The New(ly) Renovated Duty Free Philippines @ NAIA Terminal 1

State-owned Duty Free Philippines (DFP) recently unveiled its renovated Departure and Arrival duty-free stores at Ninoy Aquino International airport (NAIA) new terminal one in Pasay City.

DFP’s duty-free outlets in NAIA T3 also underwent major renovations to cater to the increase in passenger traffic due to the relocation of major airlines such as Delta, KLM Royal Dutch, Emirates, Singapore Air and Cathay Pacific.

World-renowned design team Sounda Design Inc. led by architect Frederic Chevassus and designer Philippe Larosse transformed the perfumes, cosmetics and fashion areas’ into an elegant and more functional space adopting an aerodynamic concept using aircraft details, such as a plane’s wings and propeller, as inspirations. The new layout aims to project the airport outlet as inviting from all sides of the store perimeter, drawing the target customer into the interior. Sounda Design Inc. is based in Taiwan and Hong Kong and specializes in architectural planning, interior design and construction.

The stores were redesigned to achieve a more attractive, dynamic and functional retail environment to cater to the discerning taste of its shoppers, made up of international travelers, tourists and balikbayans (arriving Filipino residents).

Along with thestores’ cutting-edge design, state-of-the-art interiors and amenities, DFP has also assembled an impressive line-up of the world’s best travel-retail brands that cater to international travelers.

Top perfumery, cosmetics and fashion brands such as Calvin Klein, Estee Lauder, Lancome, Bulgari, Christian Dior, Clinique, Clarins, L’Occitane, La Prairie, SK-II and Lacoste are expected to attract both new and loyal customers.  The other highly in-demand duty free product categories still house the usual best-selling brands; such as Cadbury, Hershey’s, M&M’s, Toblerone and Nestle for confectionery, Johnnie Walker, Chivas Regal, Jack Daniels, Hennessy, Ballantines,  Remy Martin and Macallan for liquor and spirits;  Michael Kors, Anne Klein, Skagen, Cerruti and Armani for watches; among many others.

A special “brand experience” awaits jet-setters as  luxury fashion boutiques feature at both terminals, specifically Coach, Salvatore Ferragamo, Longchamp, and Chloe. Aside from these designer brands of top quality leather goods and fashion accessories, DFP also houses an extensive range of the popular Kiehl’s beauty products while a Pandora boutique, is set to open soon.

“Store development and product expansion are endeavors perennially on DFP’s priority list. Aside from meeting the high standards of its target customers, these ensure that DFP stores keep pace with the dynamism and sophistication of the international travel-retail industry,” the retailer said in a statement.

DFP is an attached agency of the country’s Tourism Department and its earnings accrue to the DOT to help support the Philippines’ tourism infrastructure, programs and projects.


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CAPA Analysis: AirAsia Drives Growth At Philippines’ Puerto Princesa Airport As Palawan Visitors Surge

Puerto Princesa Airport could experience major growth as the Philippine island of Palawan emerges as a popular tourism destination. AirAsia is particularly keen to pursue major growth in Palawan and use Puerto Princesa as an international hub.

The small airport, which currently only handles domestic is flights and international charters, has been operating well above capacity. But a major expansion project is expected to be completed by early 2017, providing a new terminal and international facilities.

Philippines AirAsia (PAA) plans to launch scheduled international flights from Puerto Princesa to China and potentially other international destinations including Malaysia. For now Philippine market leader Cebu Pacific has no plans for international operations at Puerto Princesa but could be swayed to relook at the market if PAA’s focus on Palawan proves successful.

Palawan Attracted Almost 1M Visitors in 2014

Caticlan, which a 10min ferry from the popular tourist island of Boracay, is currently the 14th largest airport in the Philippines based on current seat capacity. The rapid growth over the last several years in visitor numbers to Boracay has mainly been accommodated by Kalibo Airport, which is about 70km from Boracay and Caticlan. As CAPA highlighted in the first report, Kalibo is now the fourth largest airport in the Philippines after Manila, Cebu and Davao.

