CAPA Analysis: Australia-Philippines Market Faces Overcapacity


Image Source: Rappler.com

In 2015, the Philippines (PH) became Australia’s (AU) fastest growing market when passenger traffic between these two countries rose by 39%. This market is expected to further improve as both Cebu Pacific (5J) and Philippine Airlines (PR) plan to launch more non-stop flights from the Philippines to Australia.

5J is eyeing Melbourne as two more A330-300s are expected to join its fleet soon. PR plans to deploy its new A321NEOs to Brisbane and possibly add a second Sydney frequency.

Despite these rosy figures, overcapacity is seen as a looming problem. 5J may have stimulated demand but this impacted yields and load factors. Average load factor last year was less than 67%. Cebu Pacific has 64% while Philippine Airlines cornered 60%.

AU-PH Market Rapid Growth

According to BITRE data, over the last five years, the AU-PH market experienced rapid market growth. In 2010, there were 228,000 non-stop passengers. Last year, it rose up to 466,000 passengers. There is a yearly market growth but the fastest surge occurred in 2015, when the number of nonstop passengers reached 39%.

PH experienced the fastest growth in AU’s 20 largest markets beating China (15%) and Japan (18%). PH is AU’s 12th largest international market, a marked improvement from 2010 when it was ranked on the 16th spot. PH even beat Korea, PNG, South Africa and Vietnam in the last five years.

Spotlight Cebu Pacific in 2015

The growth in 2015 was driven primarily by Cebu Pacific. 5J launched services to Sydney in Sep-2014 but only flew 30,348 passengers to and from Australia in 2014 as it took time for the new route to mature.

In 2015 Cebu Pacific carried 138,793 passengers on the Sydney-Manila route, giving it a leading 41% share of the market. Cebu Pacific currently operates four to five weekly flights on Sydney-Manila compared to seven weekly frequencies for PAL and a consistent five weekly frequencies for Qantas but uses much higher density aircraft than both its competitors.

Cebu Pacific has successfully stimulated demand in the Australia-Philippines market by providing the first LCC option for Manila-Sydney. Qantas LCC subsidiary Jetstar Airways suspended services to Manila in early 2014 but had a relatively small impact on the Australia-Philippines market as it only served the Darwin-Manila route.

Excluding Cebu Pacific, the Australia-Philippines market grew by only approximately 20,000 passengers in 2015. However the fact there was still growth when excluding Cebu Pacific indicates that Cebu Pacific has stimulated growth rather than taken away market share from existing players.

 

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NAIA: Screening Equipment Missing


ABOUT P67-million worth of security screening equipment procured by the Office for Transportation Security (OTS) for the Ninoy Aquino International Airport (NAIA) and other airports around the country last year appears to have disappeared.

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Ninoy Aquino International Airport

In 2015, the OTS—a Department of Transportation and Communications-attached agency—bought eight full-body scanners for P48 million and eight electromagnetic analyzers (EMA) or bottled liquid scanners for P19.2 million from Singapore.

The state of the art equipment were to beef up security at the NAIA terminals and the Mactan-Cebu and Davao international airports but not one of the screening machines was installed.

The old full body scanners currently at the NAIA—which are reportedly hardly used—were bought earlier by the Manila International Airport Authority (MIAA) from Germany.

In February last year, the OTS bought eight full body scanners at a cost of P6 million each.

A source, who sought anonymity for lack of authority to speak, told the Inquirer the scanners were not installed at the NAIA because they were “lemons.”

A MIAA official, when asked about the matter by the Inquirer said: “You should ask the OTS where they stowed them away.”

The OTS claimed the scanners were distributed to airports around the country.

DOTC-OTS spokesperson Jonathan Maliwat earlier said the body scanners were delivered to the international airports at Clark, Laoag, Kalibo, Iloilo and Mactan-Cebu.

But Kalibo and Mactan-Cebu airport officials said they never received the scanners.

The DOTC-OTS had also announced in March last year it would install P19.2-million worth of EMA or bottled liquid scanners at Naia and other airports.

Several OTS personnel, however, said they had yet to lay their eyes on the high-tech scanners.

“Some of us were trained to use them (EMA). But we haven’t seen any of them here,” an OTS security screening officer at NAIA Terminal 1 told the Inquirer.

The Inquirer learned that none of the liquid analyzers were installed at the NAIA terminals, although Maliwat had claimed they were to be set up at the terminals’ checkpoints.

