PAL unions must recognize market reality

- Boo Chanco -

I don’t know if the PAL rank and file union will strike this Holy Week to cause maximum headache to management even if it will guarantee maximum inconvenience to passengers out for a Holy Week break. Those of us whose holiday excursions involve a flight with PAL should probably have a Plan “B” just in case. I asked the Cebu Pacific people if they will honor a PAL ticket in such an emergency and they said they will be happy to do that but PAL must ask first. They have apparently offered in the past and got no reply from PAL. They are also almost fully booked by now for Holy Week.

Our poor flag carrier, Asia’s first, had been getting it pretty bad from their unions in recent weeks. They should all be working together instead. Everyone in PAL should realize that they are no longer the country’s number one airline, at least not in terms of number of passengers flown last year. They are now just number two and that’s why they must try even harder to please. Cebu Pacific is now the country’s largest carrier. Based on government statistics, Cebu Pacific last year flew 10,036,503 local and international passengers to PAL’s 9,259,982. In the domestic market, Cebu Pacific leads with 7,972,659 passengers to PAL’s 5,311,168. PAL still leads Cebu Pacific in the international market.

And guess what? Cebu Pacific flew more passengers with less staff. Cebu Pacific has 4,000 people working for it, about half of that are outsourced. The 2,000 staff members outsourced by Cebu Pacific are holding the same positions that PAL wants to outsource. There is just no way for PAL to continue to have 7,000 employees on its payroll. Aviation market conditions have changed so much and the older airlines, not just PAL, must do something about their so-called legacy costs or just simply lose out to more nimble competitors like Cebu Pacific.

The conditions just got tougher with our unilateral Open Skies declaration. There will be more regional budget airlines taking to our skies and it is important that PAL’s cost structure becomes more comparable to theirs. My Singapore-based son was able to fly to Manila on a whim one weekend on a roundtrip ticket costing him $150 on Tiger Air. I know PAL is trying to match such cut-throat competitors with $250 tickets but its ability to do so on a sustained basis is questionable unless it revamps its cost structure.

In the end, PAL must be financially viable for all its employees to continue to have jobs. If they are able to restructure PAL’s cost, a good part of the present employee force will continue to have jobs in the airline. But if they strike and PAL folds up, everything and everyone goes down the drain. Cebu Pacific, on the other hand, has already invested a billion dollars and planning to invest more.

Business organizations evolve and change in response to market conditions. That’s all there is to it. PAL’s present structure may have worked in the past when it was a monopoly. That is no longer the case. And there is no national interest that can justify a government takeover to save PAL. It is survival of the fittest in the marketplace and PAL is too financially unfit to survive the challenge of Cebu Pacific, Tiger Air, Air Asia and all those new budget carriers whose price structures we love as consumers. The PAL unions must help win this competitive challenge not by striking but by agreeing to restructure the airline.


I received a reaction from Secretary Sonny Coloma to our column last week on the CommGroup. Here are relevant excerpts of his e-mail.

It is sad that you would claim that “(I) have no experience in public relations,” considering that we have known each other since the early seventies.  We were colleagues in the International Association of Business Communicators (IABC) when you were working with PNOC and I was employed by Far East Bank and Trust Company.

The field of public relations spans several publics: an organization’s clients or customers, its own employees, government, mass media, and other stakeholders.  I served as vice president and head of Far East Bank’s corporate relations department and also of its employee relations (including employee communication) department during my ten-year stint with the bank.

When I joined the Asian Institute of Management (AIM) as a professor in 1988, I introduced an elective entitled Corporate Public Communication, which is all about public relations. In fact, you were my preferred resource person on the topic of issues management.  Other PR professionals can attest to the fact that I have designed and delivered a practitioner-oriented course on public relations in keeping with AIM’s academic standards.

My response: It is true that we organized the Philippine chapter of IABC in the early 80s. It is also true that I knew about Sonny’s PR course at AIM. In fact, I think I was his guest lecturer a couple of times. I thought of mentioning both items when I was writing my column but later on decided both facts were irrelevant. The point I was trying to make was the fact that Sonny didn’t have the kind of PR experience required of his current job. Issue management and Crisis Management are two of the more relevant skills needed at the Palace that can only be had by actual experience.

 And while Sonny can say he is familiar with PR concepts from an academic perspective… that is not nearly enough. This lack of experience would have been mitigated if he had actual media experience. That would have enabled him to think like a reporter or an editor and thus be able to serve media’s information needs better as well as tweak his material to better catch media attention.

 I have always been impressed with the fact that your columns are research-based. However, you might have been misinformed because, not a single centavo of appropriation

 is provided in the national budget for Channels 4, 9, and 13.  The charter or law that created the People’s Television Network, Inc. (PTNI) does not allow Channel 4 to receive an annual appropriation from the national government. Channels 9 and 3 are also sequestered entities that are not entitled to budgetary support from the government.

The Presidential Communications Operations Office (PCOO) that I head has a total budget of 976 million pesos for 2011 which is lower than the 2010 outlay of 1.16 billion pesos.  Only about half of this amount is allotted for mass media: 293 million for the Bureau of Broadcast Services and 250 million for the Philippine Information Agency that has a field network of regional and provincial offices.  When our budget for 2012 is presented anew to both houses of Congress, I am mindful that I will have to justify all items of expenses for personal services, maintenance and other operating expenses, as well as for capital outlays. This is in accordance with President Aquino’s policy on zero-based budgeting, to ensure that every centavo of the taxpayers’ money is properly spent.

My response: That’s more resources than most PR professionals get to spread their good news. The budget aside, Channel 4 could have more impact if used to provide what we cannot expect from the commercial networks. Maybe you can work out a deal with Armida Siguion Reyna to show her well produced cultural show Aawitan Kita. Or show some of the cultural features in the tourism channel. Our current generation of Pinoys must be exposed to our rich cultural heritage. Or maybe, Channel 4 can air curriculum based educational programs during school days. Knowledge Channel is doing it now but only reaches those schools with cable or satellite connections. The thing is, make Channel 4 useful. Trying to imitate what the networks are already doing in news and entertainment is a waste of resources.

(Note: Sonny also responded to my suggestions on social media. I need space to tackle those in a future column).

Paris in spring

Rosan Cruz, now in Paris to run the Paris Marathon, sent this one.

A thief stole some paintings from the Louvre. Captured a block away when his van run out of gas, he told police he stole the paintings because he had no Monet to buy Degas, to make the Van Gogh. He had De Gaulle to do it because he had nothing TOULOUSE.

I hope Rosan finished her marathon with no injuries yesterday.

Boo Chanco’s e-mail address is [email protected]. He is also on Twitter @boochanco

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