Part I.

Company Background and History

Philippine Airlines, Inc. (PAL) has been the dominant air carrier in the
Philippines since its creation in 1941. Operating both internationally and within
the 7,100 islands that make up the country, PAL has been something of a
curiosity and scandal among the world’s major airlines, for decades losing money
while being traded among the handful of wealthy families in control of the
Philippine economy. After 14 years of ownership by the government of deposed
President Ferdinand E. Marcos, PAL was sold at the order of President Corazon
Aquino in 1992 to a consortium of companies under the leadership of the Soriano
and Cojuangco families. Because Aquino’s maiden name was Cojuangco, many
believed this “privatization” of PAL was not likely to break the pattern of
corruption and inefficiency that has marred the carrier’s history since 1941. But
events in the late 1990s would conspire to force significant changes in the airline.

The first Philippine air transport companies were created in the early
1930s, primarily as a means of travel and freight delivery between the nation’s
scattered islands. One of these pioneering companies was the Philippine Aerial
Taxi Company (PATCO), which was granted a 25-year charter by the Philippine
legislature in 1931 for both domestic and international flights. At that early date,
when the country was still a possession of the United States, Pan American
Airways provided most of the Philippines’ International air transportation. PATCO
settled for short flights among the major islands of Luzon, Cebu, Leyte, and
Mindanao. The 1941 transformation of PATCO into PAL involved an international
cast of characters, most notably General Douglas D. MacArthur, at that time in
charge of the United States Armed Forces in the Philippines preparing for an
expected Japanese invasion of the islands. General MacArthur, whose father
had served as the first military governor of the Philippine Islands.

The general employed as his aide-de-camp a wealthy Spaniard named

Andres Soriano, who had previously served as consul in Manila for the Spanish
dictator Francisco Franco. Soriano controlled the large San Miguel Breweries

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along with a number of other corporations, and had powerful connections in the
Philippine capital. In 1941 he put those connections to good use by teaming with
the National Development Company, a government agency, in forming Philippine
Airlines, Inc., which promptly absorbed PATCO, thereby becoming the nation’s
largest air carrier.

The Soriano family retained control of PAL until the late 1960s, the period
of Ferdinand Marcos’s rise to power. Marcos was first elected president of the
Philippines in 1965 and remained the country’s absolute ruler until his forced
exile in 1985, when it was discovered that he and his wife, Imelda, had
systematically plundered their country. Marcos literally had a hand in every major
Philippine enterprise, including the nation’s airline monopoly.

PAL became one of the many baubles flaunted by Imelda Marcos, who by
this time was one of the richest women in the world. The First Lady of the
Philippines traveled around the world in her own PAL DC-8 jet equipped with
beds, a built-in shower, and gold bathroom fixtures, sometimes also
commandeering a second jet to carry her personal luggage. The airline was
officially under the control of the Government Service Insurance System (GSIS),
which controlled the pension funds of all government employees in the country
and was one of the Philippines’ largest financial institutions. GSIS was run by
Roman A. Cruz, one of Imelda’s favorites, and it was Cruz and his family who ran
PAL from its takeover to the election of Corazon Aquino in 1986.

Meanwhile, President Aquino originally ordered the sale of PAL along with
hundreds of other government-owned companies shortly after her election in
1986. Since the airline had been run at a loss for many years, Aquino first hired a
Philippine businessman named Dante Santos to make PAL profitable prior to its
sale. Under Santos, PAL did report two years of net income, but these were
widely assumed to be the result of creative accounting methods rather than of
any substantive changes in PAL’s performance. By that time the airline had
racked up consistent losses for the better part of two decades. PAL was at least
able to enjoy the benefits of Manila’s new international airport, completed in 1982

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to replace a network of runways dangerously in need of repair; but, in the words
of the Far Eastern Economic Review.

For years, U.S. negotiators had been trying to get PAL to comply with an
"open skies agreement," signed in the early 1980s, whereby both U.S. and
Philippine carriers would have unlimited access to markets in each other's
territory. PAL had gotten its compliance deadline postponed four times. But by
1996 it had run out of largesse from the Philippine government, which was
concerned that limitations on passenger service could lead to a loss of tourism
income, a significant industry in that country. Thus it was confronted with a more
or less final deadline of 2003. "This," as Abby Tan wrote in Asian Business,"
gives PAL just seven years to fix a host of problems that have dulled its
competitive edge and sapped it’s profits.