The Inquirer tried to question OTS officials about what happened to the multimillion-peso screening equipment but they either denied knowledge of them or refused to answer questions.

Source: Jeannette Andrade, http://newsinfo.inquirer.net

 

T2 of Mactan Cebu Int’l Airport Update


 Mactan-Cebu International Airport (MCIA) Terminal 2 is on track for delivery by June 2018 according to GMR-Megawide Cebu Airport Corporation (GMCAC) executive adviser, Andrew Harrison.
Image Source: cebudailynews.inquirer.net
GMCAC is investing some P32 billion for the first phase of development of Terminal 2. This includes the completion of concrete works for the civil structure of the new terminal building is scheduled by the end of this year. GMCAC will finalize awards for major suppliers for equipment and services relating to electro-mechanical works by the end of 2016.

 

Terminal 2 is approximately 45,000 square meters and can be expanded further in the second phase. The new terminal will serve all international flights with eight aerobridge-equipped aircraft parking stands and will be connected by a link-bridge to Terminal 1, which will be refurbished for domestic use.

Architectural features of Terminal 2 blends modern building materials and Cebuano culture and heritage, said GMCAC.

Image Source: cebudailynews.inquirer.net

The new terminal building will also feature 48 check-in counters that are expandable to 72. It will include modular expansion capability to ensure operations can continue uninterrupted whilst expansion takes place as traffic growth warrants.

It will also have a car park that can accommodate 550 cars, which is expandable to 750 cars.

In terms of employment generation, GMCAC said more than 3,000 jobs are created during the construction of Terminal 2, with another 550 employment opportunities through concessionaires once Terminal 2 is commissioned.

Once Terminal 2 is completed, the combined annual passengers that will use the airport is projected to rise to 12.5 million from 4.5 million passengers a year.

“The MCIA is envisioned to become the world’s friendliest airport gateway that demonstrates the warmth and hospitality of the Cebuano people. It will be an airport that will make guests feel that their resort experience has started the moment they set foot in here,” the company said.

Source: Katlene O. Cacho, http://www.sunstar.com.ph

Collect Php249 Million From Airlines – COA


The Commission on Audit (COA) has directed the Bureau of Immigration (BI) to collect more than P249.950 million in administrative fines from airline companies that have allowed illegal aliens to enter the country.

This huge amount stems from uncollected penalties since 2001. This clearly violates the articles of the 1940 Philippine Immigration Law.

The COA report said the BI should immediately and properly address  the questions raised by its clientele on the legality of the increase in fines from P500 to P50,000 and strengthen its internal control in the collection of fines.

State auditors said the agency is authorized by law to collect or impose administrative fines on airliners and shipping companies for bringing to the Philippines passengers not properly documented.

“If any vessel or aircraft or aircraft arriving at a port in the Philippines from a place outside thereof brings on board any alien bound for the Philippines who is not properly documented as required by this Act, the pilot, master, agent, owner, or consignee of the vessel or aircraft shall be subject to a fine of P500 in the case of each person brought,” the Philippine Immigration Law reads.

State auditors however bared that “uncollected receivables from administrative fines had tremendously accumulated” considering that as of Dec. 31, 2015, uncollected receivables from airlines have reached P249,950,000. Philippine government was deprived of income because the law is not strictly implemented.

Source: Michael Punongbayan, http://www.philstar.com

Philippine Airlines Arrives in Saipan


It was delayed for an hour and a half.

The inaugural flight of Philippine Airlines to Saipan was delayed due to some 40 Chinese tourists whose connecting flight from China to MNL arrived late. The flight was originally scheduled to arrive at 0335H (local time) but the plane landed 0505H.

CNMI Officials Celebrate

Despite this, CNMI officials happily welcomed PAL’s flight. Gov. Ralph Torres remarked “Thank you Philippine Airlines for having this new hub here. It is truly a new opportunity not just for our tourism market, but also for our medical referral program. This is an excellent opportunity for us and we are going to work closely with the airlines and all entities involved.” The Governor is hopeful for a successful and continuous service to Saipan from MNL.

“We are going to make sure that we help PAL succeed, because when you succeed, we also succeed. This is going to be a good partnership. I also want to acknowledge our Commonwealth Ports Authority — they will be working closely with PAL.”

