Philippines airline case study problem

Philippine Airlines
Lucio Tan, the owner and Chairman of Philippine Airlines (PAL) was faced with a problem. Despite unacceptable levels of profitability, higher levels of passenger boardings for the summer of 1997 indicated that a sharp increase in staffing levels was required. Faced with this request from his management team, Mr. Tan, having heard of some effective consulting work carried out by Renoir Consulting in the Philippines, asked Renoir to conduct an assessment of his Manila operation.

World Class maintenance programs were implemented and small management action teams
2004 © Renoir Consulting Limited

Staffing
Original
Request
494

International
Domestic

Actual
Required
93

20

-4

125
639

Cargo
Totals

NOV

DEC

OCT

SEP

JUL

AUG

Thai Airways

•Reduced staffing requirement •Better equipment utilization •Better on-time performance retention

100
80
60
40
20
0

Philippine Airlines
Cathay Pacific

Key Results

•Better high yield fare

ON TIME PERFORMANCE

MAY

Renoir’s initial work in terminal operations was extended to cargo & maintenance.
In
addition to the direct benefits generated, the better on-time performance resulted in improved high yield passenger retention. Finally, as a further endorsement of confidence,
Renoir was asked to work at
Mr. Tan’s Asia Brewery.

12
101

Ground Equipment Availability
Historical
New
Tow tugs
61.4%
82.2
%
Air stairs
81.7
90.1
Belt conveyor
75.2
97.5
Lower deck conveyor 74.1
99.0
Shuttle bus
60.1
76.3

JUN

FOCUS PROCESS™ &
IMPLEMENTATION
Renoir’s approach is to engage the workforce so that they understand and own the solutions to the issues.
Highly practical workshops and on the job training and coaching result in real and significant improvements that are uniquely sustainable.

The results were staggering:

APR

THE ASSESSMENT
The
Assessment at Manila confirmed Mr. Tan’s gut instincts.
The
proposed additional complement of over 600 staff could be reduced by over 500, provided some changes took place. Chief amongst these changes were maintenance and cargo performance improvements.
The
management team didn’t believe that a consulting company without any airline experience would be an effective partner but they were in for a surprise.

enthusiastically threw themselves into transforming the operation.

% ON TIME DEPARTURE

OVERVIEW
Airline competition in southeast Asia is fierce, with some of the best airlines in the world competing for market share and the high yield business travelers. Chief amongst that competition for Philippine
Airlines is Singapore and Thai airlines. Their vastly superior on time performance helped them to dominate the higher yield business market, forcing PAL to scramble for the lower end leisure and contract worker markets.