Manila, Cebu and Davao are all major population centres while Kalibo and Puerto Princesa relies almost entirely on inbound traffic. Aklan province, where Kalibo and Boracay are located, reported 1.5 million visitor numbers in 2014 while Palawan province reported just under 1 million visitors.

Palawan is positioned for potentially faster growth than Boracay and could eventually overtake Aklan as the second largest tourist region in the Philippines after Central Visayas. Central Visays, which includes Cebu and nearby islands, has about 3 million annual visitors.

Boracay is already well developed and has become congested. Palawan is a much larger island is still largely undeveloped. The island is about 500km long (but very narrow) and has a population of less than 1 million.

Puerto Princesa Airport Is Now Operating Well Above Capacity

The Puerto Princesa Airport currently handles about 1.5 million annual passengers but was designed to accommodate only about 350,000 annual passengers. A major expansion project began in 2014 with the awarding of a USD83 million project to a Korean construction company.

Construction began in late 2014 and is expected to be completed by early 2017. The project includes a new passenger terminal with capacity to handle 2 million annual passengers, a cargo terminal, apron, taxiways and new navigation equipment. The new terminal has been designed to handle regular international flights, which the Palawan tourism sector is keen to attract.

The Philippine and Palawan governments expect the new airport to meet international standards and see the facility as a key component in a plan to attract more tourists to Palawan island. Philippines president Benigno Aquino III visited the airport and construction site on 29-Jun-2015, an indication of the importance the government has placed on developing an international airport to help support growth of Palawan’s promising tourism sector.

AirAsia Sees Opportunities To Grow in Palawan

In Mar-2015 the Palawan government along with AirAsia and other partners launched a tourism campaign to promote the island, which was voted in 2014 as the “best island in the world” by Conde Nast Traveller readers. The “World’s Best Island” campaign is designed to increase awareness among both domestic and international travellers and make Palawan more affordable through more seats, cheaper fares and new hotel packages.

The campaign aims to double the number of visitors to Palawan in 2015 to 2 million. But such a goal seems unrealistic as seat capacity at Puerto Princesa has increased only slightly. AirAsia pledged as part of the campaign to add a fifth daily flight on the Manila-Puerto Princesa route but its schedule for Jul-2015 and the remainder of 2015 show it will maintain four daily frequencies.

AirAsia has identified Puerto Princesa as one of two or three new international hubs that the group plans to open in the Philippines as PAA/AirAsia Zest restructures its network. The new business plan for the two carriers, which are expected to eventually transition to a single air operators’ certificate, focuses on developing under-served leisure destinations.

As CAPA has previously highlighted, AirAsia’s Philippine operation has struggled financially since it was launched in 2012. But the group sees emerging leisure destinations in the Philippines such as Puerto Princesa as having huge opportunities for growth while staying under the radar screen of Cebu Pacific.

Cebu Pacific for now is studying potential opportunities at Puerto Princesa but the typically conservative carrier is unlikely to make a move until the market becomes more mature. PAL is also unlikely to launch scheduled international flights at Puerto Princesa and instead stick to charters which have little or no risk as they are underwritten by agents in key source markets such as Taiwan.

AirAsia Expects To Serve China From Puerto Princesa

The AirAsia strategy for Puerto Princesa envisions launching several scheduled routes to mainland China. AirAsia plans to wait for the new international terminal and customs facility, which could potentially be completed by the beginning of the 2016 northern winter season.

Shanghai would be a logical initial route for AirAsia’s new international hub at Puerto Princesa as PAA/AirAsia Zest already serve Shanghai from Kalibo and has been looking at resuming service to Shanghai from Manila. There are several other potential Chinese routes from Puerto Princesa as the AirAsia Group already serves 13 Chinese airports from its hubs in Thailand and/or Malaysia.

