Elevated Walkway, ASEAN Airline & PAL’s B777


NAIA Walkway

NAIA Terminals 1 and 2 will soon be connected by an elevated walkway. Philippine Airlines will shoulder the 250 million peso cost of building the 400 meter walkway. Lucio Tan had already agreed to underwrite the project but the proposal still needs the regulatory approval of Manila International Airport Authority.

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AirAsia

Asia’s largest LCC, AirAsia, plans to create an ASEAN airline that will house Malaysia’s AirAsia Bhd, Thai AirAsia and the soon-to-be-listed Indonesia AirAsia and Philippines AirAsia. According to AirAsia’s chief executive officer Tan Sri Tony Fernandes, AirAsia’s affiliates in Indonesia and Philippines already appointed bankers in their respective countries to work on the planned initial public offering (IPO).

AirAsia Group will form the holding company once the Indonesian and Philippines affiliates joined AirAsia Bhd and Thai AirAsia in the listing club.

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Philippine Airlines

Starting December, PAL will increase flight frequencies to:

MNL – LAX twice daily

MNL – SFO from 11 to 14 flights a week

YVR – JFK from 4 to 5 flights a week

This is made possible due to the arrival PAL’s 7th Boeing 777-300ER aircraft this month. By December, another Boeing 777-300ER is expected to join the fleet. The B777-300ER has a seating capacity of 376 seats.

CEB-LAX route, on the other hand, will still be flown by the 254 seat-Airbus 340 aircraft. The A340 will also be used as standby aircraft to fly to Australia and Honolulu.

It’s Cheap to fly to the Philippines


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The Philippines ranked 9th out of 75 countries offering ‘best value flights’ according to kiwi.com’s Aviation Price Index 2016. India ranked 1 while United Arab Emirates was the most expensive.

kiwi.com is an online travel agency that uses algorithms to combine flights in the vast and fragmented commercial aviation sector to uncover savings for its clients.

The survey studied over one million international and domestic journeys. To come up with the ranking, it took into account fares per 100 kilometers of travel in terms of budget airline and legacy carrier trips to come up with an “average” figure.

The Philippines secured its place among the top 10 countries offering value flights with an average of $7.76 per 100 kilometers of travel.

The Philippines has three carriers. Legacy carrier Philippine Airlines and two budget carriers: Cebu Pacific Air and Air Asia Philippines. According to kiwi.com’s survey, its average low-cost airline fare for domestic routes was at $5.23 per 100 km and $8.26 for legacy carriers.

For international flights, it was at $3.93 for low cost airlines and $13.61 for legacy airlines, per 100 kilometers.

As noted, the survey revealed that India had the most “value” with an average a flight cost of $3.25 per 100 kilometers of travel while the United Arab Emirates, as the most expensive, calculated at a cost over 30 times higher, or $105.71 per 100 kilometers of travel.

“The Aviation Price Index is a fascinating guide to the costs of air travel around the globe,” Kiwi.com’s CEO Oliver Dlouhý said in a statement.

Source: Miguel R. Camus, Philippine Daily Inquirer

Air Asia Cancels Over 80 Flights Due to APEC


Cancelled Air Asia Philippines flights:

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November 17, 2015  (34 domestic flights)

Z2 711 and Z2 722 Manila-Kalibo-Manila

Z2 352 and Z2 353 Manila-Tagbilaran-Manila

Z2 767 and Z2 768 Manila-Cebu-Manila

Z2 424 and Z2 425 Manila-Puerto Princesa-Manila

Z2 430 and Z2 431 Manila-Puerto Princesa-Manila

Z2 773 and Z2 774 Manila-Cebu-Manila

Z2 354 and Z2 355 Manila-Tagbilaran-Manila

Z2 782 and Z2 783 Cebu-Manila-Cebu

Z2 300 and Z2 301 Manila-Kalibo-Manila

Z2 765 and Z2 766 Manila-Cebu-Manila

Z2 320 and Z2 321 Manila-Tacloban-Manila

Z2 775 and Z2 776 Manila-Cebu-Manila

Z2 272 and Z2 273 Manila-Kalibo-Manila

Z2 350 and Z2 351 Manila-Tagbilaran-Manila

Z2 324 and Z2 325 Manila-Tacloban-Manila

Z2 420 and Z2 421 Manila-Puerto Princesa-Manila

Z2 612 and Z2 613 Davao-Manila-Davao

November 18, 2015  (14 domestic flights)
Z2 711 and Z2 712 Manila-Kalibo-Manila

Z2 773 and Z2 774 Manila-Cebu-Manila

Z2 354 and Z2 355 Manila-Tagbilaran-Manila

Z2 320 and Z2 321 Manila-Tacloban-Manila

Z2 775 and Z2 776 Manila-Cebu-Manila

Z2 350 and Z2 351 Manila-Tagbilaran-Manila

Z2 427 Puerto Princesa-Manila

Z2 424 Manila-Puerto Princesa

 November 19, 2015  (14 domestic and 10 international flights)
Z2 713 Manila-Kalibo