In the mid-to-late 1990s, PAL began taking positive steps toward

eliminating its problems, both technical and human-related. In the technical
realm, it began to update its aging fleet with an enormous order for new planes.
In December 1995 it placed on order 24 Airbus A340-300s (in addition to four
already on order), as well as 12 A320s and eight A330-300s. Financing of $1.1
billion worth of Airbus equipment came from a variety of Asian banks. PAL did
not simply add aircraft; it was “reflecting, creating an entirely new service fleet,
and Mackey in late 1997 predicted that with the delivery of several new aircraft in
the following year, “PAL will have one of the most modern and youngest fleets
in Asia.” In late 2015 PAL continues its financial turnaround with a total
comprehensive income of $85 million for the first quarter. It reverses a $20.7
million loss incurred in the same period of 2014. The profit is attributed to the
increase in passenger traffic following the opening of several domestic and
international destinations, as well as aggressive sales campaigns that resulted in
improved yields.

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 Vision

1.To be a Full-star, Full service, National carrier of the Philippines.

2.To be the Airline of Choice in all markets we serve.

3.To be a source of pride of Filipinos everywhere.

Mission

1. To deliver safe, reliable, efficient and pleasant travel experience,

exceeding passenger expectations.

2. To provide a satisfying career to our employees and adequate returns to

our stockholder.

3. To represent the Best of the Philippines, the Best of the Filipino to the
world.

Corporate Values

1. We put our Customers first.

2. We grow a successful and empowered team.
3. We embrace and drive change.
4. We act with passion and aim for excellence.
5. We exemplify the best of the Filipino spirit.

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Organizational Chart

CHAIRMAN
VC & CHIEF
EXECUTIVE OFFICER
Lucio C. Tan

PRESIDENT & CHIEF

OPERATING OFFICER
Jaime J. Bautista

EXECUTIVE MANAGEMENT
GROUP
Officer of the President and COO
Cargo Business
Corporate Audit
Consular Affairs
Quality, Safety & Security
Consultant/Advisers
General Counsel Finance Group

Legal Affairs Treasury

Corporate Communication Human Capital
Information System
Ancillary business
Financial Services
Corporate Finance and
Commercial Group Aircraft Asset Management.
Risk and Insurance
Sales management
Revenue Management Group

Corporate Planning & Operation Group

Business Development
Group
Flight Operation
Aircraft Engineering
External Affairs & Partnerships Airport Operations
Planning & Business Catering Operations
Development Cabin Service

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Products and Services

PAL Fleet

• Airbus A320-200
The A320 is the founding member of the A320 family, the world's first fly-
by-wire jetliner family.

Capacity Number
156 Passengers (2-class 10
layout) and 7 tons Cargo

• Airbus A321-231
The Airbus A321-231 is the most efficient single-aisle jetliner ever built. Its
stretched fuselage – measuring 146 feet or 23 feet longer than the A320 – makes
the A321 the longest and widest (12 feet, 1 inch) among all single-aisle aircraft..

Capacity Number
199 Passengers (2-class layout) and 17
12 tons Cargo

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• Airbus A330-343 (363-seater)
The A330 is part of the A330/A340 Family of fly-by-wire wide body aircraft.
It is optimized for regional routes and most cost effective twin-aisle airliner ever
built

Capacity Number
363 Passengers 6

• Airbus A330-300 (309-seater)

The A330 is part of the A330/A340 Family of fly-by-wire wide body
aircraft. It is optimized for regional routes and most cost effective twin-
aisle airliner ever built.

Capacity Number
309 Passengers 7

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• Airbus A340-300
The A340 is the long-range version of A330, The main difference being
that it is equipped with four engines, which allow unrestricted operations on long-
haul routes.

Capacity Number
254 Passengers 6

• Boeing 777-300ER
The B777-300ER is the world's largest long-range twin-engine jetliner,
powered by the largest and most powerful commercial jet engine. The B777-
300ER provides exceptional fuel economy, efficiency, reliability and high levels of
cabin comfort for its passengers, combined with unmatched levels of payload
and range.

Capacity Number
6
370 Passengers (2-class layout) and
28 tons Cargo

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 PAL Services

BUSINESS CLASS

The seat may recline with a 15 degree angle. It is outfitted with a 15.4 in.
seat-back mounted and 10.6in in-arm touch-screen personal television which
allows the passengers to program controls with memory. Each seat is equipped
with individual “goose neck” reading lights, laptop charging port and USB port for
passengers to listen to their personal mp3 collection or view photos and PDF
files.

ECONOMY CLASS

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 ECONOMY CLASS

The Economy Class Passengers benefit from the new seats from Weber
which features an actuating seat pan that enables the seat bottom cushion to
be moved up or forward to support the body when relaxing. It is also outfitted
with a 9in seatback mounted and in-arm touch-screen personal television.
The Economy Class seats feature the undulating wave-pattern design in a
blue, aqua and terracotta palette. The relaxed, tropical feel extends to the
front and back ends of the cabin where interiors, curtains, carpets and
surfaces are in various shades of blue, white, gray, silver and tan.