AirAsia is keen to leverage its strong presence in the Chinese international market, where it is the leading LCC, by opening new routes to popular leisure destinations throughout Southeast Asia. AirAsia is already serving China from several secondary airports, including Krabi in Thailand and Kalibo in the Philippines, and is expected to add several more including Puerto Princesa over the next few years.

The new AirAsia business plan for its Philippines operation also envisions the launch of flights to Japan, Singapore and Taiwan. But at least for now the focus is on launching flights to Taiwan from Manila and to Japan and Singapore from Cebu.

PAA/AirAsia Zest currently operates 10 scheduled international routes, connecting three Philippine airports (Cebu, Kalibo, and Manila) with seven destinations – Busan, Hong Kong, Kuala Lumpur, Kota Kinabalu, Macau, Seoul and Shanghai.

Seoul is served from all three bases while Busan and Shanghai are only currently served from Kalibo. Hong Kong, Kuala Lumpur and Macau are only served by PAA/Zest from Manila although sister carrier Malaysia AirAsia serves Cebu, Manila alternative airport Clark and Kalibo from Kuala Lumpur. PAA/Zest now serves Kota Kinabalu from both Cebu and Manila, having launched Cebu-Kota Kinabalu in late Mar-2015.

AirAsia May Link PPS With Kota Kinabalu

PAA has stated it is interested in also serving Kota Kinbalu from Puerto Princesa. The two airports are only about 500km apart as Palawan is in the westernmost portion of the Philippines while Kota Kinabalu is located on the island of Borneo in eastern Malaysia.

Previous attempts to connect Kota Kinabalu with Puerto Princesa have been short-lived. Most recently Malaysia Airlines regional subsidiary MASwings operated the route from Nov-2013 to Aug-2014. Philippine regional carrier SEAir also briefly served the route in late 2008 and early 2009.

AirAsia has the advantage of leveraging strong sales channels in both Malaysia and the Philippines and marketing Kota Kinabalu-Puerto Princesa to foreign tourists that rely on AirAsia to hop around Asia. AirAsia also has a hub and transit product in Kota Kinabalu, which would provide passengers from several Southeast Asian cities (including Jakarta, Kuala Lumpur, Penang and Singapore) an opportunity to access Puerto Princesa without backtracking through congested Manila.

A Puerto Princesa-Kota Kinabalu link could be used to target source markets for the emerging Palawan tourism sector in Southeast Asia while Puerto Princesa-Manila and potentially a new Puerto Princesa-Cebu service could be used to target source market in North Asia that do not get new direct flights from Puerto Princesa. But at this point it is hard to imagine sufficient demand for regular A320 service between Kota Kinabalu and Puerto Princesa given the challenges other carriers faced in filling up much smaller aircraft on this route.

Puerto Princesa Has Big Potential But Also Big Challenges

The Puerto Princesa market clearly has huge long-term potential as tourists from within the Philippines and abroad are attracted to Palawan’s unspoiled beaches, particularly as other Philippine holiday destinations such as Boracay become increasingly crowded. But there could be challenges in developing international routes after the Puerto Princesa Airport is upgraded.

While AirAsia is extremely optimistic on the prospects for Palawan, other Philippine carriers are taking a more cautious wait and see type of approach. For example Cebu Pacific is now focusing on expanding international operations from other secondary airports in the Philippines although it will almost certainly make a move at Puerto Princesa in future if the market matures and it sees opportunities.

Therefore AirAsia will likely be the litmus test when the Puerto Princesa Airport starts to handle scheduled international flights.

A hub at Puerto Princesa could pay big dividends for AirAsia’s struggling Philippine joint venture and become a profitable niche. But it also represents a big gamble as AirAsia tries to turn around its Philippine operation.


Ethiopian Airlines Flies To MNL On July 9

Ethiopian Airlines, Ethiopia’s flag carrier, is set to start flying to Manila on July 9, the carrier said.

The service from the Ethiopian capital of Addis Ababa marks the first direct route between the Philippines and Africa.