Z2 273 Kalibo-Manila

Z2 352 and Z2 353 Manila-Tagbilaran-Manila

Z2 767 and Z2 768 Manila-Cebu-Manila

Z2 715 and Z2 716 Manila-Kalibo-Manila

Z2 327 and Z2 328 Manila-Tacloban-Manila

Z2 771 and Z2 772 Manila-Cebu-Manila

Z2 614 and Z2 615 Davao-Manila-Davao

Z2 420 and Z2 421 Manila-Puerto Princesa-Manila

Z2 1264 and Z2 1265 Manila-Hong Kong-Manila

Z2 90 and Z2 91 Manila-Macau-Manila

Z2 884 and Z2 885 Manila-Incheon-Manila

Z2 940 and Z2 941 Manila-Kuala Lumpur-Manila
November 20, 2015  (12 domestic flights)

Z2 426 and Z2 427 Manila-Puerto Princesa-Manila

Z2 763 and Z2 764 Manila-Cebu-Manila

Z2 715 and Z2 716 Manila-Kalibo-Manila

Z2 765 and Z2 766 Manila-Cebu-Manila

Z2 420 and Z2 421 Manila-Puerto Princesa-Manila

Z2 780 and Z2 781 Cebu-Manila-Cebu
Cebu Pacific Cancelled Flights:

AirAsia Philippines Gets P3 Billion More To Expand Route, Fleet Upgrade


SHAREHOLDERS of budget-carrier operator Philippines AirAsia Inc. are infusing more money into the airline for next year, increasing the firm’s capital stock to P5 billion to finance the lease of five more aircraft for 2016.

Over lunch on Tuesday, Philippines AirAsia CEO Joy D. Caneba said her carrier’s board has approved a capital infusion of up to P3 billion for 2016, an amount that will be used for the route and fleet expansion programs of the budget carrier.

“The stockholders have approved a capital increase of up to P5 billion for next year,” she said.

“The capital call is within the existing shareholders only. But we welcome new investors.”

Currently, the company has a capital of P2 billion.

“I think by the first quarter of next year, the new capital will be in place, but we will have it in tranches. I don’t see all the additional increase will come in one tranche, but it will be sufficient to cover the growth expansion for next year,” she said.

The company will take delivery of five new A320s by next year, all leased by its parent company in Malaysia, AirAsia Bhd. All of these will be used for the carrier’s regional expansion to China and South Korea.

“China and the Philippines is a natural route combination, and the yield for that market is doing good. Our market in China is doing very, very well, too. We also plan to open Taipei on top of our Macau and Hong Kong flights,” Caneba said.

The carrier has also retired three of its planes, as the management aligns the image of the the Filipino carrier with its Malaysian parent.

It started operating with 12 planes—from 15 aircraft in January—this month.

With this, operations on certain routes will have to be lessened, thus, Caneba expects to stay in the red for this year.

This also pulls down Philippines AirAsia’s plan of conducting an initial public offering (IPO) by 2017.

“The IPO will definitely happen, but I think we will have to defer it to 2018 because refleeting set us back,” she said.

The company aims to raise as much as $200 million through its stock-exchange debut. It plans to have a public float of about 30 percent. “It’s a primary issuance,” Caneba added. “The IPO will be in the first quarter of 2018.”

Philippines AirAsia used to operate with two air operators certificate—one for AirAsia Zest and another for AirAsia Philippines.

Just recently, the Civil Aeronautics Board approved its petition to operate as a single company with just a single certificate.

The Securities and Exchange Commission issued a certificate approving the name Philippines AirAsia Inc. “doing business under the name and style of the AirAsia Berhad.”

The airline, considered as the third small player in the Philippine aviation market, operates out of Manila, Cebu and Kalibo.

Source: Lorenz S. Marasigan, http://www.businessmirror.com.ph

2016: Make or Break Year for AirAsia Philippines


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The Philippine unit of Malaysian budget carrier Air Asia Bhd is seeing its outlook improve as it focuses on more international routes via secondary hubs and completes the consolidation of its brands, aviation consultancy CAPA-Center for Aviation said in a report.

