2016 CAPA Asia Pacific Aviation Awards for Excellence

The CAPA Aviation Awards for Excellence have recognized strategic leadership in the aviation industry since 2002. The awards are not driven by customer surveys or sponsorship. They are independently researched by CAPA and Heidrick & Struggles and selected by an independent international panel of judges.

Initially limited to Asia Pacific and the Middle East, the awards were expanded by CAPA in 2012 to include all regions. This year the Aviation Awards of Excellence were presented at two gala dinners – one for the global industry in Amsterdam and one for Asia Pacific in Singapore.

The winners are…

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China Eastern Airlines, Asia Pacific Airline of the Year
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Spring Airlines (China), CAPA Asia Pacific Low Cost Airline of the Year
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Malindo Air (Malaysia), CAPA Asia Pacific Regional Airline of the Year
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Philippine Airlines, CAPA Asia Pacific Airline Turnaround of the Year
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Air New Zealand, CAPA Asia Pacific Innovation of the Year Award
  • Robert Martin, BOAC Aviation CEO – CAPA Asia Pacific Chief Executive of the Year
  • Mactan Cebu International Airport (Philippines) – CAPA Asia Pacific Regional Airport of the Year 
  • Zhang Xiuzhi, Spring Airlines founder & chairwoman – CAPA Legend Award.

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.




CAPA: Philippine Airlines To Expand Long Haul Operations

Philippine Airlines (PAL) is planning significant expansion of its long haul operation as it takes delivery of new widebody aircraft, including A350-900s. PAL’s long haul fleet is slated to expand from only 12 aircraft currently to 14 by the end of 2016, and to at least 17 aircraft by mid-2019.

After several months of negotiations PAL has finally committed to acquiring at least six A350s, three of which are tentatively earmarked as growth aircraft. The new high gross weight A350-900s will enable PAL to operate nonstop flights to the east coast of North America, as well as to add capacity to the west coast of North America and to Europe.

The Philippine flag airline currently has six long haul destinations, only four of which are served nonstop from Manila. PAL plans to add new long haul destinations, upgrade one-stop routes to nonstop, and launch new long haul routes from its secondary hub at Cebu as it expands its long haul fleet.

PAL takes six A350-900s in 2018 and 2019

PAL currently has 12 long haul aircraft, including six A340-300s and six 777-300ERs. Its total widebody fleet consists of 27 aircraft including 15 A330-300s, which are used on medium haul routes to Australia, Hawaii and the Middle East and on some regional services within East Asia. (Honolulu and Sydney have been served over the last year with a mix of A330s and A340s.)

PAL has only four nonstop long haul routes (over 10 hours) – Manila to London Heathrow, Los Angeles, San Francisco and Vancouver. London is currently served with four weekly A340 flights; Los Angeles with seven per week 777-300ER and four weekly A340 frequencies; San Francisco with seven weekly 777-300ER frequencies; and Vancouver with seven weekly 777-300ER frequencies and three weekly A340 frequencies. Of the seven 777-300ER Vancouver flights, four continue to New York and three continue to Toronto.

At the 2016 Singapore Airshow on 17-Feb-2016 PAL signed a memorandum of understanding with Airbus to acquire six A350-900s, with options for an additional six aircraft. PAL President Jaimie Bautista said at a press conference announcing the deal that the first four A350-900s are slated be delivered in 2018, with one aircraft arriving each quarter followed by the final two firm deliveries in 1H2019.

Mr Bautista said that PAL plans to retire three of its A340s as the A350s are delivered, while the other three are earmarked as growth aircraft. PAL plans to retire its last three A340s later, which suggests that at least some of the A350 options will likely be exercised. PAL owns all of its A340s, which are 14 to 16 years old, whereas it plans to lease its new fleet of A350s.

A350 deal supports PAL long haul expansion plan

In mid-2015 PAL committed to leasing two additional 777-300ERs for delivery in late 2016. The additional 777-300ERs will enable PAL to grow its long haul operation as its long haul fleet expands from 12 aircraft currently to 14 aircraft by the end of 2016.

The commitment for six A350-900s has been anticipated for several months to support further long haul expansion, as well as fleet renewal. CAPA stated in a 13-Jun-2015 report that along with the two additional 777-300ERs for delivery in 2016 PAL was seeking to acquire four to six new-generation widebody aircraft for delivery from 2017. “The A350-900 has emerged as the strong favorite as Airbus has informed PAL that it could use the type to operate nonstop services to New York. PAL was able to get a close look at the A350-900 in May-2015, when Airbus had a demonstration flight in Manila,” CAPA wrote in Jun-2015.

PAL to launch Manila-New York non-stop in 2018; Toronto non-stop seem unlikely

PAL was ultimately unable to secure late 2017 delivery slots, which would have been preferable since that would have enabled it to expand in the US market, including an upgrade of New York to nonstop, prior to the peak 2017 Christmas season. However, PAL should be able to launch non-stops to New York by mid-2018, at which point two A350-900s will be delivered.

Serving New York nonstop is a priority for PAL as its evaluation of new-generation widebody aircraft specified the ability to operate Manila-New York in both directions without payload restrictions. A new higher gross weight version of the A350-900 also enables PAL to upgrade Toronto to nonstop, but Mr Bautista says a decision on Toronto will not be made until later.

Manila-Toronto is a smaller local market than Manila-New York and therefore may not be able to support a nonstop service, particularly on a year-round basis. PAL briefly operated Manila-Toronto nonstop with the 777-300ER in one direction (eastbound only) after launching Toronto in late 2012, but poor performance prompted PAL to implement a stop in Vancouver in both directions. New York was launched in Mar-2015 with a stop in Vancouver in both directions.

The A350-900 is a smaller and more economical aircraft than the 777-300ER, making it an ideal fit for New York non-stops.

Premium ECY option on A350

PAL plans to configure its A350-900 with approximately 300 seats across three classes – economy, premium economy and business. PAL configures its 777-300ERs with 370 seats across two classes – economy and business.