A ceremonial event will be held on Thursday at Manila’s Ninoy Aquino International Airport to mark the route that is “set to bridge the Philippine-African gap—a feat that unlocks a multitude of tourism, business and commerce opportunities for the two nations,” according to the airline’s invite.

The Philippines and Ethiopia sealed their maiden air service agreement in October 2014, as part of the government’s goal to increase connectivity to Philippine air gateways amid aggressive tourism growth targets.

Civil Aeronautics Board executive director Carmelo Arcilla said the deal, which he described as a landmark agreement, allowed for seven flights per week between Manila and Northeast African country.

Moreover, the agreement allows unlimited flights between Ethiopia and other airports in the Philippines outside of Manila, he said. To boost connectivity, intermediate stops were allowed in Singapore, Bangkok, Ho Chi Minh, India and the Middle East, based on the air deal.

The talks were initiated by the Ethiopian government, said Arcilla, who added that this could open up new routes between the Philippines and the Africa- Middle East region. This, as Ethiopian Airlines has been looking at Asia for expansion, he said.

Despite the interest of Ethiopia’s flag carrier, domestic airlines have been lukewarm to launching flights in this route.

Arcilla said Ethiopia’s location was strategic, given that it was an “aviation hub” in that region that serves as a transit point for passengers from other African countries and the Middle East.

“Although the current traffic between the Philippines and Ethiopia is small, the (agreement) can  open up new connectivities between the Philippines and Africa, including the Middle East,” Arcilla said earlier.

Source: Miguel R. Camus, PDI

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,

Cebgo Transitions Into An All-Prop Airlines

Cebu Pacific Air (5J, Manila) President and Chief Executive Officer (CEO), Lance Gokongwei, has outlined the airline’s longterm plans which will see all jet operations eventually being consolidated under Cebu Pacific while all turboprop operations will be placed under its Cebgo (DG, Manila) subsidiary.

Speaking at Cebu’s annual stockholders meeting in Manila this week, Gokongwei said that between now and 2022, the Filipino carrier would retire a total of twenty-one aircraft including six A319-100s (to be sold to Allegiant Air (G4, Las Vegas McCarran) this year), seven A320-200s whose leases will expire from 2016 to 2019, and eight ATR72-500s to be retired between 2017/18.

The CEO said Cebu’s recent order for sixteen ATR72-600s (with options for an additional ten of the type) would allow the carrier to establish new bases around the country thus alleviating pressure on its Manila hub.

“Our main opportunity is that only 29 or 30 of the 90 airports in the Philippines are jet capable. There are a lot of islands and communities that cannot be reached by jet,” Gokongwei said. “And second, there’s a limitation of slots in Manila. I think the big market is really connecting these communities or secondary cities directly with the turboprop aircraft which is a prudent aircraft.”

Among the cities mentioned as possible candidates for bases include Cebu, Davao, Iloilo, and Caticlan.

Eine ATR72-600 in den Farben der Cebu Pacific

To cope with its growth plans, Gokongkwei said Cebu has increased its capital expenditure to USD280 million this year to fund the airline’s fleet acquisition.


Bicol Airport Terminal Up For Auction

THE DEPARTMENT of Transportation and Communications (DoTC) has formally invited contractors to build Bicol International Airport’s passenger terminal and runway extensions for P1.71 billion.

In an invitation to bid published in a newspaper yesterday, the agency said the contract includes a 13,680-square meter passenger terminal building.

It also includes development works for service roads, parking, and exterior utilities; a 7,500-meter perimeter road and a 7,000-meter perimeter drainage system.

“The Department is inviting qualified bidders to participate in the open and transparent process for the procurement of the infrastructure project,” the invitation read.

The bid documents can be bought for P75,000 between July 2 and July 24. A pre-bid conference will be held on July 10, while bid submissions and opening are set for July 24.

“Bidding is restricted to Filipino citizens/sole proprietorships, partnerships, or organizations with at least 75% interest or outstanding capital stock belonging to citizens of the Philippines,” the notice read.