Air Asia’s Philippine units represent the third major airline player in the Philippines, where they mainly compete with Philippine Airlines and Cebu Pacific Air.

CAPA said in its report that 2016 was a “critical year” for the Air Asia Group to prove that it can be a viable carrier in the Philippine market.

“If it meets its 2016 goal of becoming profitable, aspirations for an initial public offering within two years will become realistic, providing a foundation for consistent growth,” CAPA said.

“If the newly restructured [Philippines Air Asia] remains loss-making, its long-term survivability —and the AirAsia Group’s need for a Philippine affiliate—will again be questioned,” it added.

The group operates in the country mainly through its brands Philippine Air Asia and Air Asia Zest.

CAPA, citing its CEO Joy Caneba, said the combination of both units under a single brand would soon be rolled out.

“Turnaround efforts are banking on cost reductions driven by the transition to a single airline and higher yields that will be generated by a more international focused network,” CAPA said, adding that the business had been “highly unprofitable” since 2012.

Nevertheless, CAPA said the domestic business had been seeing improved load factor.

Moreover, it said Philippine Air Asia would continue to expand its fleet in 2016, reiterating a plan outlined by AirAsia founder Tony Fernandes.

CAPA said Air Asia Philippines was in the process of selling older planes to cut its fleet of 15 aircraft to 12 Airbus A320s.

“Strategically, PAA needs to resume expansion as it cannot afford to be stuck at its current modest capacity level. Cutting capacity and the fleet over the last year was necessary but is seen as a temporary measure to position the airline for future growth,” CAPA said.

It likewise supported the unit’s plan to develop more secondary hubs with international routes such as Davao, Iloilo, and Puerto Princesa.

“Over the last couple of years Air Asia has discovered that battling against PAL and much larger [low cost carrier] Cebu Pacific in the domestic market is generally a losing proposition,” CAPA said. “The focus on secondary international routes is logical as PAA needs to differentiate itself from its larger competitors.”

Source: Miguel R. Camus, Philippine Daily Inquirer

CAPA Report: SEA Airlines Back In The Black; Overcapacity Clouds Profit


SOUTHEAST Asia’s airline industry swung to profit in the first half of 2015 to reverse last year’s losses, but clouding the outlook are signs of “overcapacity” with most budget carriers including those in the Philippines having a huge order book, the Centre for Asia Pacific Aviation (CAPA) said in its latest report.

Philippine Airlines
Philippine Airlines (Image Source: Boeing)

The sector received a boost from “improved market conditions, slower capacity growth and lower fuel prices,” the aviation think tank said yesterday.

Sixteen airlines in the region — including Cebu Pacific, Philippine Airlines (PAL), Inc. and Philippines AirAsia — turned in combined operating profits of $641 million in the first six months, a turnaround from last year’s operating losses that exceeded $500 million, according to CAPA estimate.

Broken down, Cebu Pacific booked $136-million in profit from $67-million in the same period last year; PAL made $120 million from $22 million; while AirAsia’s local unit trimmed its losses to $24 million from $64 million, CAPA data showed.

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Cebu Pacific

Cebu Pacific posted the highest operating profit margin in the region at 20.5%, it said.

Operating margins elsewhere in Southeast Asia were generally in the single digits, lagging behind most regions, the report said. It noted the competition that is causing downward pressure on yields, “with a high risk of continued overcapacity given the region’s huge order book.”

“The Philippines domestic market is also again starting to exhibit signs of overcapacity following a period of rationality and high levels of profitability,” the report read.

The airlines’ profitability, it said, may continue to improve if they are “disciplined with capacity” while fuel prices remained low.

“But in the highly dynamic Southeast Asian market place it is hard imagine all airlines refraining from ambitious or strategic expansion,” CAPA said.

IMG_20150411_135951
AirAsia Philippines affiliate AirAsia Zest

It added that even as the market’s fundamentals are still “solid” due to a rising middle class, “there is always a risk that supply can grow faster than demand.”

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

Iloilo In Talks For Air Service To Incheon & Xiamen


ILOILO CITY — The Iloilo City government is in talks with carrier AirAsia Philippines over the possibility of offering flights to the South Korean gateway of Incheon and Xiamen in China, the Tourism department said.

The push for more connectivity comes as the city hosts meetings of the Asia-Pacific Economic Cooperation (APEC) this year, raising the region’s profile among international tourists, the Department of Tourism in Region 6 (DoT-6) said

“With Iloilo’s hosting of the APEC meetings this July, September and October, we do hope that more visitors will be coming in from the 21-member economies of APEC that will impact our number of flights and hotel accommodation,” said lawyer Helen J. Catalbas, DoT-6 director.