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Part III. Theories, Concepts and Principles applied

My internship at the Philippine Airlines in Terminal 3 and 4 in Information

System Department was an outstanding experience. I got a deep and inspiring
insight in the work of Operations/Assistant Admin but beyond that the friendly
and cooperative staff members took a lot of effort to make it a helpful trip for me
in every way, too. To summarize all experiences that I had, it was a very good
feeling that I was able to practice my course in the work field. This helped me to
enjoy every moment because of the fact that this would be my last internship
experience and becoming a graduating student, this coming academic year and
will now enter the world of professionals. This on-the-job training gave me the
idea that not all knowledge is acquired in school. Experiences, is indeed, the best
teacher. It taught me the act of dealing with people in different walks of life, from
superiors and professionals to those on the lower rank or designations.

Part IV. Observations and Concerns

Strengths

1. Loyalty Flyer Program: Mabuhay Miles is a Flyer Program run by

Philippine Airlines. The members of the Flyers program earn mileage
credits. Mileage credits can be redeemed to upgrade or free air travel with
the Airlines. String Flyer program encourages repeat Flyers which builds
strong z loyalty for the company.
2. Strong Tie-ups and Alliances: The Company has a strong alliance base
with various international alliances. Philippine Airlines is the founding
member of the One world alliance which includes Air Berlin, Cathay Pacific
Airways, and British Airways etc. One world members together serve
around 1000 destinations in approximately 150 countries. This increases
flight frequencies for the company.
3. Operational Network: Philippine Airlines has an extensive operational
network and as measured by revenue passenger miles and available seat
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 miles, Philippine Airlines is one of the largest scheduled passenger airlines
in Asia. In FY 2015, about 54.7 million boarded its mainline flights, whereas
26.8 million boarded its regional flights.
4. Reputation for onboard entertainment: Philippine Airlines’ onboard
entertainment is very popular and strongly appreciated by the customers.
This allows the company to rope in new customers as well as
increase brand loyalty. Also, this allows for word of mouth publicity.

Weaknesses

1. Growing Global Tourism: The Global tourism is growing at about 4.4%,

and has shown growth since the 2009 economic crisis. With a large
operating network throughout the world. Thus, a growing global market
gives a great opportunity to Philippine Airlines to capitalize on
the demand created.
2. Growth in World’s Airline Industry: The US’ airline industry has delivered
a robust growth in the recent years. The US Airline Industry had shown a
growth of about 4.2% in terms of revenue, standing at $160,523 million in
2015. The industry is anticipated to show a CAGR of about 5% in the next 5
years.
3. Growth in Air Freight: The global air freight sector is expected to grow at
7% CAGR. Philippine Airlines Cargo has one of the largest air
cargo operations in the world delivering a wide range of mail services and
freight. This provides incremental growth opportunities to boost its
revenues and market share.

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Areas of Concern

Organizational Structure
 Highly Professional Staff
 It works effectively and possess excellent management team which
is very good in strategy formulation and execution.
 It encourages work force and give effective results due to its multi-
skilled staff means.
 Its management is media friendly and shares latest information on
its airline and airline industry.

Operations and Procedures

 Philippine Airlines has status of being Flag carrier airlines of the
Philippines
 Electronic ticketing by web
 Subsidized fares
 Multilingual Staff on Board
 Booking Offices in all major cities both at domestic and
International
 They give incentives to its frequent flyer as it will generate more
brand loyalty by giving better incentives to the customers.
 It offers a five star service and twinkles because of its 95% on time
performance.
 One of its aims is to promote Filipino hospitality and local culture.
 It is one of the renowned members of Star Alliance and offers
approximately thousands departures throughout Europe, Asia and
North America.

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 Equipment, Facilities and Lay-out
 It has highly comfortable seats plus cabins.
 The ticketing office has good facilities and equip but inadequate
space.

V. Recommendation

Organizational Structure
 Philippine Airlines should give bonus to the industrious and
competent employees.
 Sometimes they unable to handle irregular situations due to limited
human resources. There should be clear and even distribution of
work and only qualified person should be appointed on jobs.

Operations and Procedures

 Airline should focus on the customer’s satisfaction, refund process
should be quick so that customer remains loyal to brand.
 They should offer its services of reservation and seat confirmation
with by SMS and flight confirmation message should also be sent
via SMS to the passenger.
 They should adopt good marketing policies so that it will bring
higher profit and maximum utilization of its available resources,
Business sector should be attracted to operate at full potential.

Equipment, Facilities and Lay-out

 Management should hire more the services of specialized IT
personnel for their system development and up gradation on time.
 They should renovate their ticketing office so that it makes more
appealing to passengers.

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 Philippine Airlines mission statement include that they provide a satisfying
career to their employees and they provide safe and reliable trips to their
passenger. In line with this, we recommend that Philippine Airlines should
impose strict training to their pilots, and it includes training for flight operations
and aircraft inspection. Their mission statement will only be fulfilled once they
das undergone strict training and they will feel safer. Aside from this reason,
Philippine Airlines pilot will also become more efficient and effective. It is like a
return on Investment for the invested trainings of Philippine Airlines.

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