The contract follows a separate P780.9-million deal offered last December, which covered site development works, power, sewer utilities and an administration building; an operations facility and control tower; a cargo terminal; a building for fire and rescue crews and equipment; a power house; a maintenance building; materials recovery facilities; a pump house and water tank; a chilled-water pumphouse; underground fuel storage; a chlorination facility; a DoTC-Civil Aviation Authority of the Philippines office; and guard houses.

The new airport in the province of Albay will replace the existing airport in Legazpi City. It is scheduled for completion in 2016.

The Department of Budget and Management had said that of the P4.7-billion estimated cost, a total of P2.1 billion was spent from 2007 to 2012 for advance works such as earthworks, right-of-way acquisition, access road construction, and preliminary detailed engineering.

“The DoTC will finish the construction of the new Albay international airport by the end of President (Benigno S. C.) Aquino (III)’s term,” Budget Secretary Florencio B. Abad said in March.

Source: Daphne J. Magturo,

NAIA High Risk Airport According to Global Carriers

MANILA, Philippines – Global airlines have tagged the Ninoy Aquino International Airport (NAIA) as one of the high-risk airports in the Asia-Pacific region due to unresolved safety concerns as well as poor infrastructure.

In a paper entitled “Immediate and long-term priorities for Manila Airports,” the International Air Transport Association (IATA) said member airlines were seriously concerned about the safety of the ground movement operations and management of the airside infrastructure at the NAIA.

“IATA is gravely concerned with a number of operational issues including some that may compromise safety of airline operations,” IATA said.

It pointed out that NAIA was routinely characterized by airlines as one of the top high-risk airports in the Asia-Pacific from 2010 to 2013 due to air traffic management issues including extended holding, vectors and delays, non-standard air traffic control procedures, among others.

This prompted IATA regional director for safety and flight operations Asia-Pacific Blair Cowles to issue an Operational Notice to all airline members flying to the Philippines via NAIA last May 26.

“This Operational Notice alerts airlines to the ongoing risk to aircraft operations at Manila arising from unaddressed deficiencies in airside ground movement aids,” Cowles said.

He pointed out that the association has received an increasing number of airline safety reports since 2012 highlighting deficiencies in airport signage, markings, lighting and charting, particularly at the intersection of Runway 31/13 and Runway 06/24, also known as “hotspot” area.

According to IATA, flight crews have described this “hotspot” area as poorly lit, with markings and signage that are non-standard and poorly maintained, and confusing due to the complex configuration of taxiways.

IATA said it has received three reports of runway incursion events in the “hotspot” area since November last year.

To reduce airside ground safety risks at the “hotspot” area, IATA said ground movement aids should be installed and maintained while air traffic control procedures should be put in place.

Likewise, IATA said aeronautical charts should be updated to accurately show the existing airfield layout, dimensions and markings.

On infrastructure capacity, IATA reiterated the need for higher capacity and throughput through more efficient air traffic control and improvements in the runway system. This should increase the throughput to 51 or even 56 takeoffs and landings per hour from the current 40.

“An increase of 40 percent in capacity will go a long way in reducing the congestion issues at the airport,” IATA said.

It added the government should invest more in developing NAIA over the short to medium term to relieve congestion and help ease existing capacity constraints.

“Limited investment in NAIA will continue to result in the ongoing degradation of passenger experience at NAIA. This will have a detrimental impact on the airport’s ability to attract transfer traffic, and the airport’s reputation in the region,” it said.

The IATA is also pushing for the construction of new terminal buildings with sufficient structural flexibility to accommodate different business models and requirements over time such as additional building levels, power, new aircraft types, emerging technologies, changing security and immigration requirements, among others.

The government, it added, may use the Clark International Airport in Pampanga as an interim solution to alleviate some of the current capacity issues but that it should not be made into a long-term primary gateway.

Instead, IATA said the Philippines should develop a new greenfield airport with sufficient capacity to meet Manila’s aviation needs within a 50-kilometer radius from the city center.

Source: Lawrence Agcaoili, The Philippine Star