The first enhancement is planned for 3Q2017 as PAL introduces its newly retrofitted A330-300 on the Manila to Melbourne and Sydney routes. PAL is also tentatively planning to use its new A321neo fleet to add a second daily flight to Sydney and launch nonstop services to Brisbane in late 2017 or early 2018.
PAL currently operates 18 weekly flights to Australia, including seven weekly A340-300 frequencies to Sydney, three weekly A330-300 frequencies to Melbourne, four weekly A320 flights to Darwin and four weekly A320 flights to Cairns. The Darwin flights continue to Brisbane and the Cairns flights continue to Auckland in New Zealand.
PAL currently has approximately 4,000 weekly one-way seats in the Australia-Philippines market. Its capacity has been roughly flat over the last year but increased significantly in 2015, when PAL launched Cairns and upgraded Sydney to daily. PAL also had a growth spurt in Australia back in 2013, when Brisbane and Darwin were launched in 2013. Perth was also launched in 2013 as a tag to Darwin but was dropped after only a few months. PAL's passenger traffic between Australia and the Philippines increased by 36% in CY2013 and 17% in CY2015 while growth was a much more modest 1% in 2014 (according to BITRE data).
PAL's capacity to Sydney is increasing by 22% in 3Q2017 as PAL introduces newly retrofitted 309-seat A330-300s on the Sydney route, replacing 254-seat A340-300s. PAL plans to gradually start introducing the newly retrofitted aircraft on some Manila-Sydney flights in Aug-2017 and have all seven frequencies upgraded to the new product by early Sep-2017.
Over the next year, PAL is planning to convert its eight 414-seat single-class A330-300s into the new 309-seat configuration featuring 18 lie flat business class seats, 24 extra legroom economy seats and 267 normal economy seats. The retrofitted aircraft will be used on routes now served with the 254-seat two class A340-300 or with 363-seat two class A330-300s. The routes that are now operated with the 414-seat high density A330-300, primarily to the Middle East, will switch to the 363-seat A330s.
The only Australia route PAL currently operates the A330 is Melbourne, which will switch from the 363-seat version to the new 309-seat configuration from Jul-2017. This will significantly improve PAL's economy and business class product in the Melbourne market. In economy PAL now has nine seats abreast in both of its A330 configurations but the new configuration will have eight seats abreast, which is the normal configuration for full service airlines.
PAL's capacity in Melbourne will be cut by 15% as it switches to the lower density A330s. The capacity increase in Sydney is much higher (385 additional weekly one-way seats compared to 162 fewer weekly seats for Melbourne) and as a result PAL's total capacity to Australia will increase by approximately 6% as the retrofitted A330-300s are introduced.
For now, PAL plans to maintain Melbourne at only three weekly flights but will likely look at adding frequencies in late 2017 or early 2018 as part of an overall expansion of its Australia operation. PAL is aiming to launch nonstop services to Brisbane in late 2017 or early 2018 using its new A321neo fleet. PAL is also considering using the A321neo, which will be configured with 12 lie-flat business class seats and 160 economy seats, to add a second frequency to Sydney.
PAL has 21 A321neos on order with the first two deliveries slated for 4Q2017. Brisbane, Sydney as well as the resumption of flights to New Delhi in India are all in PAL's initial network plan for the A321neo as the airline looks to use the aircraft's enhanced range. Brisbane nor Sydney cannot be served nonstop from Manila with the current generation A320ceo/A321ceo.
PAL is keen to serve Brisbane nonstop as it has been a successful market since it was launched in 2013. A majority of PAL's Manila-Darwin passengers now stay on the aircraft for the Darwin-Brisbane sector. PAL is reassessing the Darwin market to determine if it should keep the Darwin service once Brisbane nonstop service is launched.
A majority of passengers of PAL's Manila-Cairns passenger also continue on the flight to Auckland. However, PAL is not looking at launching nonstop services to Auckland, which is not within the range of the A321neo and is seen by PAL as too small a market to support widebody aircraft.
PAL has struggled in the Australia market in recent years, impacted by Cebu Pacific's launch of Sydney in 2014 and its own capacity expansion. PAL's average load factor on Australia routes was only 60% in the fiscal year ending Jun-2016 (FY2016).
However, PAL's Australia performance has improved in recent months and the airline is confident product upgrades with the retrofitted A330s will drive further improvements. A nonstop product to Brisbane and a second daily frequency to Sydney will also result in better connections beyond Manila, including to London. PAL's upcoming expansion in Australia is aimed at positioning the airline better to tap into the fast growth in Australian visitor numbers to the Philippines as well as opportunities to carry more sixth freedom passengers from Australia.
Philippine Airlines operating figures for routes to/from Australia: FY2014 to FY2016
| Year | Passenger numbers | Seats | Seat load factor |
| FY2014 | 191,986 | 272,728 | 70.4% |
| FY2015 | 196,798 | 307,770 | 63.9% |
| FY2016 | 264,710 | 442,754 | 59.8% |
Note: based on Australia's fiscal year ending June
Source: CAPA - Centre for Aviation and Australia's BITRE