New Philippine Airlines President Will Battle Budget Carriers’ Agility

The new president and chief operating officer of Philippine Airlines, Gilbert Santa Maria, named to the role on Monday will have to navigate an extremely competitive airline industry at home and abroad with low-cost carriers threatening dominance.

The airline (PAL), the first to be established in Asia, now struggles to turn a profit, having purchased new fuel-efficient aircraft as part of efforts to expand its route network. It has, however, managed to trim losses. PAL Holdings recorded a net loss of $83.3 million last year, down from a loss of $141 million in 2017.

PAL’s domestic operations are being clobbered by the savvy marketing strategies of main competitor Cebu Pacific Air, owned by another Filipino-Chinese tycoon, John Gokongwei, but run by his young son, Lance.

PAL is owned by Lucio C. Tan, its 85-year-old chairman and CEO.

From January to March, PAL and its low-cost subsidiary PAL Express flew only 2.17 million passengers domestically compared with 3.55 million flown by Cebu Pacific and its unit, Cebgo, data from the Philippines Civil Aeronautics Board show.

Also nipping at PAL’s heels is Philippines Air Asia, a subsidiary of Malaysian low-cost carrier powerhouse, Air Asia, which flew 1.2 million passengers in the same period.

PAL’s international operations are faring better than its staunchest rivals, however. In the first quarter, it flew close to two million passengers, compared to Cebu Pacific’s 1.4 million, and Air Asia’s 610,274.

PAL is currently pushing to improve its standing internationally, buoyed by a recent “Most Improved Airline” award by Skytrax on areas such as quality of onboard product, staff service, and home-base airport service.

While it codeshares with other foreign airlines, PAL isn’t in any of the global airline alliances such as Star Alliance, Oneworld, or SkyTeam, which is essential in extending its routes around the world.

A Chairman’s Pick

Given his decades of executive management and leadership experience in industries such as customer service, the new president, who replaced Jaime J. Bautista, should be a good fit.

He was a “handpicked nominee” of Lucio Tan, and was “unanimously approved” by its 15-person board of directors, a PAL statement said.

This puts an end to a blunder when PAL earlier announced that Tan’s daughter, Vivienne Tan, would head the airline as officer-in-charge as Bautista hangs up his shoes. She is now PAL’s executive president and chief administrative officer.

A search committee was subsequently set up, with Tan briefly acting as president in the interim. The magnate called on the airline’s senior officials to support the new president and COO.

“Let’s work together and help him face PAL’s many challenges,” he said during a board meeting on July 29.

Holding an MBA degree from Yale University, Santa Maria is a veteran in the business process outsourcing industry. Prior to joining PAL, he was chief operating officer of Ibex Global Solutions, a Washington-based company with call centers in the Philippines and more than 18,000 employees worldwide, that helps brands improve customer service.

He was also responsible for driving business of eTelecare, another outsourcing company, and before Ibex, was chief operating officer and chief financial officer of IQ BackOffice, a California-based finance and accounting outsourcer.

Earlier in his career, he was one of the youngest general managers of Pepsi-Cola Products Philippines’ Manila operations.

At the July 29 board meeting, Santa Maria said he considers it a privilege to serve the country’s flag carrier. He urged his fellow PAL workers to help him achieve Tan’s vision of making PAL the airline of choice across all markets it serves.

“PAL is the airline that meets the needs of local and global travelers by showcasing our brand’s main strength — the passion for safety and service. Maintaining the current level of service is important and, of course, profitability. Let us do our share to make PAL reach greater heights. I will be with you every step of the way,” he said.

A source who requested anonymity said there were other candidates for the top post but Santa Maria “seems more experienced in management — he came highly recommended.”

According to another source, a 10-person corporate governance committee went over candidates’ qualifications to “ensure maximum compliance.”

Meanwhile, Vivienne Tan said in a statement, “It is important for my father’s vision to be translated into PAL providing consistent quality service to our customers and also, the flag carrier serving as a means to contribute to nation-building. With this new leadership, we will accomplish this further.”