PHILIPPINE AIRLINES

PAL HISTORY
Congress approved the franchise of Philippine Aerial Taxi Company Incorporated (PATCO) to
provide mail, cargo and passenger service particularly in the island of Luzon. The company then
had scheduled Manila-Baguio and Manila-Paracale flights. The company became dormant for
six years on its scheduled passenger operation under its assigned routes. On February 26,
1941, Philippine Air Lines, Inc., was formally incorporated by a group of businessmen headed
by Andrés Soriano, Sr.. At that time, he was hailed as one of the Philippines' leading
industrialists and served as the general manager. He, and former Senator Ramón Fernández,
who would become the future chairman and president, acquired the franchise of Philippine
Aerial Taxi Company Incorporated, transforming it into the new Philippine Airlines. The airline’s
first flight took place on March 15, 1941 with a single Beechcraft Model 18 NPC-54 on daily
services between Manila (from Nielson Field) and Baguio. It carried two pilots and five
passengers on its maiden flight. The five passengers were also the founders of PAL – Philippine
Air Lines: Andres Soriano, Ramon Fenandez, Juan Elizalde, John R. Schultz and Ernesto Von
Kaufmann. Government investment in September paved the way for its nationalization. On
October 23, 1941, John R. Schultz was elected by the Board of Directors as Treasurer of
Philippine Air Lines. PAL services were interrupted during World War II, which lasted in the
Philippines from late 1941 to 1945. Upon the outbreak of the Pacific War on December 8, 1941
the two Model 18s and their pilots were pressed into military service. They were used to
evacuate American fighter pilots to Australia until one was shot down over Mindanao and the
other was destroyed on the ground in an air raid in Surabaya, Indonesia. On February 15, 1946,
PAL resumed operations after a five-year hiatus with service to 15 domestic points with five
Douglas DC-3s and a payroll of 108 names. Philippine Airlines returned to its original home, the
Nielson Field in Makati. The airport, heavily damaged during the war, was refurbished and
modernized by PAL at a cost of over one million pesos, quickly becoming the official port of
entry for air passengers into the Philippines. The airport was operated by Manila International
Air Terminal, Inc., a wholly owned PAL subsidiary.

PAL MISSION AND VISION

MISSION
To meet the needs of the public for moving people, goods, and information, and in particular for
safe and reliable travel, transport, communications, distribution, and related services
(president’s flights, transportation and cargo services);
To offer such services of reasonable competitive prices and the highest level of quality
consistent with such prices;
To provide satisfying career to its employees;
To provide adequate return to its stockholders; and
To represent the best of the Philippines and the Filipino people to the world.

VISION
To be the most preferred airline in Asia.

PAL ORGANIZATIONAL CHART

SOURCE: http://www.cogmap.com/chart/organizational-chart-of-philippine-airlines

PAL PROBLEMS AND SOLUTION

PROBLEM 1:
Philippine Airlines Statement on the Issue of Navigational Charges
September 28, 2017
In August 2016, the Civil Aviation Authority of the Philippines (CAAP), sent letters to PAL
demanding payment of unpaid navigational charges in the amount of PHP 6.63B.

This issue on alleged unpaid navigational charges involves complex legal issues which PAL
has been trying to thresh out with the Authority for years. For the past months, both CAAP and
PAL have been working together to validate these claims in their mutual and collaborative
effort to settle this obligation. PAL has fully cooperated and will continue to cooperate with any
and all agencies to resolve this concern.

In fact, the same legal issues were the subject of a court case between PAL and the MIAA
years back where the court ruled in favor of PAL. Despite the favorable ruling, PAL then opted
to settle amicably with the MIAA as a manifestation of its full support of the government.

In a similar vein, PAL has earlier manifested its willingness to amicably settle with the CAAP
as a manifestation of its continued support for the Authority. Communications have been open
between the parties as regards this matter.

"We look forward to meeting the negotiating panel and we are ready to submit a Compromise
Agreement to settle this issue once and for all," said PAL.

SOURCE: https://www.philippineairlines.com/en/about%20us/newsandevents/nav-charge

SOLUTION:
The problem with this issue is the accountability and responsibility of the Philippine Airlines. PAL
should have been accountable of their obligations because it is their responsibility to pay
whatever charges they are asked. The actions on the circumstances should have been
controlled and not the circumstance to blame. They should have been 100% accountable at
100% times. Follow up and course correcting should always be the case. They need to put
systems into place so that they can follow up on their expenses, and course correct their
financial plans as needed. This would give solution to the unpaid navigation charges. This is a
way of being responsible at paying charges. Although PAL has been doing actions to settle this
issue, it is best to have accountability and responsibility in their company because it is the most
important trait they can because it defines how you steward your business. Accountable for any
circumstance and a responsibility to put an action to that circumstance.

PROBLEM 2:
Philippine Airlines group faces challenging future after exiting budget carrier sector

The outlook for Philippine Airlines (PAL) remains relatively bleak following a strategy shift which
has resulted in the group exiting the budget end of the market. Transitioning low-cost sister
carrier AirPhil Express into full-service regional carrier PAL Express may succeed at improving
the group’s short-term financials but at the expense of growth and market share. The PAL
Group will likely see its share of the Philippines domestic passenger market slip to less than
35% in 2013, compared to 42% in 2012.
The shift in strategy, which leaves PAL focusing entirely on the much smaller but less
competitive top end of the Philippine market, follows the Apr-2012 ownership change at PAL
and AirPhil. The new majority owner of both carriers, the San Miguel Group, has brought new
life into the group, providing a badly needed recapitalization which is being used to pursue fleet
renewal and growth of its long-haul network.

But in the domestic and short-haul international markets PAL is suffering and the prospects are
not bright given some of the decisions made by San Miguel during its first year running the PAL
Group.

SOURCE: https://centreforaviation.com/analysis/reports/philippine-airlines-group-faces-
challenging-future-after-exiting-budget-carrier-sector-103430

SOLUTION:
Strategic Vision has worldwide experience developing tools to measure decision-making,
human behavior, attitudes and perceptions. This is the solution to the problem of PAL because
they had a decision to shift their strategy. Strategic vision is very important in this case because
PAL should have seen the bridge from present to future. The right vision takes the organization
out of the present, and focuses it on the future. PAL should focus on a solution for the present
that would have a great impact for the future. If they cut their prices now, sales would go up but
market shares would slow down or stoop down. This would decrease the level of company’s
growth and development. For PAL to be able to give a solution to such, they should have made
a strategic vision.