Biting Dust

Manila Standard

Monday, September 21, 1998

Opinion

By NELSON NAVARO

BARRING the most unlikely of miracles, Philippine Airlines will pass into history on Wednesday. There will be frantic efforts to prevent the dying of the light and, no doubt, many attempts to resurrect it from the grave thereafter. But much like America's PANAM which was supposed to be immortal, the end has finally come for PAL.

Pan American Airways, as travel buffs know, was once the very heart and soul of America's airline industry. For a long time, it was the one and only airline that flew around the world. The company's proud boast was that you'd never have to change to any aircraft which did not bear the famous blue logo and the Star-Spangled Banner. But PANAM did vanish from the skies in the 1970s — a victim of mismanagement, labor intransigence and oceans of red ink.

Recollections of PANAM's sad fate brings a sense of deja vu to PAL's unfolding tragedy. We've seen it all before. What was supposed never to happen, did happen. PANAM was said to be irreplaceable. Well, America survived its demise, and the airline industry rose to even greater heights in the domestic and international markets.

Identical fears are raised by PAL's demise. How badly will it affect the Philippine economy? What happens now to the much-crippled airline industry?

Indeed, PAL’s unexpected dismantling will leave a hole in the nation's economy far larger than PANAM could ever have created in America. There goes much of the air passenger and cargo sector, not to mention newspaper circulations and what still passes for a tourist industry.

And with the Asian financial crisis getting from bad to worse, there's little hope of fresh investments in commercial aviation anytime soon. Not with the stock market down to historic lows reminiscent of the darkest Cory days and interest rates sky high and loans denominated in dollars at that. What's more likely is that existing foreign carriers like Northwest, EVA Air, Cathay Pacific and Asiana will parcel out among themselves PAL’s estimated 75,000 international passengers annually, mostly from the lucrative Hong Kong and West Coast markets.

Never in good shape, domestic travel is bound to become hell in the coming weeks and months. Air passengers are down to the tender mercies of the four small airlines with their antiquated air drafts and alarming safety records. In fact, two are presently grounded for safety violations, one cannot fly because of unsettled fuel and insurance bills and the only one that's operating can barely live down its own months-long suspension of flights following last February's crash in Mindanao.

As for the ultimate but much slower alternative presented by inter-island passenger ships. the prospects are no better following last Friday's sinking of yet another Sulpicio Lines vessel, the m/v Princess of the Orient.

In a word. PAL’s goodbye could only have been designed by confirmed sadists bent on inflicting the most harm to the most number of people.

This is where the PANAM story emerges as little more than fairy tale compared to PAL’s absolute tale of horror.

For all of PANAM's pioneering role in aviation, it was never a monopoly. It always had strong rivals like TWA and United, not to mention many other regional air carriers to serve local routes. By the time PANAM signed off, it had become a dinosaur of sorts. Competition had passed it by and it was hopelessly over-extended as an organization. It was sad to let go of what had become a national institution dating back to the days of Charles Lindbergh (who served on the board for many years), but there was no choice. There was also no way the US-government would step into the breach and prolong PANAM's unlucrative existence.

PAL’s glory days were during the Marcos years when it could buy the best aircraft and afford the most expensive gimmicks because the government was able and ready to answer for its financial whims and caprices. It got away with the equivalent of murder because it was for all intents and purposes, the private airline of the Marcoses, flying off the Imeldific and her eternal entourage to the fashionable capitals of the world, sometimes at a moment's notice.

The happy days more or less extended into the Aquino administration because President Cory also loved to travel and some of her favorites were not queasy about taking over the rackets originated by the Marcos boys. But as everybody knows, the hills kept mounting and the moment of truth had to be faced. Government could no longer eat PAL's losses. It would have to be turned over to the private sector. And it was. First, to Cory's Kamag-anak Incorporated, which apparently was only interested in aircraft commissions, and second, to Lucio Tan, who had secretly and largely financed the private takeover in the first place.

It took time for Tan to take full control, but when he did in 1994 there were big hopes that he had the necessary megalomania and hefty financial means to pull PAL away from its path of self-destruction. No such luck. Tan moved to refleet with the latest high-tech aircraft. Creditors were pacified and more and bigger loans were availed off. The capitan is said to have poured as much as PI5 billion of his personal funds into the black hole. All to no avail.

Why the inexorable slide to disaster? Tan and his supporters blame PAL's contentious unions. In four years, these guardians of the working class mounted four spectacular strikes, the last two so crippling that Tan was reduced to issuing ultimatums of impending closure. Some two months ago, PAL fell into virtual receivership. Still the labor problems continued and got worse. All of a sudden, a week ago, a breakthrough was reported. In exchange for 30 percent or so of company stocks and three seats in the board of directors, the employees' union would give up its collectives bargaining agreement for the next 10 years. Then just as suddenly a few days ago, the agreement was repudiated by the union. Tan and later the Estrada administration asked that it be put before the general membership in a referendum. Again, this was rejected. Real democracy among workers? Are you kidding?

Having cried wolf much too often, Tan's credibility was such that he would have to make his threat of closure stick or face more ridicule. Apparently, the man has had enough. The question then is why did the unions push so hard and so spitefully that Tan was left with no choice but to do the undoable and bear the unbearable?

One view is that the unions, like old dogs, just couldn't learn new tricks anymore.

"They're used to having their way," says a veteran observer. "Under the Marcos’s as well as the Aquino and Ramos administrations, they were treated with kid gloves. The big shots didn't want any unnecessary trouble. They were engaged in their own lucrative rackets. All they did was to keep passing on labor's exactions to the ultimate consumers — the taxpayers of the land:"

That is, PAL’s perpetually escalating deficits and debts were absorbed by government banks and routinely forgiven. But this created the bad habit of labor pushing management to the wall at the drop of a hat. But when management shifted to private hands, there was no way this blackmail could continue. As the world knows, Tan and the unions played hardball. The result is nothing short of catastrophic.