PAL currently only offers a premium economy product on its A330-300 fleet. The PAL premium economy product provides extra legroom but has the same seat width as economy. This makes the PAL premium economy product more like the product offered by US airlines rather than that of its Asian competitors, which offer a wider seat and a differentiated service.

The higher-capacity 777-300ER is ideal for PAL’s biggest long haul markets, Manila to Los Angeles and San Francisco. Although PAL plans to use the A350-900 to add frequencies on these routes, the A350 is generally a better fit for thinner markets including London, New York, Toronto and Vancouver. For Vancouver a smaller aircraft would be sensible, particularly as it is decoupled from New York, leaving Vancouver with more dedicated flights even if Toronto remains tagged.

PAL to use A340s initially to launch new long haul routes

The A350-900 is also a good fit for potential new long haul routes. PAL is launching service from Cebu to Los Angeles in Mar-2016 and plans to consider other long haul routes from Cebu as its widebody fleet expands. PAL is also considering the launch of a destination in continental Europe, potentially by the end of 2016.

Cebu-Los Angeles and the other potential new long haul routes will be launched with A340-300s as the 777-300ER is too large. PAL’s A340-300s have 254 seats in two-class configuration (economy and business only), making them even smaller than the A350-900s. However the A340s are inefficient, resulting in higher per seat costs even in a low fuel price environment.

As CAPA stated in the Nov-2015 report, PAL intends to keep operating each of its six A340-300s, which were acquired in 2013 and early 2014, until the engines require overhaul. For three of the aircraft the engines will come up for overhaul as the A350-900s are delivered in 2018 and 1H2019.

PAL has the flexibility to operate the other three A340s slightly longer, although it could accelerate their retirement if fuel prices increase. If the retirement of the last three A340s were accelerated, PAL would need to quickly exercise A350-900 options or adjust its long haul capacity plans.

PAL’s long haul ASKs to grow by approximately 50% over next three years

PAL’s current fleet plan envisages 17 long haul aircraft at the midpoint of 2019, including eight 777-300ERs, six A350-900s and three A340-300s. This represents an expansion of 42% compared with the 12 long haul aircraft in the current fleet. However, long haul ASK growth will likely expand at even faster rate – potentially above 50% – as three of the A350s are being used to replace smaller A340s. The A350s will also be utilised more than the A340s.

PAL plans to use most of the additional capacity to expand in its existing long haul destinations – with a mix of additional frequencies, upgrading one-stop services to nonstop and setting up new links from Cebu. However there will also be an opportunity to add new destinations in Europe and the US. As CAPA has highlighted, PAL previously served Las Vegas and has been evaluating several potential new US destinations including Chicago, Miami and San Diego.

The approximately 50% capacity increase may seem steep, but should be manageable given PAL’s strong position in the North American market. PAL faces relatively limited competition between the Philippines and North America as the Gulf airlines are unable to offer convenient connections in this market. PAL also has a loyal customer base in North America, where there is a large Filipino community.

PAL has the opportunity to expand in US market

For several years PAL was unable to expand in the US because the Philippines was under a Category 2 safety rating from the US FAA. PAL has only increased capacity slightly to the US since the Philippines was upgraded to Category 1 in Apr-2014. There are clearly opportunities for further expansion, particularly when taking into account the need to catch up on growth after not being able to expand its US operation for six years.

PAL has between 6,500 and almost 9,000 weekly nonstop seats to the US depending on the time of year. The launch of Cebu-Los Angeles will add approximately 10% more seats. New York is not included in these figures as it is served one-stop via Vancouver, but the planned new nonstop service to New York would generate approximately 10% seat growth for PAL in the Philippines-US market.

Load factor data for New York is only available for the first three months of the New York operation. But in Aug-2015, the last month of available data, PAL recorded a load factor of 87% on the Vancouver-New York sector. In Aug-2015 PAL recorded an average load factor of approximately 89% on Manila-San Francisco and 86% on Manila-Los Angeles.

The Philippines-US market will likely grow at least modestly over the next several years. PAL should also be able to increase its Philippines-US market share as it adds nonstop capacity.

PAL should be able to increase its share of the Manila-Los Angeles and Manila-San Francisco markets as it adds frequencies. However, the biggest opportunities for market share gains could be on routes where it launches a new nonstop option – such as Cebu-Los Angeles and Manila-New York – because on these city pairs PAL now offers similar one-stop products to those of its competitors.

Source: CAPA, http://centreforaviation.com

CAPA Analysis: 2016 Cebu Pacific Expansion Plans, Growth Rate Slows

Cebu Pacific is SEAsia’s 3rd Largest LCC Group

Southeast Asian LCC groups ranked by fleet size: Dec-2015

Airline Group  Number
of carriers 
fleet size 
Lion Group 4 198 512
AirAsia/AirAsia X 7 188 385
Cebu Pacific 2 55 51
Garuda (Citilink) 1 36 44
SIA (Scoot/Tigerair) 2 34 50
Nok 2 31 13
Jetstar 2 29 0
VietJet 2 27 89
Golden Myanmar 1 3 0
TOTAL  23 601 1144

International expansion accelerated in late 2013 when Cebu Pacific’s long haul operation was launched with Dubai the first route. Three more long haul routes were added in the last four months of 2014 to Sydney, Kuwait and Riyadh. Doha was launched as Cebu Pacific’s fifth long haul route in Jun-2015.

Cebu Pacific currently operates six A330-300s although the equivalent of two of these aircraft are currently used on short haul routes. Its narrow body fleet consists of eight A319s and 33 A320s while Cebgo operates eight ATR 72-500s.

Double Digit Capacity in 2015

In 2015 Cebu Pacific has taken delivery of its sixth A330 along with four A320s. Two of these A320s were pure growth aircraft while the other two replaced smaller A319s.

