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The Philippine tourism industry expects to benefit from All Nippon Airways Holdings’ decision announced Tuesday to acquire a 9.5 percent stake in Philippine Airlines (PAL) for $95 million.
The parent of All Nippon Airways (ANA), Japan’s largest carrier, will be buying the shares from Trustmark Holdings, owned by the family of Filipino-Chinese tycoon Lucio Tan, who is the largest shareholder in PAL Holdings, the parent company of the Filipino carrier.
Tan, who is PAL chairman, had said several times in the past said he was open to selling a stake to strategic investors to raise the airline’s profile as one of the top in the world by 2020.
“PAL has long wanted investors to help us maximize our growth and development, so we can take our good progress so far to the next level,” PAL vice president for corporate communications, Jose Enrique Perez de Tagle told Skift.
The deal could go a long way to reinvigorating inbound Japanese tourism to the Philippines, tourism officials said. Jose Clemente III, president of the Tourism Congress of the Philippines, the leading tourism private sector organization in the country, said: “Through PAL’s wide domestic network, Japanese travelers will also be to see more destinations across the Philippines.”
In November, Australia-based AirlineRatings.com rated PAL the world’s most improved airline 2019. That same month, PAL received the Four Star Major Regional Airline 2019 award from New-York based Airline Passenger Experience Association, which it said was based on a verified passenger voting system.
In a statement, ANA Holdings president and CEO, Shinya Katanozaka, said, “Asia is a key growth market and we believe Philippine Airlines is in an excellent operational position to capitalize on both the strong upticks in air traffic growth as well as the vibrant, expanding Philippine economy. We look forward to expanding our business relationship with Philippine Airlines so we can continue to serve our passengers even better.”
In a separate statement, PAL president Jaime J. Bautista, said: “We are honored and excited that a premier airline group such as ANA [Holdings] has decided to purchase shares in PAL Holdings.The Philippines and Japan have a long-standing relationship with complementary strengths. This week, in fact, we commemorate the 70th year of Philippine Airlines’ service to Japan, dating back to the launch of our first Manila-Tokyo flight on January 26, 1949.
“It is a great privilege to celebrate the historic occasion by strengthening our ties with ANA, as we aim to build a relationship that is mutually beneficial with an eye to a more progressive future.”
Regaining lost ground in Japan
Tourism Congress of the Philippines’s Clemente told Skift that ANA’s investment in PAL might prove a boon in regaining the Japanese inbound market to the Philippines.
He said it showed ANA’s and Japan’s commitment to the Philippines as one of their leading destinations.
Last year, the number of tourists from Japan grew by just 8.2 percent to 631,801, earning a fourth spot among the Philippines’ largest markets for foreign travelers. This was slower, however, than in 2017, when tourists from Japan grew by 9.2 percent to 584,180.
Japan used to be the third largest source market after the United States, but both had been edged out by the surge in Chinese travelers to the Philippines, which grew at a rate of some 30 percent every year since 2016.
On a monthly basis, Japanese tourists to the Philippines range between 50,000 and 60,000, considered by local travel agencies and tour operators as tepid, considering Japan is only a mere four hours away from the Philippines.
Japanese travelers and businessmen in the past had also been a major investor in Philippine tourism, discovering places such as Elephant Island in Marinduque province, south of Manila, and opening up El Nido, Palawan, to high-end travelers. El Nido is now one of the most popular destinations of foreign tourists in the Philippines.
The Philippine Department of Tourism has been stepping up marketing and promotions in Japan with tourism secretary Bernadette Romulo Puyat, newly appointed in May, visiting the country twice last year.
In 2018, the state-run tourism agency especially tapped female Japanese celebrities as “Philippines Tourism Fun Ambassadors,” in a bid to attract more Japanese women to visit the Philippines.
“This is in line with the Joshi Tabi (Women’s Travel) program to reach to the ladies market, since our arrivals from Japan are still largely male,” said Romulo Puyat.
A new dawn for PAL?
Meanwhile, ANA Holdings said the stake in PAL is in line with its corporate strategy for fiscal year 2018-2022, pillar of which is “strengthening partnerships with foreign airlines to provide further convenience to its passengers.”
The Japanese firm added that its investment in PAL “heralds the dawn of a new era of growth for PAL,” which is currently expanding its fleet and network to almost 100 aircraft and 80 destinations in four continents.
“This campaign has coincided with an emphasis on product transformation that saw PAL recognized recently as the World’s Most Improved Airline for 2019,” it said.
PAL currently operates 84 flights weekly on nine routes to Japan and ANA operates 14 flights weekly on two routes to the Philippines. The two carriers have codeshare operations on Japan-Philippine routes and domestic routes within Japan and the Philippines, linking a total of 16 Japanese and 11 Philippine destinations.
PAL posted some PhP130 billion ($2.45 billion) in revenue as of December 2017, with a capital of PhP9.8 billion ($185 million).
In a filing with the Tokyo Stock Exchange on Tuesday, ANA reported it earned JPY107 billion ($98 million) in profit in the nine months to December 2018, 30.2 percent down from the same period in 2017. Operating revenues were up 5.2 percent to JPY1.57 trillion ($1.4 billion) in the nine months to December 2018.
In Southeast Asia, apart from PAL, ANA has a 8.77 percent stake in Vietnam Airlines.