And the Philippines’ Largest Domestic Carrier Is…


From January to September 2015 period:

Passenger

  1. Cebu Pacific, 8.37 million passengers (50.94%)
  2. PAL Express, 3.60 million passengers
  3. AirAsia Zest, 1.61 million passengers
  4. Cebgo, 1.38 million passengers
  5. Philippine Airlines, 1.18 million passengers
  6. Air Asia, 272,755 passengers
Image Source: Rappler.com

Cargo

  1. Cebu Pacific, 82.51 million kilograms
  2. PAL Express, 51.63 million kilograms
  3. Philippine Airlines, 34.51 million kilograms
  4. Cebgo, 15.78 million kgs
  5. AirAsia Zest, 10.72 million kgs
  6. AirAsia, 1.24 million kgs

 

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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

SEC Clears AirAsia’s Acquisition of Zest Airways


BANGKOK – The Philippines’ Securities and Exchange Commission (SEC) has approved AirAsia’s takeover of Zest Airways Inc.

“We have gotten an approval from SEC and we will now apply with the CAB and CAAP,” Joy Caneba, president and chief executive of AirAsia Zest told reporters flown in from Manila.

CAB refers to the Civil Aeronautics Board, while CAAP is the Civil Aviation Authority of the Philippines.

Caneba said the AirAsia Group plans to consolidate its operations in the Philippines and rebrand AirAsia Zest to AirAsia Philippines.

“The local government in most of the provinces that we are operating recognized the value of AirAsia in the Philippines and they’ve been very supportive of us,” she said.

Tony Fernandes, AirAsia Group chief executive said the company would have one brand in the Philippines.

“It would be AirAsia Philippines. It’s going to be one brand,” he said.

In December last year, the Senate Committee on Public Services approved the sale of Zest Airways to AirAsia Philippines. The House Committee on Franchise also gave its consent in February last year.

Under Republic Act No. 9183, any change in the carrier’s ownership has to be approved by Congress.

After the transaction, former ambassador Alfredo Yao, who owned Zest Airways, will receive a 15 percent interest in AirAsia Philippines plus cash, while Marianne Hontiveros, Michael Romero and Antonio Cojuangco — all part owners of AirAsia Philippines — will get 15 percent each. Malaysia’s AirAsia Group owns 40 percent of AirAsia Philippines.

According to the Centre for Asia-Pacific Aviation (CAPA), AirAsia would benefit from a single brand and product across the Philippine market.

Zest Air and AirAsia still face an uphill battle, as Cebu Pacific and Philippine Airlines remain strong competitors, CAPA said.

AirAsia Zest and AirAsia Philippines operate a combined fleet of 15 aircraft, servicing domestic destinations such as Kalibo (Boracay), Puerto Princesa (Palawan), Tagbilaran (Bohol), Cebu and Tacloban. Its international destinations include China and Korea.

Source: Darwin G. Amojelar,

AirAsia Plans U$500M Infusion In Philippine Operations


 

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MANILA, Philippines–Malaysia’s AirAsia Berhad, one of the region’s biggest budget carriers, is investing another $500 million to expand its Philippine operations should the group gain a long-delayed approval from Congress to consolidate its local business, its top official said on Wednesday.

Malaysian tycoon and AirAsia founder Tony Fernandes said the consolidation was part of the company’s strategy for AirAsia Philippines to return to profitability by 2015, acquire more planes and compete with rivals here such as flag carrier Philippine Airlines and budget carrier Cebu Pacific.

A key part of the consolidation was for AirAsia Inc., which AirAsia Bhd. owns with Filipino partners, to increase its 49-percent stake in AirAsia Zest to a controlling share.

AirAsia Zest is currently controlled by juice and banking magnate Alfredo Yao, who has expressed his willingness to sell, but the deal has been held back by a delay in the Philippine Senate.

“It’s taking so long. It’s not good for business and it’s not good for investments,” said Fernandes, adding that he still hoped they could secure the Senate’s approval within 2014.