Through the first nine months of 2015 the group reported a 13% increase in seats and a 27% increase in ASKs. Passenger numbers were up 9% and RPKs were up 24% as the group’s load factor has slipped by 3ppts.

Seat capacity was also up by 14% in 2014 while ASKs surged by 27%. The increase in seats was partially driven by the Tigerair Philippines acquisition while the new long haul operation drove the higher increase in ASKs.

In 2013 seat growth was a slightly more modest 9% while ASKs grew by 14% with the first three months of the Dubai service contributing to the higher ASK figure. In 2012 seat growth was 16% and ASK growth was a similar 15%.

Ready to Launch Honolulu

The double digit ASK growth for 2016 will be driven partially by the full year impact of Doha which was launched in Jun-2015. Cebu Pacific is also aiming to launch Honolulu and Melbourne in 2016. But as these routes are not likely to be added until 2H2016 their contribution to ASK growth will be relatively modest.

Honolulu and Melbourne have been in the business plan for Cebu Pacific’s long haul unit since it was established. Preparations for Honolulu advanced after the Philippines was upgraded in Apr-2014 by the US FAA to a category 1 safety rating. Under category 2, Philippine carriers were barred from launching new services to the US.

Cebu Pacific had been looking at launching Honolulu in 2015 but the process of securing all the required approvals has taken longer than expected. Cebu Pacific now has all the required regulatory approvals but is still waiting for approval from Manila Airport, which needs to allocate the proposed new A330 service to Honolulu terminal space. Pending airport approval Cebu Pacific is now looking at launching three or four weekly flights to Honolulu as early as 2Q2016 but at this point a 2H2016 launch seems more likely.

Advanced Stages of Preparing for Melbourne

Preparations for Melbourne have been underway since May-2015, when the Philippines and Australia agreed to an expanded air services agreement. Cebu Pacific was previously limited to five weekly flights to Australia, which it is now using for Sydney.

But Melbourne is also currently being held up by a pending request to Manila Airport for a gate to support the new service, which Cebu Pacific has proposed operating with four weekly flights. Once the final approval comes Cebu Pacific will run a final check on the numbers before proceeding and setting a launch date.

Cebu Pacific will need some time to launch both Melbourne and Honolulu as it first needs to free up A330 capacity by removing some of the short haul flights now operated with the A330. This requires a re-jigging of its A320 schedule to free up A320s to back fill capacity in the regional markets that will lose A330 flights.

Plans 3rd Doha Frequency but Shifts Focus Away from Middle East

Cebu Pacific is now seeking to increase Doha to three weekly flights. The proposed additional flight to Doha is also waiting for approval from Manila Airport.

Besides the additional Doha flight Cebu Pacific is not planning any expansion of its Middle East operation in 2016 as it focuses long haul growth on Australia and Hawaii. The Middle East currently accounts for 32% of Cebu Pacific’s international ASKs, which is more than any other region.

The shift away from the Middle East is sensible as it results in a more balanced long haul operation. By the end of 2016 Cebu Pacific will likely have 57% of its long haul seat capacity allocated to the Middle East compared to 73% currently.

Australia and Hawaii are very different to Cebu Pacific’s four Middle Eastern destinations. In the Australia and Hawaii markets Cebu Pacific relies on Filipinos who are now permanently residing overseas and pay for their own flights to visit friends and relatives in the Philippines. In the Middle East market most of Cebu Pacific’s passengers are temporary workers with flights paid for by their contractors.

With Sydney Cebu Pacific has been able to stimulate demand in Australia’s Filipino community as well as from Australians looking for an alternative destination in Asia for holidaying. In the first 12 months of Cebu Pacific serving Sydney (Sep-2014 to Sep-2015), the total Sydney-Manila passenger market grew by 67%, according to Australian government data.

Cebu Pacific captured a leading 38% share of the Sydney-Manila market during this period. PAL’s share of the market has slipped but its passenger numbers in Sydney have also grown while Qantas’ traffic on the Sydney-Manila route has dropped only slightly.

Cebu Pacific is confident it can similarly stimulate demand in the Melbourne and Honolulu markets. PAL is currently the only carrier with non-stop flights from Manila to both Melbourne and Honolulu.

In the Manila-Middle East market it is more difficult to stimulate demand as the Filipinos in the Middle East are generally not there permanently and rely on their contractors to cover their flights home. The Philippines-Middle East market is also more competitive and has seen a large increase in capacity in recent years from PAL and Middle Eastern carriers.

Intense Competition in the Middle East Market

PAL will start competing against Cebu Pacific in the Kuwait market in Jan-2016. PAL currently serves four destinations in the Middle East – Abu Dhabi, Dubai, Dammam and Riyadh – all of which it has launched since late 2013.

Kuwait and Jeddah are being added by PAL in Jan-2016, both initially as a tag to Dubai. As CAPA analyzed in the first installment in this series of reports on the Philippine market:

Manila-Dubai has been a challenging market for PAL since the group launched the route two years ago – at about the same time as Cebu Pacific. Manila-Dubai is now profitable for Cebu Pacific, which reported a 3Q2015 load factor of 87.5% load factor for Manila-Dubai, while it is still loss making for PAL.

PAL is hoping the new tag to Kuwait and Jeddah will improve its performance in the Dubai market. PAL will have uplift rights from Dubai to Kuwait and Jeddah which it intends to utilise. PAL is also hoping to carry significant traffic from Manila through to Kuwait and Jeddah, enabling it to improve load factors on Manila-Dubai.

The earlier report also pointed out that PAL has experienced a significant erosion in yields in the Sydney market since Cebu Pacific entered in Sep-2014. The route has since been unprofitable for both carriers and PAL will likely be similarly impacted in Melbourne, Guam and Honolulu. All these markets are primarily price sensitive leisure market which plays to Cebu Pacific’s strength as the LCC has a significant lower cost base than its full service rival.