Torres acknowledged that PAL is taking a risk, “but we also see an opportunity for growth here, and I believe the market will grow.”

PAL Express president Bonifacio Sam thanked the CNMI government and people for their support.

“This is our maiden flight — at last we are here, thank you so much for the support,” Sam said.

Proud moment

“Landing here on Saipan … after a little over four hours … is a proud moment for PAL, and the touchdown of our plane marks the culmination of the collective effort of PAL and the industry’s stakeholders.”

He thanked the entities that made the flight service available: the Civil Aviation Authority of the Philippines, the Federal Aviation Administration, the CNMI government, the Philippine Department of Tourism, and the Marianas Visitors Authority.

“Now fellow Filipinos, Saipan residents, and leisure travelers can travel in and out of the island with ease and enjoy the flight on board our modern Airbus A320 with business class and economy class while experiencing heartfelt service.”

Sam also mentioned that he loves nature and golf. “For a tourist like me, Saipan is indeed the place to be … I look forward to experiencing an exciting round of golf here.”

Saipan is PAL’s 43rd destination in its international network which includes countries in Asia, Oceania, the Middle East, the United States and Europe.

PAL Express flies twice-weekly from Saipan to Manila every Thursday and Monday at 4:35 a.m. local time with an arrival in Manila at 6:45 a.m.

PAL leaves Manila every Wednesday and Sunday at 9:20 p.m. and arrives on Saipan at 3:35 a.m. local time the following day.

The PAL route includes connections to points within the Asia-Pacific region such as Thailand, Singapore and China.

Happy

Chris Tenorio, acting CPA executive director, presented a plaque to PAL officials to commemorate the inaugural flight while MVA Managing Director Chris Concepcion said he is happy about the successful inaugural flight.

“This is a new flight service that people in the CNMI can take advantage of — direct flights to Manila twice a week. It not only will help our local passengers on medical referral, it will also provide a new destination for leisure customers who can travel directly and not have to transit anywhere.”

Staffers of MVA’s Manila office, which opened early this year, are also on island for PAL’s inaugural flight.

“They will head back to Manila spreading the word about Saipan and the CNMI that we are open for business for tourism and leisure travel,” Concepcion said.

PAL provided direct Manila-Saipan flight service in the 1990s but it was eventually discontinued.

Source: Bryan Manabat, http://www.postguam.com

Cebu Pacific & MIAA To Build Aircraft Parking Bay


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MANILA International Airport Authority (MIAA) and Cebu Pacific officials led the ground breaking Tuesday of a 2.5-hectare aircraft parking bay at the Ninoy Aquino International Airport (NAIA).

The envisioned parking bay is located at NAIA’s South General Aviation Area, formerly Flight Operations Briefing Station.

Once completed, the parking bay can accommodate approximately four to six Airbus A320-family aircraft, helping ease up movement at other terminal bays in the airport.

MIAA General Manager Jose Angel Honrado and Engr. Ricardo Medalla, NAIA Terminal 3 Manager, graced the groundbreaking ceremony together with the CEB management committee.

 

“We are very grateful to the MIAA and relevant government authorities for allowing us to develop and utilize the South General Aviation Area for aircraft parking. This area supplements the space requirement of our growing fleet and will contribute to the optimization of our ground operations,” CEB President and CEO Lance Gokongwei said.

CEB’s 57-strong fleet is comprised of seven Airbus A319, 36 Airbus A320, six Airbus A330, and eight ATR 72-500 aircraft.

Between 2016 and 2021, CEB said it expects delivery of two more brand-new Airbus A320, 30 Airbus A321neo, and 16 ATR 72-600 aircraft.

CEB flies to over 90 routes and 64 destinations, spanning Asia, Australia, the Middle East, and the United States.

Source: Sun Star Manila (SDR/Sunnex)

PriestmanGoode Designs New United Polaris Business Class Cabin


PriestmanGoode is delighted to unveil United Polaris, the new premium business class cabin and lounge for United Airlines.

Over the last three years, the leading aircraft interior and transport design studio has worked closely with United as their strategic partners to develop a comprehensive global re-brand that is seeing a complete overhaul of the passenger experience, from lounge to landing.

From a nose to tail re-design of both domestic and international aircraft interiors, through lounges with bespoke seating and finishes, to airport environments, digital media, inflight meal service items, menus and a plethora of other details, PriestmanGoode has generated a language of quality and refinement for United Airlines.

