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PAL TO SUSPEND RIYADH FLIGHTS

The Philippines' flag-carrier, Philippine Airlines (PAL) has decided to suspend flights to Riyadh from March 2 this year but it will continue to serve the needs of Filipino travellers to the Gulf and Middle East region.

PAL said the move was prompted by the need to rationalise operations amid a massive oversupply of arilines' seats in the Mideast market that has caused it persistent losses in the region.

The decision to suspend the three-times-weekly service to the Saudi capital was taken after a long, careful review and comes after many years of the airline sustaining unviable operations in the ME as a public service to the Filipino community there, PAL said.

The recent series of increases that raised aviation fuel prices to record highs in the world market has added to the burden of maintaining the Riyadh operation — a liability other heavily subsidised airlines do not share, it added.

However, PAL will continue to serve the needs of Philippine travellers to the region, particularly overseas Filipino workers (OFWs), via existing code-share partnerships with Emirates and Qatar Airways. PAL is also in talks with other Middle Eastern carriers to expand and enhance the coverage of its code-share network.

The Riyadh-service suspension is not expected to impact OFWs generally given that PAL's three-weekly flights account for less than 4 per cent of the total number of arlines' seats available on the Philippines-Middle East routes.

Six national carriers from the various Arabian Gulf states already operate a total of 43 flights weekly between Manila, Cebu and nine points in the region. In addition, five East Asian carriers serve the Gulf market from the Philippines with three flights weekly via their hubs.

In all, these airlines operate 76 flights per week between the Philippines and the Mideast, with a deployed capacity of over 1.12 million seats a year. However, the traffic in this sector is not much over half a million passengers annually, the vast majority of them OFWs.

The gross overcapacity has led to cut-throat marketing practices, with state-owned Gulf carriers driving fares way below commercially viable levels in an effort to force out competition, not only in the ME market but also on the onward sector to Europe.

Over the last three years, four European carriers that used to operate direct flights between Manila and European capitals have either stopped or reduced service — British Airways in 2002, Swiss International in April 2004, Air France in November 2004, and Lufthansa in April 2005.

PAL likewise felt the market pressure as far back as the late 1990s but chose to endure and absorb the losses to carry out its mandate of serving the Filipino community in the region.

However, the flag carrier could only hold out for so long. In June 1998, it was forced to discontinue service to Dubai and Jeddah, and in August 2001, to Dammam.

PAL's departure from Riyadh closes a colourful chapter of service to the Middle East, an era that spanned 27 years and, at its peak from the mid-1980s to early 1990s, covered seven points in four countries.

From March 2, the PAL network will count 25 international destinations as well as 19 points in the Philippines.