Source: CAPA, http:// centreforaviation.com



CAPA: Airlines Responding to Congestion with ‘High-Density’ Plane

AN AVIATION think tank said low-cost carriers (LCCs) in Southeast Asia, including Cebu Air, Inc., are moving to replacing their fleets with larger and high-density aircraft to maximize airport space, but the huge order book in the region is starting to get “alarming” as this will have a huge impact on capacity balance.

A321neo CFM AIRBUS V08 300dpi

“LCCs in Southeast Asia are starting to respond to growing infrastructure constraints at several airports in the region by up-gauging aircraft,” the Center for Asia Pacific Aviation (CAPA) said in an analysis released on Friday.

“The use of larger and higher density narrowbody aircraft is logical as it maximizes the use of precious slots; but is also somewhat alarming given the huge order book for the Southeast Asian LCC sector.”

Cebu Air operates Cebu Pacific Air, which has the “most pronounced up-gauge strategy” of all LCCs in Southeast Asia after placing an order for 30 A321neos in 2011.

“The replacement of A320ceos with A321neos is an important component of the Cebu Pacific long term strategy to continue expanding at its Manila hub without increasing the number of flights. Manila is currently operating at capacity and very few — if any — additional slots are expected to become available over the next several years,” CAPA explained.

Flag carrier Philippine Airlines, Inc. is also adopting a similar strategy of maximizing its slots at the Ninoy Aquino International Airport by replacing A320ceos with A321ceos and later A321neos. The carrier already phased out its A319 fleet last year.

CAPA noted that while Cebu Pacific has not yet committed to expanding its widebody fleet, any decision to lease additional A330s would be likely “driven by opportunities to up-gauge more short haul flights” instead of expanding its long haul network.

Over the next few years, A321s will become the “backbone of the fleet” of Cebu Pacific and other Southeast Asian LCCs, “resulting in an up to 33% increase in capacity before factoring in any expansion of the fleet.”

As of Dec. 11 (2015), Cebu Pacific operates eight A319-100, 33 A320-200, six A330-300E, and eight ATR 72-500, according to the CAPA Fleet Database.

Source: Daphne J. Magturo, http://www.bworldonline.com

CAPA: ATR Receives EASA Certification for High Density ATR 72-600

The high-density seating configuration option for the ATR 72-600 aircraft has received its certification from the European Aviation Safety Agency (EASA).

Using the existing airframe, the new high density configuration option is achieved by optimizing the pitch and adjusting forward cargo compartment, bringing the aircraft maximum capacity from 74 to 78 seats. ATR’s greater passenger capacity further enhances airline revenue potential. The option will also be available as a retrofit.

Cebgo was the first airline to choose the high-density seating, in a deal for sixteen new ATR 72-600s announced at the Paris Airshow earlier this year. The first aircraft in the 78-seat layout will enter commercial service in August 2016. The additional seats are very valuable for airlines operating in the regions where traffic grows rapidly and the demand is highly sensitive to fare.

“The demand comes from airlines, especially in the Southeast Asian market, requesting to further optimize the cabin space and to increase the number of available seats for regional flights,” says Thierry Casale, ATR Senior Vice President Programmes. “With the lowest seat-mile cost in the regional market and unparalleled operating economics, the 78-seat ATR 72-600 turboprop is a perfect combination between comfort and efficiency.”

Source: CAPA, http://centreforaviation.com

Cebu Pacific & Philippines Airlines Among Profitable Airlines in SEA

Rank Airline  Country 

3Q 2015

3Q 2014

1. Malaysia AirAsia Malaysia  $78m profit $63m profit
2. Singapore Airlines Singapore  $71m profit $110m profit
3. Bangkok Airways Thailand  $30m profit $22m profit
4. Cebu Pacific/Cebgo Philippines  $22m profit $2m loss
5. Garuda Indonesia Indonesia  $22m profit $32m loss
6. SilkAir Singapore  $15m profit $2m profit
7. Thai AirAsia Thailand  $14m profit $13m loss
8. Citilink Indonesia  $8m profit $6m profit
9. Philippine Airlines Philippines  $5m profit $3m loss
10. Scoot Singapore  $1m loss $15m loss
11. SIA Cargo Singapore  $2m loss $13m loss
12. Indonesia AirAsia Indonesia  $4m loss $7m profit
13. Indonesia AirAsia X Indonesia  $7m loss N/A
14. Tigerair Singapore Singapore  $8m loss $20m loss
15. Malaysia AirAsia X Malaysia  $8m loss $42m loss
16. NokScoot Thailand  $9m loss N/A
17. Nok Air Thailand  $10m loss $11m loss
18. Thai AirAsia X Thailand  $11m loss $5m loss
19. Philippines AirAsia Philippines  $19m loss $30m loss
20. Thai Airways/Thai Smile Thailand  $79m loss $119m loss
TOTAL    $107m profit $95m loss

Source: CAPA – Centre for Aviation


Cebu Pacific Air and Philippine Airlines were among the five most profitable airlines in Southeast Asia during the first nine months of 2015, a period marked by more “rational” capacity and low fuel prices, think tank Center for Aviation (CAPA) said in a report.

CAPA data showed that Cebu Pacific booked a profit of $156 million while PAL earned $124 million during the January to September period. They were just behind Malaysia AirAsia, with a profit $220 million, and Singapore Airlines, which earned $203 million.

The gains came as challenges were highlighted for Southeast Asian carriers, which have moved to cut the overcapacity seen in 2014 that was manly led by low-cost carriers, the report said.

CAPA said Cebu Pacific and PAL were also among 10 of 19 profitable Southeast Asian airlines during the period, meaning most were still in the red.

“Majority of airlines remain in the red despite the low fuel prices, an indication that market conditions remain relatively challenging,” Capa said.

Among those that reported earnings, CAPA said several carriers were “only marginally profitable” and the figures were relatively lower when compared to most other regions.