Unveiled in New York City on 2 June 2016, the new designs for the international fleet focus on a brand new premium experience for business travelers: United Polaris. Following extensive research and passenger studies, this new exclusive offer is tailored to United business passengers, providing them with a serene environment that will leave them feeling refreshed and rested.

PriestmanGoode’s designs range from the lounge to all elements of the onboard experience including seating, bespoke furniture elements like a bar area, branded cabin elements and a host of details including new tableware, glassware and amenity kits, among others.

Nigel Goode explains ‘At PriestmanGoode we design products and environments that elevate brands and shape outstanding passenger experiences. We have been working in close partnership with United Airlines to create a holistic, refined, human-focused journey. The new cabin and brand identity are the physical embodiment of United Airlines’ new philosophy, which keeps the passenger at its heart, and rather than merely move passengers around the world, aspires to move the world forward. Our new designs will align the airline’s many products across the entire fleet, and provide a consistent, passenger-focused journey from home to destination.’

 

United Polaris Cabin

PriestmanGoode designed a whole series of products for the new United Polaris cabin, every element of which is intuitive to operate. Designed as part of a greater whole, each element combines to result in a peaceful, restful cabin environment.

The United Polaris cabin includes an entirely new premium seat, based on an original, patented seat layout concept invented by Acumen,which United is the exclusive North American licensee for. PriestmanGoode then led the strategic development and the creative direction of the concept into a unique United Airlines product with distinctive features including integrated personal stowage with latching door, headphone hook and mirror, a do not disturb feature, bespoke reading light, large solid surface cocktail table and unique trim and finish including the latest innovations in aviation materials. The intuitive lighting and seat controls can be operated from any position and give passengers greater control of their environment.

PriestmanGoode’s designs for the United Polaris cabin also include:

  • Bespoke cabin furniture, including galleys, monuments and bar areas
  • Unique and bespoke branded elements including literature boxes, boarding brand panels and cabin brand panels
  • New tableware, table linen, menus, salt and pepper pots, glassware, hollowware, chocolate boxes, etc.
  • Amenity kits
  • Cabin trim and finish (carpet, curtain, foils etc.)

United Polaris will be available on selected international flights from December 2016.

Philippine Airlines Expects Profit in Q2


After posting a first quarter decline this 2016, Philippine Airlines (PAL) is hopeful it would see growth in net earnings in Q2. According to Jaime Bautista, PAL President and COO, the airline sees an improvement in net profit for April-June period. Last year’s net income for Q2 was Php.2.08 billion.

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For the first quarter, PAL Holdings’ net profit dropped 21.2 percent to P2.98 billion from P3.78 billion in the same period a year ago. Bautista attributed the lower first quarter net earnings to the reduction in fares.

Although fuel prices went down and the airline has started serving new destinations in the first quarter, he said it would take time for the new flights to be full.

Earlier this year, PAL started flying to destinations such as Jeddah in Saudi Arabia, Kuwait, and Doha in Qatar from Manila, as well as Los Angeles in the US from Cebu.

PAL is set to continue expanding its network with the launch of flight services to Saipan from Manila on June 15.

On June 25, PAL is scheduled to start operating its Manila-Taipei-Osaka service.

By the end of the month, PAL is likewise increasing its air services to London from Manila by offering daily flights from four per week at present.

The airline currently serves 43 international and 30 domestic destinations.

PAL which has a three-star rating, is aiming to achieve a five-star rating in five years.

Source: Louella Desiderio, http://www.philstar.com/

 

2 More A330-300s for Cebu Pacific


The Philippines’ largest budget airline, Cebu Air Inc, is looking to acquire two more Airbus 330 aircraft, company president Lance Gokongwei said.

“That is under consideration because we’re looking to fly to additional routes particularly Honolulu or increasing potential flights to the Middle East,” Gokongwei told reporters.

The budget carrier, which had 55 aircraft, mostly Airbus jets, as of end-December, expects to beef up its fleet to 69 planes by end-2018.

Asian budget carriers have been placing big orders for jets from Airbus and Boeing Co to take advantage of a regional travel boom.

Last month, eight Asian low-cost carriers, including Cebu Air Inc’s Cebu Pacific, set up an alliance allowing travelers to book flights across their platforms for the first time, aiming to reach more customers outside their home markets.

Source: http://www.reuters.com