Budget carrier operator Zest Airways Inc. is lobbying for the construction of a low-cost carrier airport at the site of the domestic terminal in Manila.
Newly appointed AirAsia Zest Chief Executive Officer Joy D. Caneba said in an interview that her relatively young airline is pushing for the construction of a budget airline hub, saying this would effectively reduce the cost of air travel in the country.
“We are encouraging the government to establish a low-cost carrier airport to make it more efficient. It could effectively minimize the cost of operations, making it more efficient for airlines,” she said.
Caneba, who used to be the airline-company’s chief operating officer, noted that the budget air hub could translate to higher yields in terms of passenger traffic, saying this would allow more people to travel as a result of lower costs.
She confirmed that should the government conduct a bidding for the said project, the company will participate in the auction. “AirAsia Zest is willing to provide the design and expertise for the construction of a low-cost carrier airport,” Caneba said.
“The airport operator will be able to recoup the investment in terms of retail,” the official explained, noting that the construction of the hub would take less than three years to finish, especially since there is already an existing terminal building at the Ninoy Aquino International Airport Terminal 4. The proposal came on the heels of the completion of a budget terminal in the Malaysian capital.
The low-cost carrier terminal at the Kuala Lumpur International Airport can accommodate up to 45 million passengers a year and can handle 100 planes per hour.
Source: Lorenz S. Marasigan
Budget carrier Tigerair has suffered a bumpy ride recently, but CEO Koay Peng Yen, told CNBC’s Managing Asia he’s confident the airline will soon return to its glory days.
As Singapore’s first budget carrier offering no frills service at affordable rates, Tigerair enjoyed exponential growth in the first seven years of operation. But its fortunes nosedived in July 2011 when the Australian Civil Aviation Authority grounded its operations for six weeks leading to losses of 104 million Singapore dollars ($83.18 million) that financial year and a change in chief executive officer.
“We will make Tigerair roar again. Tigerair will emerge stronger and better,” said Koay.
“We have reported operating losses, we can’t be continuing on that basis. So the plan is to actually turn it around – we have put a few things in place to address that,” he added.
The budget carrier, which flies some 10 million passengers to over 50 destinations across Asia Pacific annually and is partly owned by Singapore Airlines, has undergone a major makeover. It partially offloaded its Australian subsidiary in July 2013 and sold off its Philippines offshoot when it divested its 40 percent stake to Philippines budget carrier Cebu Air earlier this year but maintained an alliance with the firm.
Tigerair reported net and operating losses for the three months to December 2013 of 119 million Singapore dollars in January. The company’s shares – traded in Singapore – have slumped 37 percent over the past 12 months.
Despite negative sentiment, Koay said he’s confident the carrier’s turnaround plan was in full swing.
“There are a few phases that we are focusing on. The first phase – what I call the putting out the fires phase – we have completed that. We are now in the second and third phases of our turnaround,” he added.
The second phase will involve managing capacity and refocusing operations in Singapore through alliances, he said.
The Tigerair CEO told CNBC that currency weakness in both Indonesia and the Philippines has proven problematic.
“We have lost money in our investment in the Philippines, and those have been written off. We are going to start a new chapter,” he added.
Tigerair’s operations in Indonesia have also been a trouble spot for the airline recently, with talk of a potential sale as the airline has faced tough competition from other budget carriers like LionAir, AirAsia and Garuda.
“The rupiah hit us a lot. As you know, the rupiah went down over 20 percent in the second half of last year, so that has added stress to the company,” he said.
He said he was combating this headwind by expanding internationally and had recently added new flights from both Bali and Jakarta to Hong Kong, stressing that the firm would focus on flights that raise the highest yields.
Following Tigerair’s sale of 60 percent of its Australian unit to Virgin Australia, Peng Yen said it would be premature to start talking about an exit from Australia.
“We can’t keep on losing money in Australia… so we are looking forward to having a turnaround,” he added.
The recent disappearance of Malaysia Airlines flight MH370 flight in a month ago has cast a dark shadow over the airline industry amid safety concerns.
“Whenever there is an aircraft incident, we also pour over the details to find out what are the learning points, and how we can do it better,” added Koay.
Source: CNBC, Written by Katie Holliday I Reporting by Christine Tan