It said the region’s airline sector would account for less than a fifth of the total profit for Asia Pacific and about 2 percent of the $50 billion in operating profit of airlines globally, CAPA added.

Sources: Miguel R. Camus, http://business.inquirer.net, CAPA

CAPA Analysis: PAL Pax Volume To Grow 20% This Year

AN AVIATION think tank said Philippine Airlines, Inc. (PAL) is on track to grow its passenger volume by an annual 20% this year, and will have more opportunities to boost its long-haul operations in late 2016.

“PAL is on track to carry about 6 million international passengers in 2015, a 50% increase compared to 2012,” the Centre for Asia Pacific Aviation (CAPA) said in a report released over the weekend.

“For the second consecutive year PAL will likely end 2015 with annual international passenger growth of about 20%.”

For the first half of the year, the flag carrier ferried 2.9 million international passengers, higher than Cebu Pacific’s 1.9 million and Philippines AirAsia’s 357,000, CAPA said, citing data from the Civil Aeronautics Board.

CAPA expects the carrier to “focus” its long-haul expansion on North American routes, which generated “most” of its profits and where it sees “relatively limited” competition.

Among PAL’s North American routes include Vancouver and Toronto in Canada, San Francisco, Los Angeles, Honolulu and New York in the United States.

PAL’s listed parent firm, PAL Holdings, Inc., reversed last year’s P322.16-million net loss as it swung to a P247.9-million profit in the third quarter, helped by the peso’s depreciation against the dollar and higher passenger revenues from new routes. For the first nine months, its net income ballooned by an annual 2,465% to P6.11 billion.

“PAL is planning to expand capacity to mainland North America over the next few years, a sensible move as competition will likely continue intensifying to the Middle East, Australia and, soon, Hawaii,” CAPA explained.

The airline also announced that its re-fleeting program will likely involve adding eight Boeing 787 or Airbus A350 XWB aircraft through a lease or purchase agreement to be sealed within the year to replace six of its existing Airbus A340, and “possibly” add two more of these, with delivery expected by 2017 or 2018.

PAL has yet to issue a formal decision on which plane to acquire, but in its report, CAPA said “PAL is close to committing to at least six A350-900s for delivery from 2017. A formal announcement is expected by the end of 2015.”

PAL Holdings President and Chief Operating Officer Jaime J. Bautista did not confirm the CAPA statement. Sought for comment, he said in a mobile phone reply on Sunday: “We have not issued such statement.”

The flag carrier operates a fleet of 59 aircraft, composed of 32 A320 family aircraft and 27 widebodies, across 36 destinations.

Shares in PAL Holdings ended unchanged last Friday at P4.52 apiece.

Source: Daphne J. Magturo, http://www.bworldonline.com

CAPA Analysis: PAL Closes In On A350-900 HGW

The A340-300s are now slated to be phased out as new generation wide body aircraft are delivered. PAL is close to committing to at least six A350-900s for delivery from 2017. A formal announcement is expected by the end of 2015.

PAL is looking to acquire a new high gross weight (HGW) version of the A350-900 which is available from 2017 and will enable non-stop Manila-New York flights in both directions without payload limitations. Airbus has informed PAL that it does not need the recently launched A350-900ULR, which will be available from 2018 and has been ordered by Singapore Airlines for non-stops to the US.

Trans-Pacific flights from Manila are about three hours shorter than flights from Singapore. But flights from eastern North America to Manila are still slightly too long for the current version of the A350-900 or the 777-300ER.

PAL is also looking at using A350-900 HGW aircraft to potentially upgrade Toronto to non-stop and launch a fourth destination in the US. Chicago is the most likely new destination for the A350-900 HGW.

PAL has also been evaluating other potential US markets in both the east and west coasts. New destinations in the western US can be launched using the existing wide body fleet, potentially as early as late 2016 as the two additional 777-300ERs are delivered. PAL previously served Las Vegas and at one point was considering San Diego, which has a large Filipino community.

A fleet of eight 777-300ERs and six A350-900s will enable modest growth of the long-haul network with a focus on North America. Even if PAL ultimately opts for a few more A350s the long-haul growth should be manageable.

PAL is likely to remain for at least the medium-term the only non-stop operator between Philippines and continental North America, which has a large a loyal Filipino population. PAL is fortunate to only have to compete against North Asian carriers in the Philippines-North America market as one-stops via the Middle East is a much longer option.

Source: http://centreforaviation.com

CAPA: What’s In An eponym? Airport Names

According to a list in the online encyclopaedia Wikipedia, there are 317 scheduled commercial airports around the world (out of a total of 4037 according to OAG/ACI [2013]) which are named after a person.

Most often that individual is (by far) a politician, or a religious leader. There is a small but growing number that are named, or more likely have been renamed, after a ‘celebrity,’ such as a musician, actor, artist or sportsperson for example and occasionally an industrialist.

One might assume that there is a commercial motive behind such a decision, at least partially. But there is little in the way of research so far into the quantifiable economic benefit of an airport adopting a celebrity eponym.

The vast majority of these airports are named after political or religious figures, or notable individuals from the fields of science and other disciplines. There are some dangers in taking the political route and even the religious one. While it is extremely unlikely that anyone would seek to name an airport after a tyrant, applying any political eponym to an airport runs the risk of alienating as many people as it encourages to use the facility. This is particularly true in the US, where political support amongst those who care at all is divided almost 50:50 between Republicans and Democrats with hardly any other parties or individuals getting a look in.

Passengers having distaste for a party may not be able to avoid using the named airport but they can minimize their patronage and circumvent the facilities in it.

President Obama will inevitably have an airport named after him – but where?

On the other hand such extreme reactions are rarely to be found where US airports are named after Presidents, who retain a special place in the heart of most American citizens, irrespective of their political doctrine. So there will almost certainly be a Barack H Obama airport one day when his two terms are complete, possibly in Chicago where his political power base is.

