Cebu Pacific Sees More Opportunities Under ASEAN Single Market

Under the skies of an integrated, single market economy starting 2015, Budget carrier Cebu Pacific expects a thriving airline business given the new routes that will open up in the Association of Southeast Asian Nations (ASEAN).
“[It means] more cities to fly to, more frequencies, more tourism,” JG Summit Holdings Inc. SVP Bach Johann Sebastian told reporters on the sidelines of the Economic Journalists Association of the Philippines (EJAP)-ING Bank Forum in Makati City. “The upside is really tourism,” he said.
Cebu Air Inc., operator of Cebu Pacific, is a unit of Gokongwei-led JG Summit.
Sebastian cited the AirAsia Group as competitor to reckon with in the low-cost airline industry. “AirAsia is the biggest in Asia so they’re a tough competition. We just have to learn how to compete better,” he said.
“Open skies will really be good for Cebu Pacific. And we know our costs are in line with theirs. We should be able to compete with them,” Sebastian noted.
He acknowledged the fact that the Malaysian budget carrier has more scale, giving it the advantage when it comes to securing aircraft at a cheaper price.
“But we’re not small either… So, we can get enough discounts to make our aircraft cheaper,” he said.
The AirAsia Group has a fleet of over 120 aircraft and maintains partly owned subsidiaries in Malaysia, Thailand, Indonesia, Japan, Philippines and India, making it Asia’s largest low cost carrier.
Cebu Pacific now operates a fleet of 50 and will have 43 more aircraft delivered between 2014 and 2021.
Not Interested in Philippine Airlines
As it grows its fleet, Sebastian said Cebu Pacific is not interested in acquiring a stake in flag carrier Philippine Airlines.
“I think it’s going to be a regulatory issue, because the government might view that as too much concentration,” he said.
“That will have to be approved by Congress because we own a Congressional franchise and we have to live up with our commitments there. The Civil Aviation Board will also have to weigh in on that because they’re sort of the fair trade commission of the airline industry. The CAAP will also have to weigh in on that,” he said.
CAAP is the Civil Aviation Authority of the Philippines.
Apart from regulatory issues, PAL’s financial statements are not public, the Cebu Pacific official said.
“We don’t know the business case, we don’t have a business case owning a full service airline because we are a low-cost airline. There’s no basis for me to make a judgment as to whether PAL is interesting or not,” Sebastian added.
On Tuesday, businessman Manuel Pangilinan said he is no longer interested in investing in PAL.
Last week, San Miguel said it was “discussing” with investment partner Lucio Tan Group their respective interests in PAL, Reuters reported.
Source: , GMA News

AirAsia CEO Calls On Philippines To Ascend To ASEAN’s Open Skies


AirAsia (AK, Kuala Lumpur Int’l) Group CEO Tony Fernandes has called on the Philippines to ascent to the Association of Southeast Asian Nations (ASEAN) multilateral Open Skies agreement. Fernandes argued that being part of the treaty would boost local tourism help while helping to drive down air fares through the introduction of competition.

However, the Filipino government has rejected the move on the grounds that the current standard of the country’s infrastructure – Manila in particular – would not be able to take the added pressure.

“The challenge in Manila is congestion,” Finance Secretary Cesar Purisima told the Philippine Flight Network. “We need to fix our infrastructure bottlenecks.”

In a bid to improve conditions at the ageing airfield, AirAsia’s local subsidiary, AirAsia Zest (Z2,Manila), has begun lobbying government to establish a new terminal at Manila airport dedicated to Low Cost Carriers stating that it is is willing to provide the design and expertise needed to get the project started.

While Manila’s issues are gradually resolved, Purisima has put forward a compromise – a “Pocket Open Skies” agreement in which select secondary airports throughout the country would be opened up to international traffic.

“We would love more connections and we thank Tony Fernandes for connecting cities in the Philippines to the rest of the region. We’ve seen the benefits of it,” said Purisima.

However, commentators have warned that any policy decisions taken must be made in consultation with Cebu Pacific Air (5J, Manila) and Philippine Airlines (PR, Manila) both of which have expressed grave concerns over the opening up of Filipino skies to the likes of Tigerair (TR, Singapore Changi),Malaysia Airlines (MH, Kuala Lumpur Int’l), Vietnam Airlines (VN, Hanoi), Garuda Indonesia (GA,Jakarta Soekarno-Hatta) and AirAsia (AK, Kuala Lumpur Int’l) among others.

The airlines argue that as privately run operations, they do not enjoy state-backing and would therefore be put at a serious disadvantage in comparison to some regional competitors whose governments both fund and protect them.

Philippines AirAsia (PQ, Manila) has meanwhile announced that it is considering relaunching operations from Clark from 2016 when the so called NLEX-SLEX Connector Road is expected to be completed cutting travel times between central Manila and Clark to 45 minutes. It had originally launched from Clark, not very successfully though, and then consolidated all operations in Manila as part of the cooperation agreement with Zest.


Philippines to Benefit from EU-ASEAN Open Skies


MANILA, Philippines – The proposed “open skies” agreement between the European Union (EU) and the Association of South East Asian Nations (ASEAN) is expected to result in higher standards of safety and regulation as well as more reasonable fares for airline passengers.

