Rationalization at PAL

Money Asia

Monday, November 4, 1996

Editorial

THIS nation of islands may now sigh for relief that one of its major means of communication and transportation is back in service. Management and labor at the Philippine Airlines have agreed to go back to the negotiation table to iron out their differences.

But many of those who have planned to go out-of-town for the annual All Saints' Day celebration have lost the weekend. For one thing, the President decided not to intervene in the labor-management dispute in the airline. In the past, either of the two sides could play hardball and set onerous conditions and hold the public hostage confident that the Chief Executive will step in for the sake of public service without any one side losing face for having to withdraw from intransigence.

Now it's no longer just the public convenience that is at stake. With many other airlines just waiting to take over, Philippine Airlines cannot afford to let the competition get its foot on the door. A drawn-out stalemate may well mean losses that could lead to the closure of the airline.

With the airline said to be losing some P3 million a day, the workers cannot smugly assume their position will be safe because the owners will not allow the company to close down.

It is not as if the airline is still under government management which can afford to operate it at a loss as a public service.

In fact, the present woes of the airline may he traced to days when its was part of government where management was not duty-bound to make a profit as long as the public is happy and votes are not endangered. As an arm of government, it has become a virtual source of political sinecure. Its payroll is as bloated as any government office.

The present management, of course, is trying to cut down on its excess manpower complement. Labor is fighting hard to keep positions intact. But to be able to maintain its operating health, there must be some kind of rationalization in this regard. And that is where the trouble lies.

It is the same trouble plaguing most government airlines. The example nearest home being that of the Garuda International Airways. Garuda was able to rationalize its problem.

PAL had better do the same. Otherwise the competition will rationalize the situation for both labor and management. And both could end up holding the bag.