That would mean renaming O’Hare airport, which is currently named after a World War 2 flying ace, as Midway simply wouldn’t be ‘important enough,’ and the proposed South Chicago Suburban airport has been earmarked for cargo, which might not be appropriate. Or it could be in Hawaii, where he was born, or Kenya, where his father came from, or even Ireland, as the Irish have long celebrated the rise to power of ‘Barry O’Bama.’ (This was written on St Patrick’s Day and Dublin Airport does not carry anyone’s name right now).


Obama would be the latest edition to a long list of political airport eponyms that already includes the 41st President George H W Bush (Houston) – not his son George W ‘Dubya’ Bush who has no lasting airport memorial for now at least -; Gerald R Ford (the not so grand Grand Rapids Airport, Michigan); Ronald Reagan (Reagan National Airport, Washington DC); and probably the best known of them all, John F Kennedy (New York). ‘JFK’ actually has two. The J F Kennedy Memorial Airport in Ashland, Wisconsin is also named for the assassinated 35th President.


The Abraham Lincoln Capital Airport, named after probably the most famous of the US’ historical Presidents and arguably the greatest, can be found at one of the many Springfields (the most popular name for a town or city in the US and where ‘The Simpsons’ live), this one at Springfield, Illinois, where ‘Abe’ lived. In the US at least it is not only large city or hub airports that are named in honour of senior politicians.

There are many politicians immortalised in runway tarmac in the US but Presidential name selections are relatively few and that broadly is the case in most other countries. Canada’s main claim to fame is Montreal’s Pierre Elliot Trudeau International Airport, one that is perhaps not as influential as was the former French-Canadian Prime Minister, who began his political life as a Parliamentary Secretary to Lester B Pearson (who, of course, is immortalized at Toronto’s main airport).

In 2014 MPETIA carried only 14.8 million passengers, a small figure for Canada’s second city and a mere 38% of the total at Toronto Pearson, despite 5.3% annual growth. There is increasing concern amongst the city’s politicians over this poor performance, which is heavily influenced by lower taxes at airports in nearby New York State in the US. Meanwhile no passengers at all now use Montreal’s Mirabel Airport, the 1975 white elephant that was once the world’s largest by size, and which was named after the suburb of that name.

The UK is a country that has usually avoided political name attachments. Most of the main airports in London (Heathrow, Gatwick, Stansted etc) and the regions (Manchester, Birmingham, Glasgow, Edinburgh etc) carry no political appendage. In fact, with little imagination being employed, airports in Britain are or were typically named after the suburb or locality in which they are found (Manchester Ringway, Liverpool Speke, Birmingham Elmdon, Glasgow Abbotsinch, Edinburgh Turnhouse and so on). The main bone of contention is whether or not to describe them as ‘International’ Airport, whether they actually are or not.

This state of affairs is representative of a wider trend in the UK which can best be demonstrated in the example of the legendary 1970s new town of Milton Keynes, about 50 miles (80 km) north of London and now Britain’s fastest growing city and with more finance houses than Zurich. It was named after the villages of Milton and Keynes over which it was built, not the economists Milton Friedman and John Maynard Keynes as is often assumed.

Several airports could have a claim on Sir Winston Churchill

There are the beginnings of an interesting debate in the UK though, over the future naming of Heathrow Airport. In the year of the 50th anniversary of the death of celebrated wartime leader Sir Winston Churchill (who is generally regarded as Britain’s greatest ever citizen), a councillor in Maidenhead, close to Heathrow Airport, has begun a campaign to rename London Heathrow Airport after Churchill. Heathrow Airport has not responded to the suggestion though it is not likely to until the final results of the Airports Commissions on UK runway capacity are delivered early in Jun-2015.

This actually raises an interesting question as to which airport might claim to ‘own’ a politician’s name where several are in the frame. There are two or three others that might well lodge a claim in Churchill’s case, including Manchester, where Churchill entered politics – quite by chance – and subsequently won his first Parliamentary seat (Oldham 1900-1906) and then went on later to represent Manchester North West. Later still he represented two separate constituencies in Essex (closest airports London Stansted and London Southend) and Dundee in Scotland.

Yet, there seems to be no interest shown by Manchester Airports Group, which owns both Manchester and Stansted airports, even in merely examining the case for renaming either airport after a statesman who is almost universally revered (even if such reverence is open to question).

There are several exceptions to this general rule in the UK, where airports have been overtly renamed after ‘celebrities,’ the best known being Liverpool and Belfast City airports, and where attachment to a highly regarded historical figure is – again – under consideration, this time at Birmingham. These exceptions will be examined later.

Briefly, other notable ‘politicians’ (the word is sometimes used loosely here) who have found themselves attached to airports, whether they like it or not (and most are well beyond caring) include:

Napoleon Bonaparte (Ajaccio, Corsica, France);

Alexander the Great (who is immortalised at two airports, in Greece and Macedonia);

David Ben Gurion (Tel Aviv, Israel);

Yasser Arafat (Rafah, Gaza Strip);

Rafic Hariri (Assassinated former Prime Minister of Lebanon: Beirut):

Charles de Gaulle (Paris, France);

Gengis Kahn (Ulan Bator, Mongolia);

Lech Walesa (Gdansk, Poland);

Indira Gandhi (Delhi, India. There are no airports named after Mahatama Gandhi but plenty of other transport facilities in India are);

Benazir Bhutto (Assassinated former Prime Minister of Pakistan: Rawalpindi);

Jomo Kenyatta (Nairobi, Kenya);

Konrad Adenaur (first post-war German Chancellor, Cologne, Germany);

Oliver Tambo (ANC leader: Johannesburg, South Africa);

Adolpho Suarez (Spain’s first democratically elected prime minister after Franco, Madrid – but only from 2014);

Simon Bolivar (Leader of five countries to independence from Spain: twice, at Columbian and Venezuelan airports);

Imam Khomeini (Tehran, Iran);

Vaclav Havel (Prague, Czech Republic).