The Senate committee on public services, which oversees public utilities, services and the granting of legislative franchise such as the one held by AirAsia’s local units, was chaired by Sen. Ramon “Bong” Revilla Jr.

This was before Revilla’s arrest this year on graft and plunder charges for his alleged involvement in the pork barrel scam. He was replaced by acting chair Sen. Sergio Osmeña III, information on the Senate’s website showed.

“We’ve put in $100 million already in cash terms [into AirAsia Inc.], excluding the planes. And we are committing another $500 million once we get the franchise approval. That’s over a period of three to four years,” Fernandes said.

Its units AirAsia Philippines and AirAsia Zest currently operate more than a dozen Airbus A320s operating mainly out of Manila’s Ninoy Aquino International Airport, Cebu and Kalibo. The fleet would at least double once the group gets the go-ahead to consolidate domestic operations, Fernandes said.

“As soon as we get the franchise, we should be able to get 15 aircraft. Then I hope we can add about five aircraft a year,” he said.

“My aim is to grow Philippines AirAsia in the international [market]. It’s adding more flights in Korea, eventually China and Japan and Asean and bringing these people to the Philippines like we’ve done in Indonesia and Thailand,” Fernandes said.

“I feel a strong optimism now that we’ve been through the worst. Our backs have been against the wall and that’s actually when we’re best. In many ways we are like the boxer on the ropes,” he added.

Read more: http://business.inquirer.net/181885/airasia-plans-500m-infusion-in-ph-operations#ixzz3J77loPwS

Low-Cost Carriers Mount More Int’l, Domestic Routes


MANILA, Philippines – Low-cost carriers are eyeing more international and domestic routes from the Ninoy Aquino International Airport (NAIA) in Manila and Mactan-Cebu International Airport in Cebu.

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Budget airline Cebu Air Inc. (Cebu Pacific) of taipan John Gokongwei has asked the Civil Aeronautics Board (CAB) to allow it to impose fuel surcharge for new international routes particularly in Japan and Taipei.

Cebu Pacific said it intends to fly to Narita where it intends to impose a fuel surcharge of $71 per passenger as well as Taipei where passengers would be charged $34 from Cebu.

On the other hand, the low-cost carrier also intends to mount flights to Fukuoka via NAIA where it intends to impose a fuel surcharge of $48 per passenger.

Another Gokongwei-led airline also intends to mount flights to Butuan via Manila where it intends to impose a fuel surcharge of P500 per passenger.

Cebu Pacific spent $7 million to acquire the 40 percent share of Tiger Airways Singapore Pte. Ltd. and $8 million for the 60 percent owned by Filipino businessmen in Tiger Airways Philippines.

Cebu Pacific and Tigerair made further progress on their interline agreement with the first interline flights available for sale on the Tigerair website from July 23 and available on the website of Cebu Pacific starting September.

The interline agreement between Cebu Pacific and Tiger Airways Singapore Holdings Ltd. created the biggest network of flights from the Philippines to the Asia Pacific region.

Based on its latest operating statistics, Cebu Pacific and Tigerair Philippines flew 11.26 million passengers from January to August or 14.6 percent higher than the 9.83 million passengers carried in the same period last year.

The increase could be attributed to the increase in the number of aircraft to 50 compared to the a year-ago level of 46, resulting to a 13.7 percent increase in capacity to 13.34 million from 11.73 million.

Both Cebu Pacific and Tigerair Philippines expect to fly 17 million passengers this year. It is in the middle of a $4 billion refleeting program aimed at acquiring 49 brand new Airbus aircraft.

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Meanwhile, AirAsia Zest intends to launch new routes from its Cebu and Kalibo hubs.

The low-cost carrier would fly to Davao and Cagayan de Oro from Cebu, imposing a fuel surcharge of P300 per passenger as well as to Davao from Kalibo where passengers would be charged P400.

AirAsia Zest chief executive officer Joy Cañeba said the low cost carrier is committed in connecting communities in the Philippines.

