Executive Meeting

 

 

 

 

 

 

 

 

To have an executive meeting that will discuss and arrange the internal audit and structure of the company

 

To set, approve and formalize the vision and mission statement, new rules and regulations and proposed strategies.

 

 

 

·                  All of the executive officers

 

 

1 week

 

 

P 10,000

 

Research and design new technologies

 

 

To design and develop new and advance technologies to heighten competitiveness and service quality

 

 

 

 

  • President
  • Finance Manager
  • Researchers and Developers
  •  Designer

 

 

 

3 months

 

 

P3,000,000

 

Upgrade and develop modern facilities and technology

 

To increase Philippine Airlines competitiveness by introducing the following enhancements to our service offerings

To differentiate Philippine Airlines  services from competitors on the basis of quality instead of price

 

 

 

  • President
  • Finance Manager
  • Designers
  • Developers

 

 

 

6 months

 

 

15,000,000

 

Improve efficiency of our production processes by substituting cheaper but quality material in order to minimize costs

 

 

To minimize the costs that has to be recovered in order to compete with other airlines that offers cheaper fares

 

 

  • Vice President for Production
  • General Manager of Production

 

 

 

1 month

 

 

P5,000,000

 

 

Improve proper flight scheduling and impose strict regulation involving departure time

 

To enhance brand image and to avoid delaying of flights

To become the preferred airline both in domestic and international flights

 

 

  • Management

 

 

 

1 month

 

 

P500,000

 

 

 

 

 

 

 

Intensify marketing strategies emphasizing advertisement and promotion

 

 

 

To further enhance brand recognition and improve service offerings by selling them on the basis of benefits instead of price in order to boost sales of PAL  Express (domestic flights that will increase sales and market share

 

 

 

  • Marketing Manager
  • Sales Manager
  • Finance Manager

 

 

 

 

3 months

 

 

 

 

P10,000,000

 

Tie up with the Department of Tourism

 

 

To attract new customers and   retain loyal customers

 

 

 

  • Marketing Manager

 

 

 

6 months

 

 

 

P5,000,000

 

 

 

 

 

Locate sites where prospect customers exist

 

 

To expand in new markets/ territories

 

 

 

  • Finance Manager
  • Market Researchers

 

 

1 month

 

 

P1,000,000

 

 

 

 

Expand  branches and flight coverage locally and internationally

 

To meet the demands of people who travels frequently and occasionally all over the world

 

 

  • Finance Manager
  • Market Researchers

 

 

 

 

5 months

 

 

P30,000,000

 

My First post in Tumblr

This is my first post in Tumblr and eventually I’ll put here my Strama paper and I will follow all my friends from all over the world.