Additionally, Lee Kuan Yew (Singapore) – a proposal in Apr-2015 to rename Singapore‘s Changi Airport that arose from a public petition and will now be presented to the Government for consideration.

One potential issue that can arise when an airport is named for political reasons is that the politician falls out of favour. That can prompt awkward deliberations as to whether the airport should be renamed.

Baghdad International Airport was previously Saddam International Airport, ironically now a name that suggests, if nothing else, greater national unity than exists at present. Addis Ababa’s Bole International Airport once carried the name of Emperor Haile Selassie, revered by Rastafarians as the returning messiah, but is now recognized by the bland name of a suburb.

South African airports eradicate all apartheid era traces, but no place yet for Mandela

The principal three South African airports dropped their apartheid era names. Johannesburg’s Jan Smuts became O (Oliver) R Tambo; Cape Town’s D F Malan simply reverted to Cape Town and gained ‘International;’ while Durban’s Louis Botha also became Durban International before closing down altogether in 2010 to be turned into a container storage yard and replaced by the green field King Shaka International Airport, named for a 19th century Zulu leader.

Away from the ‘golden triangle’ of the Republic’s three main commercial cities, the name of another apartheid era leader, B J Vorster, who was in power at the time of Nelson Mandela’s imprisonment, was quietly removed from what is now plain Kimberley Airport, at the centre of South Africa’s diamond mining region.

Strangely, perhaps, there is no Nelson Mandela airport yet in South Africa, though there surely will be one day. But there is a Nelson Mandela Airport – at Praia on the island of Santiago, the capital of Cape Verde; a country that prospered from South African Airways flights that landed there to refuel en route Europe and the Americas during the period when they were not permitted to overfly a raft of African states. The naming was not without controversy.

There are few other countries where the march of history is better demonstrated than in South Africa’s renaming of its airports but Bolivia (named after the hitherto-mentioned Simon Bolivar) has a shot at it. No friend to the US during the Eva Morales presidency since 2005, Bolivia renamed El Alto, the world’s highest international airport, from its previous moniker, J F Kennedy (again) but in its defence that was before Morales took office and the name was rarely used in public anyway. Had the Morales government chosen to do it the already tense stand-off between the two countries might have been further heightened.

Simon Bolivar crops up again in Ecuador where another airport named after him at Guayaquil was renamed Jose Joaquin de Olmedo International in honour of a former President, Mayor of Guayaquil and a renowned poet. At least on this occasion there was no obvious political motive. It was merely felt that there were too many Simon Bolivar airports.

Politics most definitely played a part in the Philippines though, where former First Lady Imelda Marcos’ (of the shoes) name was removed from what is now plain Mati Airport and in Taiwan, where Generalissimo Chiang Kai-shek (he of the ‘White Terror’) suffered a similar fate, being erased from the nameplate of what is now Taiwan Taoyuan International Airport.

Royalty ranks higher than religion in airport naming

Aside from politics, the names of religious leaders and of royalty can be found at airports, the latter with much greater frequency. Religious ones include the same Pope (John Paul II) at both of the Krakow, Poland and Ponta Delgada (in the Portuguese Azores) airports. St Paul the Apostle Airport can be found at Ohrid in Macedonia.

There are no other Popes or Apostles that we know of but the beatified Mother Teresa of Calcutta is recognised at Tirana Airport in Albania. While she was of Macedonia origin, her parents were Albanian.

The names of Kings and Queens are attached to five airports, three of them in Saudi Arabia (Abdulaziz/Jeddah, Fahd/Dammam and Khalid/Riyadh), together with the aforementioned King Shaka at Durban, South Africa and (King) Tribhuvan airport in Nepal. There are two Queens (Alia at Amman, Jordan and Beatrix at Oranjestad, Aruba and one Princess (Juliana, at Sint Maarten in the Netherlands Antilles).

Sultans are far more numerous, 11 in total, and all in Malaysia (six) or Indonesia (five). (A number of Indonesian airports are also named after ‘national heroes’).

Renowned aviators do make the list but not as often as might be expected. Lyon’s (France) main airport is named after Antoine de Saint-Exupéry who was an all round polymath: an aristocrat, writer and poet as well as a pioneer of flight. Istanbul’s fast growing second airport carries the name of Sabiha Gökçen, an adopted daughter of Mustafa Kemal Atatürk, founder of the Turkish state, and the first Turkish female combat pilot. The Wright Brothers are recognised at Dayton–Wright Brothers Airport in Dayton, Ohio, USA but it is only a reliever/general aviation facility.

The final ‘category’ so to speak is the most intriguing one and might be referred to as the weird and wacky. They are, though, few and far between. Airports are a serious business. They include another flying ace, Billy Bishop, a Canadian First World War pilot, if only because he turns up twice; once at the Toronto City Airport that has recently changed hands in a sale-and-leaseback deal (an unusual arrangement in the airports business) and secondly at Owen Sound/Billy Bishop Airport, also in the province of Ontario. There are limited commercial flights at the latter but the potential for confusion is evident.

Greece is strong on names of characters from ancient history. The Greek physician Hippocrates is immortalised at the Kos International Airport, the island on which he was born, while the ancient Greek boxer Diagoras of Rhodes is celebrated at the airport of that name on the island of Rhodes. In the UK it still perplexes some people as to why the owners of Doncaster-Sheffield Airport, which opened in 2005, gave it the title ‘Robin Hood’ after the heroic outlaw of popular English folklore.

He is more typically associated with Sherwood Forest, some distance from the airport and the naming occasioned a petition against it. One airport is even named after a piece of music – Linz Blue Danube Airport in Austria is named after Johann Strauss’ Blue Danube Waltz of 1866. Bizarrely, Sétif International Airport 08 May 1945 was named after a massacre.