“With our newest routes between Cebu and Mindanao we would like to provide much-needed connections and tap into underserved markets, grow it, as there is definitely great tourism and business potentials between these awesome cities. Let’s paint these cities red and make traveling more affordable, fun, convenient, reliable and on time,” she said.

AirAsia Zest also services flights from Cebu to Manila, Incheon/Seoul, South Korea and Kuala Lumpur, Malaysia.

“This is just the beginning of our new plans for Cebu as we are set to expand our presence here with new international direct flights and offer ‘fly-thru’ products to connect all Filipinos to the rest of AirAsia Group’s massive network covering over 88 destinations stretching across China, India and Australia,” Cañeba added.

Philippines’ AirAsia and Zest Airways of Ambassador Alfredo Yao entered into a strategic alliance agreement last year, allowing the former to acquire an 85 percent economic interest and 49 percent voting rights in ZestAir as well as a 100 percent interest in Yao’s Asiawide Airways Inc.

In exchange, Yao’s ZestAir got $16 million as well as a 13 percent interest in AirAsia. Since then, the airline has been rebranded AirAsia Zest.

Source: Lawrence Agcaoili, Philippine Star

Cebu Pacific Dominates Domestic Flights, Philippine Airlines Lords International Flights


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MANILA – Cebu Pacific dominated the domestic air travel market, while Philippine Airlines (PAL) lorded it over on the international front in the first six months of the year.

Data from the Civil Aeronautics Board (CAB) show that the country’s air passenger traffic in the January to June period went up by 9.5 percent to 21.73 million from last year’s 9.31 million.

Domestic passenger traffic fueled the rise, grow by 15 percent to 12.42 million this year from 10.77 million last year.

Cebu Pacific remains the country’s leading domestic carrier with a 46 percent share of the market. It flew 5.82 million passengers this year, up by 6.98 percent from last year’s 5.44 million.

PAL’s domestic traffic increased 30.26 percent to 1.98 million from 1.52 million in 2013.

The flag carrier’s affiliate, PAL Express, flew 2.7 million passengers, up by 28.57 percent from 2.1 million last year.

AirAsia Zest carried 1.06 million passengers in the first half of the year, while Tigerair Philippines flew 575,093 passengers. AirAsia Philippines carried 168,106 passengers.

CAB executive director Carmelo Arcilla ascribed the growth in domestic passenger traffic to additional flights by the country’s budget airlines and cheaper airfare, adding that travel peaks in the second quarter.

The country’s international passenger traffic also grew albeit at a slower 2.64 percent to 9.31 million in the first six months of the year from 9.07 million in the same period last year.

Arcilla blamed the slower growth in the international market on the Ninoy Aquino International Airport’s (NAIA) limited capacity to handle traffic, which has prevented carriers from mounting more flights.

5J will fly to Kuwait (September 2) and Sydney (September 9). Next stop...New Zealand
 

He said the congestion should abate once the government builds a third runway for the airport.

A recent study done by Japan International Cooperation Agency (JICA) shows that NAIA would be operating beyond capacity starting 2015, by which time the airport will be handling 37.78 million passengers.

At end-2012, NAIA accommodated 31.88 million passengers, near its maximum handling capacity of 35 million a year.

PAL flew the most number of international passengers at 2.49 million in the first half of the year, up by 24.5 percent from 2 million a year ago. Its affiliate, PAL Express, carried 77,309 passengers.

Cebu Pacific carried 1.62 million passengers, 9.45 percent more than the 1.48 million last year. Zest Airways flew 377,198 passengers, followed by Tigerair Philippines, 104,467; and Air Asia Inc, 2,168.

Foreign carriers carried 4.63 million passengers.

Source: Darwin G. Amojelar, InterAksyon.com

Air Passenger Volume Up 9.5% in H1


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MANILA, Philippines – Air passenger traffic rose to 21.73 million in the first half of 2014, attributed to the continued increase in the number of foreign and domestic tourists, the Civil Aeronautics Board (CAB) reported.

Volume of airline passengers grew by 9.5% from January to June this year compared to 19.84 million in the same period in 2013.