Transportation Secretary Joseph Emilio Abaya said the ASEAN would have to first achieve a single aviation market as part of the ASEAN integration in 2015 before entering into a comprehensive air agreement with the EU.

“It is still a long way. This is still in its infancy stages. Immediate goal is to first achieve an ASEAN single aviation market. This should be achieved as part of ASEAN 2015,” abaya said.

According to Abaya, the proposed “open skies” between EU and ASEAN would translate to higher safety standards for airlines as well as cheaper fares for airline passengers.

“This will allow competition, higher standards of safety and regulation and more access to flights and more reasonable fares for our people,” he said.

Civil Aeronautics Board executive director Carmelo Arcilla said the EU has been helping the Asean achieve a single aviation market through a project called the Asean Air Transport Integration Project (AATIP) that serves a venue for exchange of info on practices within ASEAN and the EU and capacity building for aviation authorities of ASEAN.


“The proposed EU-Asean comprehensive air transport agreement is a welcome development and is something to look forward to especially so, that the trend in aviation is connectivity and seamless travel. This is also a chance for our airlines to beef up their operations and compete in a bigger field,” Arcilla said.

Carriers Opposed Open Skies Policy

Source : Barbara Mae Dacanay, Bureau Chief, Gulf News



MANILA: Two Philippine carriers, the Philippine Airlines and Cebu Pacific will begin long haul flights in October, complimented by Emirates, which will also start its flight from UAE to an airport outside Manila, also in the same month, sources said.

In December 2012, the Philippines and the UAE agreed to allocate 28 flights a week for each country, or 56 per week for both countries. Earlier, only 28 flights a week were allocated for each country, or a total of 28 a week for both of them.

All of the flights will service an estimated 700,000 overseas Filipino workers in the UAE.

Both Philippine airlines are also eyeing flights to Saudi Arabia, which hosts 2.3 million overseas foreign workers.

Earlier, both carriers also lobbied to restrict the country’s open-skies policy.

Last March 2011, President Benigno Aquino signed Executive Order 29 to open up Philippine skies to foreign airlines to airports other than the Ninoy Aquino International Airport (NAIA) in Metro Manila’s Pasay City.

Identified as “pocket-open skies policy,” the Philippine government has designated secondary airports to host additional frequency route rights given to foreign airlines, one of which is the refurbished airport at the former US Clark Air Base.

The executive order allowed foreign carriers to increase route rights over and above the limits imposed by the respective air service agreements entered into by the Philippines and the countries that represent the foreign carriers.

At the time, both PAL and Cebu Pacific demanded to get reciprocal benefits from foreign countries whose airlines are allowed to have increased routes in the Philippines.

Cebu Pacific Wants PHL-JPN Open Skies Deal

Source: GMA News Online




Cebu Air Inc., operator of budget carrier Cebu Pacific, is urging the Aquino administration to forge an open skies policy with Japan as a way of boosting trade and tourism and reverse a decline in Japanese tourists to the Philippines.

An open skies agreement between the bilateral partners should be tackled in the upcoming air talks with Japan under the Philippine Civil Aeronautics Board (CAB), a Cebu Pacific official said.
“An Open Skies agreement with Japan will benefit local tourism and trade, especially since we believe Japan can rival South Korea when it comes to foreign tourist arrivals,” vice president for marketing and distribution Candice Iyog noted in a statement Wednesday.
In a position paper filed with the Philippine Air Consultation Panel, the Cebu Pacific said carriers from the Philippines would not be able to mount additional flights to other countries including Japan in the absence of seat entitlements as Philippine authorities struggle to increase capacity at the Ninoy Aquino International Airport.
Seat entitlements must be given by other countries like Japan so airlines can increase flights or add international destinations, according to the budget airline.
An open skies deal with Japan would let Cebu Pacific to expand its Japan operations beyond the thrice weekly Manila-to-Osaka flights. “Cebu Pacific plans to aggressively expand into Japan in the future. We fully support the CAB in its efforts to further boost tourism and the Philippine aviation industry,” Iyog said.
Japan could dislodge Korea as a major source of tourists for the Philippines, the airline official noted.
Official data showed a 2 percent compounded drop in tourist arrivals from Japan in 2006 to 2011, primarily in the absence of new seat entitlements.
“Aside from Japan being one of the Philippines’ biggest trading partners, it is also home to 350,000 global Filipinos. Cebu Pacific’s expansion in Japan will allow us to offer our trademark lowest fares to the Philippines to boost business and leisure traffic,” Iyog said..
Japan, once one of the most protective aviation sectors in the world, has signed Open Skies agreements with countries such as Thailand, Malaysia, Singapore, Hong Kong, Taiwan, South Korea, Australia, France, Sri Lanka, United Kingdom, US, Canada, and Mexico.
CAB Deputy Executive Director Porvenir Porciuncula told reporters Wednesday the PHL-Japan Air Consultation Talks is scheduled for Sept. 11 to 13 in Tokyo.
The Philippine panel hopes to secure additional seat entitlements for Philippine carriers to mount additional flights to Japan, Porciuncula said.
The Philippines and Japan last held air talks in 2008. — VS, GMA News