There have been few academic studies to date

The naming of an airport is evidently taken seriously even if the result is sometimes a little difficult to understand. Surprisingly, there has been little in the way of academic research into the subject but a doctoral thesis was prepared in 2011 by a student, Uttam Kumar Regmi, who is also an aviation lecturer in Nepal specialising in the marketing and economics of airports. The following sections are based on interpretations of the content and data of that thesis. Comments in brackets (parentheses)/italics indicate an observation by the CAPA author on the student’s remarks.

The study investigated the use of brand names and slogans at 1,562 airports worldwide using content analysis of airport websites. The broad conclusions are:

  • Over 75% of airports worldwide are named after a single place;
  • 20% of world airports are not named after a place, and this is particularly common for airports in Latin America and the Caribbean where almost half of airports in that region are not named after a place. Instead, they tend to be named after a famous person, especially a political leader and/or revolutionary;
  • Almost half of airports worldwide name their airport after the scope of services available, and this is always in addition to, as opposed to in place of, an existing name.

Significant differences exist between world regions. Naming an airport after natural or man-made

attractions is most common in Europe; after a political leader and/or revolutionary is most common in Latin America/the Caribbean; and after royalty is most common in the Middle East (as above).

Only 10% (also reported in the study to be 13%) of all airports use a slogan and this is mainly a North American phenomenon. A more detailed analysis of airports in Europe finds that one-quarter of airports have two or more place names; one is typically the name of the place in which the airport is located, while the other tends to be the name of the nearest main city or town. (Often such an outcome will be driven by the demands of a low cost airline that wishes to emphasize the proximity of an airport to a major city or conurbation, even if it is not proximate at all, as in the case for example of Frankfurt Hahn, Stockholm Skavsta and Paris Beauvais airports. This trend may begin to reduce as the main European LCCs focus their growth more on primary airports).

Including a reference to the scope of services available at the airport is significantly more common at larger versus smaller airports in Europe. The use of a slogan is significantly more common at airports in Europe that are owned or operated by private interests compared to those that are publicly owned and operated.

So the naming of airports worldwide is widespread while the employment of slogans is limited. In Europe in particular the use of airport names and slogans varies according to the size of the airport and style of corporate governance.

Airports are typically not strong at marketing a brand

Historically, the study says, airports have been behind their airline counterparts in terms of marketing, failing to demonstrate professionalism and lacking a proactive or dynamic approach. However, airport marketing has developed rapidly in this sense during the last few decades, many of them establishing marketing departments during the 1990s, led by the UK.

Citing brand theory, the study says the most fundamental element of brand awareness is the brand name. It must be distinctive, memorable, easy to pronounce and meaningful (whether in real or emotional terms). An extension of the brand name is to have a slogan which is a memorable phrase that says something about who the company is and what it does.

Using location as the defining reason for naming an airport has its dangers. The study mentions an example of one area that co-operated to find an acceptable umbrella name – Tri-Cities, which covers parts of Tennessee, Southwest Virginia and North Carolina. It also refers to what was East Midlands Airport in the UK, to which Nottingham was added as the neighboring ‘main city’ in 2003.

But the other two principal cities of the area – Leicester and Derby – are closer to the airport and were added following protests in 2006, resulting in the ridiculously cumbersome “East Midlands Airport – Nottingham Leicester Derby,” which is hardly ever used. Rather, it is still just plain ‘East Midlands’ to most people.

Some reference is made to ‘famous persons,’ some of which are mentioned in the prior text. But little is reported about ‘celebrity’ naming, the main focus of this short report, despite the fact that naming in recognition of the famous in general made up a high proportion of airport names in all regions at the time the academic study was undertaken, varying from a low of 10.4% of all names in Europe to 42.2% in Latin America and the Caribbean (an average of 19.3% across all regions). Indeed the word ‘celebrity’ does not appear in the report even though it could be argued that celebrity is a significant sub-category of ‘famous’.

Everyone’s a celebrity, sporting and singing

In 2015 the rule of thumb is that the most famous – apart from some members of Royalty and very serious politicians – are ‘celebrities,’ and most frequently those in the sports, acting and musical performance fields. As long ago as 1966 John Lennon, then of The Beatles, declared that he was ‘bigger than’ (interpreted by the media as ‘more popular than’) Jesus. The attachment of the name of such persons to an airport is more likely to generate newspaper column inches and public intrigue than any other category.

CAPA undertook its own short study of the phenomenon of naming an airport after a celebrity (see later). The results seem to indicate that not a great deal of thought is attached to the power of a celebrity name to attract passenger business or investment. This is also rather surprising. Airport naming rights (to third parties) has increased in value as a non-aeronautical revenue generating tool during the past decade, especially so in the case of ‘low cost’ airports and terminals, which typically attract more leisure passengers that might be influenced by a particular name. This is the case in the US as well as Europe and Asia, where private airports developed outside the FAA’s remit can offer certain facilities to airlines that those within that framework cannot, and can develop unconventional revenue streams, such as offering naming rights and other sponsorship opportunities.

The best example (in fact the only one to date – setting up such a private airport in the US is no easy task) is Branson Airport, Missouri, which apart from being the only privately owned, privately operated commercial service airport in the US (it opened in May-2009) is a nationally known centre for live music performances, on a par with Nashville and Austin.

And yet there has been no formal brand naming of Branson Airport so far, nor does it even carry a slogan.


  • Most airports are named after a single place. Where they are named after a person it is most frequently politicians, royalty or religious figures. There can be hidden dangers in doing so;
  • The use of celebrity names is not widespread. Some of the best examples can be found in the UK;
  • There is little evidence of formal, structured evaluation of the financial benefits of airport naming, including celebrity naming;
  • Some airports do not use the names of entities or individuals when there would be an obvious benefit. But they may ‘play’ on the name in other ways;
  • Some trade associations are not convinced of the value of these naming activities as it can generate confusion;
  • The adoption of a slogan may potentially be hazardous and needs to be thought through. Often they appear humorous but one person’s humor can be another’s insult.

Source: http://centreforaviation.com