Domestic airline passengers surged 15.32% to 12.42 million in the first half of 2014 from 10.77 million in the same period last year.

Foreign passengers inched up by 2.6% to 9.31 million from 9.07 million, CAB reported.

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Air traffic in the Philippines has been recovering from flat growth last year amid the reforms being implemented by the Aquino administration, CAB executive director Carmelo Arcilla said.

Air traffic in the country has been growing by double-digit levels since 2005, except for 2013, Arcilla said.

“We are reaping the benefits of the deregulated policy adopted by the Aquino administration,” Arcilla said.

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Budget airline Cebu Air Inc (Cebu Pacific) of taipan John Gokongwei dominated the domestic market after flying 5.82 million passengers in the first half of the year.

Philippine Airlines (PAL) Express came second with 2.77 million, national flag carrier Philippine Airlines Inc with 1.98 million, AirAsia Zest with 1.06 million, and Tiger Airways Philippines with 575,093.

PAL, which used to be jointly owned by tycoon Lucio Tan and diversified conglomerate San Miguel Corporation (SMC), dominated the international market after flying 2.5 million passengers from January to June this year.

Cebu Pacific came second with 1.62 million, followed by AirAsia Zest with 377,198, Tigerair Philippines with 104,467, and PAL Express with 77,309.

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Agreements, projects to boost air traffic growth

Arcilla said there is further room for growth of the country’s air traffic as the Aquino administration is pushing several projects, including the proposed P2.4 billion ($53.92 million*) parallel runway to help decongest the Ninoy Aquino International Airport (NAIA).

Arcilla added that the proposed runway optimization program could raise the capacity of the country’s main gateway to 50 to 60 events per hour from the current 40 to 42 landings and take-offs per hour.

Likewise, the CAB official said several airports are being expanded and developed in the provinces including the P17.5-billion ($393.17 million) Mactan-Cebu international airport being undertaken by the tandem of Megawide Construction and Bangalore-based GMR Group, and the expansion of the Clark International Airport in Pampanga.

“There are foreign airlines waiting in the wings,” Arcilla said.

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Arcilla also said that the air agreements signed by the Philippines over the past few years led to more tourist arrivals. CAB hopes to conclude agreements with 3 more countries, including Australia, this year.

So far this year, the Philippines concluded air talks with France, Singapore, New Zealand, Myanmar, Canada, Macau,and South Africa. Air talks with Malaysia were called off twice.

Last year, the Philippines signed air agreements with Japan, Macau, Brazil, Australia, Israel, and Italy.

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The Aquino administration is pursuing air talks as part of its open skies policy. Under Executive Order No. 29, airports other than NAIA would be opened to more foreign traffic, in line with the target to lure 10 million tourists by 2016.

Source: Rappler.com

A Budget Boon For Jet-Lagged Traders


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For AirAsia and its head honcho Tony Fernandes, services must be made affordable and accessible to more consumers.

That was why Asia’s largest low-cost carrier last week announced two additional services aimed at giving loyal customers more value for money.

To grant “flexibility to discerning business travelers,” AirAsia has unveiled “Premium Flex,” which its chief executive Fernandes says will primarily benefit small and medium entrepreneurs who always have to be on the go.

Those who will avail themselves of Premium Flex for just a little added cost may enjoy a complementary 20-kilogram baggage allowance as well as flexibility to change their flights at least twice with no change in fees. Also, Premium Flex users may pick premium seats and avail of Xpress boarding and baggage services.

“There is growing demand for business travel and we are excited to offer a truly relevant and high valued travel experience deeply appreciated by business travelers. With unpredictable schedules that business travelers keep, Premium Flex offers peace of mind and convenience to change their flights at their fingertips via their computer or handheld devices. It is the best deal in town as we offer the lowest fares while providing services and products of the highest quality,” AirAsia group head of ancillary Kenny Wong says in a statement.

The budget airline has also announced that it will launch low-cost Wi-Fi onboard services before the year ends.

