Philippine Airlines: Strategic Retail
Planning Process
1. Define the Business Mission
Mission Statement:
“To deliver safe, reliable, efficient, and pleasant travel experiences exceeding passenger
expectations.
To provide a satisfying career to our employees and adequate returns to stockholders.
To represent the best of the Philippines, the best of Filipinos to the world.”
- This focuses on the core product – air travel. It promises a high-quality experience
prioritizing passenger safety and comfort, with reliable service and efficient operations.
- This highlights the importance of both internal and external stakeholders. Happy
employees lead to better service, while financial success ensures the airline’s long-term
viability.
- This emphasizes national pride and global image. PAL aims to be a positive ambassador
for the country, showcasing Filipino hospitality and excellence on the world stage.
1. Conduct a SWOT ANALYSIS
Strengths:
- Established brand as the Philippines' flag carrier.
Being the national carrier enhances customer trust, prestige, and recognition both
domestically and internationally.
- Comprehensive domestic and regional route network.
A wide-reaching network allows PAL to connect key destinations and maintain competitive
market coverage.
- Loyal customer base via the Mabuhay Miles program.
The loyalty program encourages repeat business and creates opportunities for targeted
retail offerings.
Weaknesses:
- High operational and overhead costs.
These reduce profit margins and limit the flexibility to invest in new retail initiatives.
- Need for stronger digital infrastructure.
Outdated systems hinder seamless retail integration and personalized customer
experiences.
- Past issues with flight punctuality and customer service.
Reputation concerns can negatively affect customer retention and willingness to engage
with PAL’s retail channels.
Opportunities:
- Growing inbound tourism.
More tourists increase demand for travel-related products and services, boosting retail
potential.
- Increasing demand for online travel shopping and convenience.
Travelers now prefer digital platforms, opening opportunities for e-commerce and bundled
retail experiences.
- Integration of lifestyle offers into the loyalty program.
Expanding rewards beyond flights enhances customer value and drives retail engagement.
Threats:
- Intense competition from low-cost carriers (Cebu Pacific, AirAsia).
Budget airlines attract price-sensitive travelers, challenging PAL’s ability to compete on cost
and volume.
- Rising fuel prices and geopolitical disruptions.
External economic factors increase operating costs and reduce budget flexibility for retail
expansion.
- Tech-savvy global airlines with stronger retail ecosystems.
Competitors with advanced digital platforms can better attract and retain retail-savvy
passengers.
3. Identify Strategic Opportunities
Retail-Related Opportunities:
1. Enhance in-flight and airport retail (e.g., branded merchandise, Filipino products).
2. Upgrade the e-commerce site for ticketing, add-on services, and retail.
3. Collaborate with local brands for exclusive product offerings.
4. Offer bundled travel deals (hotels, tours, ground transport).
5. Expand the Mabuhay Miles loyalty program to include retail lifestyle redemptions.
4. Evaluate Strategic Opportunities
Evaluation Criteria:
- Market Attractiveness: Revenue potential, demand, and trend alignment.
- Competitive Position: PAL’s current ability to execute effectively, including internal
capabilities and brand alignment.
Evaluation Matrix
Retail Market Competitive Rationale
Opportunity Attractiveness Position
Enhance in- High Medium Strong
flight and tourist
airport retail demand for
local and
branded
goods; needs
better
logistics and
variety.
Upgrade the High High Digital
e-commerce experience is
site essential;
PAL already
has the
digital
foundation.
Collaborate Medium High Leverages
with local Filipino
brands identity; low
barriers to
partnership.
Offer High Medium High
bundled demand but
travel deals dependent
on solid
partnerships
and logistics.
Expand High High Immediate
Mabuhay value to
Miles loyal
lifestyle customers;
redemptions scalable and
brand-
aligned.
Strategic Insights:
- Top Priorities: E-commerce platform upgrade, Loyalty program expansion, In-
flight/airport retail enhancements
- Mid-Term Focus: Travel packages, Local brand collaboration
- Long-Term Innovation: AR/VR retail, Subscription travel models
5. Set Strategic Objectives
- Increase in-flight and airport retail revenue by 20% by 2026.
- Launch a redesigned, mobile-friendly e-commerce platform by Q1 2026.
- Establish 10 local brand partnerships for exclusive retail collaborations within 12 months.
- Reach 90% satisfaction rate for retail touchpoints (surveys, reviews).
- Grow loyalty program redemptions in retail categories by 30% within 18 months.
6. Develop a Retail Strategy
Target Market:
- OFWs, leisure and business travelers, international tourists, and domestic flyers.
- Loyalty program members and digital-native travelers.
Retail Mix (7Ps):
Element Strategy
Product Filipino-themed merchandise, travel
accessories, bundled travel services,
exclusive in-flight items
Price Tiered pricing (economy to premium),
dynamic bundling, loyalty-based discounts
Place E-commerce site, mobile app, in-flight
catalogs, airport lounges and kiosks
Promotion Email campaigns, social media, Mabuhay
Miles promotions, digital ads
People Retail-trained cabin crew, ground staff
ambassadors, digital customer support
Process Seamless booking-to-purchase flow,
omnichannel retail journey, loyalty
integration
Physical Evidence Quality packaging, sleek mobile interface,
well-branded touchpoints
7. Evaluate Performance and Make Adjustments
Evaluate Performance:
Philippine Airlines will monitor key metrics such as retail revenue per passenger,
conversion rates, and customer satisfaction to assess the effectiveness of retail strategies.
Regular reviews (monthly, quarterly, and annually) will ensure alignment with business
goals and passenger needs.
Make Adjustments:
If targets are not met, underperforming products or channels will be revised or replaced,
and strategies will be adapted based on customer feedback, competitor activity, and sales
performance. Continuous improvement will be driven by data insights and frontline staff
input.
