AirAsia Plans To Launch Caticlan, Faces Formidable Rivals

THE LOCAL unit of Asia’s biggest budget carrier AirAsia Berhad will launch flights to Caticlan Airport in March 2016, although an aviation think tank said it will likely not be profitable at first as the gateway to Boracay Island is already dominated by rivals Cebu Pacific and Philippine Airlines (PAL).

“Yes we will launch flights to Caticlan as soon as it is open for A320 operation,” AirAsia Zest Chief Executive Officer Joy D. Caneba said in a mobile phone reply yesterday.

AirAsia Berhad operates in the Philippines through Filipino-registered company AirAsia, Inc., where it has a 40% stake. AirAsia, Inc. owns 49% of homegrown airline Zest Airways, Inc. — which has been rebranded as AirAsia Zest — through a strategic alliance signed in May 2013. The two airlines will complete its merger within the year.

In a report released yesterday, the Centre for Asia Pacific Aviation (CAPA) said that while AirAsia needs to serve Caticlan, the market may “suffer from overcapacity” once the airport is expanded.

“Profits are therefore unlikely in the initial phase, particularly as AirAsia will be the newest and smallest carrier in Caticlan,” the CAPA report read.

“If the market becomes oversupplied PAA [AirAsia’s Philippine unit] may also not be able to hold its ground as long as its competitors, given its focus on becoming a profitable entity and improving its financial footing,” it added.

AirAsia’s Ms. Caneba yesterday declined to comment on this.

AirAsia’s Philippine unit recorded a net loss of 19.3 million Malaysian ringgit in the quarter ended December 2013, the Malaysian-based parent said in its February 26 disclosure to Bursa Malaysia.

Ms. Caneba had said last week the budget carrier plans to turn a profit within the year — which would be the first since its Philippine launch in March 2012. The airline has been implementing a turnaround plan since April last year, which includes strengthening its balance sheet and removing past liabilities.

“AirAsia is generally keen to avoid overlap with Cebu Pacific in the Philippines as PAA aims to carve out a niche under the radar screen of the market leader by focusing on leisure markets that are not served by Cebu Pacific,” CAPA said.

“Caticlan is expected to be among two or three new international hubs that AirAsia opens in the Philippines as PAA restructures its network in a bid to improve profitability.”

CAPA pointed out that the airline managed to become a “market leader” only for the Manila-Kalibo domestic route, “most likely because AirAsia is currently unable to serve Manila-Caticlan while its two competitors split the Boracay market with operations at both airports.”

Schedules from aviation data provider OAG showed that Cebu Pacific and PAL Express are the main operators at Caticlan, with 150 weekly flights and 140 weekly flights, respectively. Cebu Pacific operates 55 weekly return flights on Caticlan-Manila and 20 weekly return flights on Caticlan-Cebu with 72-seat ATR 72s, while PAL Express offers 70 weekly return flights on Caticlan-Manila with 56-seat Dash 8 Q300s and 76-seat Q400s.

“A new operation at Caticlan could improve PAA’s outlook, but… any expansion at Caticlan will likely impact AirAsia’s position at Kalibo, where it has a leading 38% share of total seat capacity,” CAPA said.

The local unit of AirAsia, which operates only A320s — has 18 jets for its fleet.

Source: Daphne J. Magturo,

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