“A range of Wi-Fi products including Instant Messaging, e-mails as well as content streaming will be made available gradually on all AirAsia flights with the AK flight code (Malaysia AirAsia). It will be introduced throughout the AirAsia Group, including AirAsia Philippines, progressively,” the carrier says in a separate statement.

Fernandes says he is “very proud and happy that our staff continues to push the boundaries” of innovation.

Fernandes also told Filipino reporters flown to Kuala Lumpur last week that he wanted more Filipinos to enjoy the perks of less expensively flying with AirAsia.

In an interview, Fernandes aired his concerned over the supposed “unfair treatment” of his airline in the hands of Philippine airport authorities.

“I’m disappointed with the pace of change [in the Philippines]. I think you have a good government; they mean very well. But I don’t think AirAsia is being treated fairly in a lot of sense,” Fernandes says.

According to Fernandes, first of AirAsia’s woes is the dilapidated state of Ninoy Aquino International Airport’s Terminal 4, or the “old domestic terminal.”

About four-fifths of AirAsia flights to and from Manila go through Terminal 4.

“We are getting very inferior service at Terminal 4, yet we are paying the same. It’s not right,” he says. “I don’t mind operating in Terminal 4, but charge us appropriately.”

Also, AirAsia continues to fail in its attempt to increase its presence at Terminal 3, Fernandes said.

“We’re being blocked. I think the big airlines put a lot of pressure on airport authorities,” he claims.

Fernandes also lamented the slow action of Congress on moves to formally change the name of the Philippine subsidiary from “AirAsia Zest” to “AirAsia Philippines.”

“The Lower House has approved it, but the Upper House is sitting on it. Why is Congressional approval taking so long?” he asks.

Fernandes explains that a change in name will benefit not only AirAsia as a brand, but also Philippine tourism.

Fernandes says he suspects intense competition in the budget airline space as a reason behind the challenges now facing AirAsia’s Philippine operations. He hints that a competitor may not be playing fair.

“Competition is fine but competition must be fair. And airports must be fair. They cannot choose sides,” he says.

It does not help that AirAsia’s pleas seem to fall on deaf ears as far as the Philippine government is concerned, Fernandes says.

“I thought those days were gone in the Philippines. That’s why, as a foreign investor, I invested. I think the Philippine government is very fair; the President and the government officials were very professional. But sometimes, they’re not given all the information,” he says. “We’re struggling to get plane capacity, slots and approvals. There’s so much bureaucracy.”

Despite these setbacks, Fernandes says AirAsia will “not give up” on the Philippine market.

“We just want to keep what we have at the moment and make money with what we’ve got. If we are treated fairly, we could put a lot of investments into the Philippines, create more jobs,” Fernandes says.

He also says that he is seeking a dialogue with top-level government officials, such as President Aquino, and will fly to Manila “anytime they want to see me.”

In the end, Filipino travelers will become the biggest losers when they are faced with limited choices, Fernandes explains.

“If you’re left with one to two airlines, Filipino consumers will suffer,” he says.

On a personal level, Fernandes has a warm spot for his Filipino employees, and is said to be amazed by Filipinos’ resilience especially in times of hardship.

That is why, among the things he wants to do before he dies, he wants to put up low-cost hospitals in the Philippines and his home country, Fernandes reveals.

“I think the price difference between a private hospital and a state hospital is massive. In a country like the Philippines, a low-cost hospital has a wonderful opportunity. There’s so much talent, so many good Filipino nurses and doctors,” he notes. “I want to create a hospital that costs a little bit more than government hospitals, so a lot of people can afford it.”

Fernandes points out that most government hospitals are beset by long queues of patients who want to avail of free or discounted services.

“In every country in the world, government hospitals are full because there’s so much demand and the system can’t take it,” he says.

By establishing low-cost hospitals in the Philippines in the future, Fernandes also hopes that it will provide jobs to Filipino medical professionals.

“The saddest thing in the Philippines is that people have to leave their country,” he says.

Source: Ben O. de Vera, Philippine Daily Inquirer