Farewell, PAL

After 57 years, Philippine Air Succumbs

September 26, 1998 - In a sad footnote to the history of international civil aviation, Asia's oldest airline ceased operations at midnight, September 23. With the death of an airline, the entire travel community--providers and consumers alike--is diminished.

The demise of Philippine Airlines was caused, ultimately, by a breakdown in negotiations between the airline's labor unions and management over a proposal to provide union members with a 20% ownership stake in the company in exchange for the suspension of collective bargaining. Although the union had initially signaled approval of the offer, they later reversed themselves, citing concerns over the "no collective bargaining" concession tied to the proposal.

Labor had hoped the Philippine government would assume management of the airline, arguing that air transportation should be treated as a national necessity and therefore deserving of protection from the vagaries of free-market economics. The government countered that, as a practical matter, it could not add the airline's financial burdens to what it already faced.

Asia's Oldest Airline

Philippine Airlines boasted of being the oldest of Asia's airlines, having begun operations in 1941 with a single plane that carried five passengers on a 125-mile flight from Manila to Baguio. On its final day of service, 57 years later, PAL operated a fleet of 54 aircraft, flying to 36 domestic destinations and to 28 cities worldwide.

PAL has been struggling financially for several years. The carrier's problems were compounded by the economic downturn in Asia, and by unrest among the various labor groups, including a 22-day pilots strike over pay and working conditions in June.

The Future?

With PAL in debt to the tune of US$2 billion, the company's assets will likely be liquidated immediately to satisfy creditors. And once liquidation has begun, any efforts to resuscitate the carrier would be difficult and protracted.

More

As of today, September 26, the PAL website is still active, at http://www.philippineair.com.

PAL reservations numbers are:

• In the Philippines - (632) 819-1771, (632) 816-6691
• In the US - 1-800-I-FLY-PAL

There's no telling how long these numbers will remain in service.