Ms. Catalbas said Iloilo City Mayor Jed Patrick E. Mabilog is currently leading talks with AirAsia Philippines, Inc. with the aim of launching services next year.

South Korea and China are both APEC members, along with Australia, Brunei Darussalam, Canada, Chile, Chinese Taipei, Hong Kong (China), Indonesia, Japan, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Thailand, the United States,and Vietnam.

For domestic flights, Ms. Catalbas said she has participated in discussions for the introduction of flights between Iloilo and Cotabato.

“For Mindanao, our flights for Davao, General Santos and Cagayan de Oro are going strong. We are looking at adding Cotabato. What is important is we can sustain the flights,” she said.

The airport’s current local routes include Manila, Cebu, Tacloban, Puerto Princesa, General Santos, Davao and Cagayan de Oro.

The Iloilo International Airport, located in the town of Cabatuan, will be bid out for upgrade works under the public-private partnership (PPP) program. The contract cost is P30.4 billion covering expansion, operation and maintenance over a 30-year period.

It is part of the PPP airport Bundle 1 that includes the Bacolod-Silay Airport with an indicative cost of P20.26 billion.

Prospective bidders, based on the PPP Center Web site, include GMR Infrastructure Ltd.-Megawide Construction Corp., the Metro Pacific Investments Corp.-JG Summit Holdings, Inc. consortium, Aboitiz Equity Ventures, San Miguel Corp., Philippine Skylanders, Inc., and Union Equities, Inc.

The submission of qualification documents has been moved to Aug. 10 from July 27.

Source: Louine Hope Conserva, http://www.bworldonline.com

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


Puerto Princesa Airporthttps://i0.wp.com/centreforaviation.com/images/logos/capa-306x90.png 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.

Source:

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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, http://www.bworldonline.com

AirAsia Philippines Unveils Expansion Plan


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BUDGET carrier AirAsia Philippines disclosed plans to strengthen its partnership with the AirAsia Group, after the European Union lifted a safety-related ban on European destinations two weeks ago.

“We are expanding. We will have a board meeting on July 3. We plan to interconnect with AirAsia, the long-haul unit of the AirAsia Group,” said former Philippine ambassador Alfredo Yao, who owns a 13-percent stake the AirAsia Philippines by virtue of the latter’s takeover of 49 percent of his family-owned Zest Airways Inc.

The Civil Aviation Authority of the Philippines (CAAP) and the European Union (EU) will give an update on the EU Air Safety List on June 25, he said.

“Our plan is to have one operation in the Philippines and call it AirAsia Philippines. We’ve just … secured approval from the SEC [Securities and Exchange Commission]. We will now apply with CAB [Civil Aeronautics Board] and CAAP,” said Joy Cañeba, chief executive officer of AirAsia Zest. The AirAsia Zest brand was formally launched last year.

“The local governments in most of the provinces where we are operating have recognized the value of AirAsia in the Philippines and they’ve been very supportive to us,” said Cañeba, but did not give a timeline to consolidate its business in the Philippines.

Meanwhile, AirAsia Group and Chief Executive Officer (CEO) Tony Fernandes confirmed the Asia-based airlines’ plans to invest in AirAsia Philippines, adding: “Yes, we want to invest more. The Philippines is actually the best (area for the company). The grounding of the airline was a massive blow for us. Now, there’s some light [at the end of] the tunnel.”

The airlines will now apply for separate approvals from the CAB and the CAAP, said Fernandes.

In March 2013, AirAsia Philippines and Zest Airways signed a strategic partnership with AirAsia, Asia’s largest budget carrier, acquiring a 49-percent stake in Zest Air and 100 percent in Asiawide Airways—both under the Zest Air Group.

Zest Air is a low-cost carrier that operated from Pasay City’s Ninoy Aquino International Airport.

The AirAsia Group has a combined fleet of 120 aircraft and 350 other planes, with operations in Malaysia, Thailand, Indonesia, Japan, the Philippines and India, flying on 158 routes across 18 countries.

AirAsia Philippines has a load factor of 65 percent, up 6 percentage points from 59 percent recorded during the third quarter of last year, company records show.

In July 2013, the EU allowed Philippine Airlines (PAL) to resume flights to Europe after a three-year ban. Cebu Pacific, another budget airline, also exited from the EU’s ban.

EU’s total lifting of bans on Philippine carriers will be announced by CAAP Director General Lt. Col. William K. Hotchkiss 3rd and Mr. Lubomir Frebort, Charges d’ Affaires, a.i., EU Delegation to the Philippines on June 25.

Source: Rosalie Periabras, Manila Times