Philippine Airlines to tender 3-year contract

By Doug Newhouse |

PAL A320 (Photo credit Kentaro LemotoPhilippine Airlines (PAL) is to tender its inflight duty free contract which expires at the end of this year, according to the airline’s Assistant Vice President – Ancillary Business Programs Management, Alfred Montemayor.

 

The existing agreement is with the Inflight Sales Group (ISG),while the airline will be inviting specialist retailers to bid for a new three-year term contract, according to Resty Tizon, Inflight Duty Free Director. [ISG has held the contract since November 2011 after it was also awarded an extension-Ed].

 

Asked how the programme has performed, Tizon said: “Actually in the first few months it was kind of great in 2012 when it was very, very high because of the novelty of new items and they had lots of watches and this was something unusual for PAL.

 

LOOKING FOR A SALES PER PAX BOOST

“We used to sell only around five or six watches, but then we had around 30 to 40 watches, so that was a big change and the cabin crew members were kind of surprised by this.”

 

Montemayor said the business has cooled since, although still solid as the Philippines has grown into a very popular destination for holidays with several nationalities in the last few years. As a result he said: “We are looking forward to a good result in terms of sales per passenger.”

 

Filipinos also have a good record as spenders, but Tizon added that there are nevertheless not that many who can afford to buy the most expensive items onboard, except those coming from the Middle East and Singapore.

 

Philippine Airlines inflight mag

PAL is hoping to attract more high spending Chinese passengers in future and this could become reality if The Philippines and China settle their territorial waters dispute.

MORE CHINESE WANTED…

She said the airline therefore carries products at lower price points to encourage them to buy so they can engage in the custom of bringing back gifts for the families and friends. [Currently, the overall spend per head is just under $2-Ed].

 

One of the big hopes in future is that the Philippines will be able to attract more Chinese visitors and Montemayor says they remain a major target – as both passengers and inflight sales customers.

 

She added: “We expect more Chinese passengers and as you know the Chinese are known to spend more on duty free items like liquor and luxury items. But right now the Chinese market is also being watched over in terms of the spending.”

 

He said the spending levels of passengers from North Asia have fallen, ‘with even the Koreans spending less’ and this has had an impact on PAL’s sales per passenger. He also believes that more and more passengers may be spending money at the airport shops, rather than onboard.

 

Boeing 777 PAL (Photo credit Alec Wilson)

A Philippine Airlines Boeing 777 PAL (Photo credit: Alec Wilson).

 

 

 

 

 

 

 

 

 

 

 

 

Tizon added that PAL is launching a lot of new flight frequencies right now to China, South Korea, Los Angeles and other destinations and this is expected to help sales, but she adds that the two tools that remain the most important are the cabin crew and the inflight magazine – with the latter now being upgraded.

 

Commission is paid to crew, although it is pooled and shared out amongst them all, rather than paid individually.

 

The airline is also aiming at becoming five-star rated within five years, over and above the three-star Skytrax rating it carries today. This will be helped by several new-generation aircraft on order that will come into service progressively over the next few years.

 

Top image: PAL A320 (Photo credit: Kentaro Lemoto).

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