Qatar Airways is Hiring Cabin Crew in Manila


Qatar Airways Recruitment Day, 23 January 2016


  1. Female only
  2. Minimum of 1 year flying experience (current or ex-cabin crew).
  3. Venue: Manila Hotel
  4. Time: From 0900H to 1700H.
  5. Attire: Formal business attire
  6. Bring updated CV with full length & passport size photos.
  7. Date: 23 January 2016

13 Airlines with the Best Looking Flight Crew (Migme,

On 14 September 2015, Air India announced that they will ground 125 cabin crew if they fail to lose weight and reach the required Body Mass Index (BMI) range. According to TIME magazine, the airline claims that this is due to safety concerns, as they want to ensure the crew are fit enough to handle emergency situations. Male crew have to have a BMI of 18-25, while females are required to meet the range of 18-22.

This follows the 2014 guidelines from the Indian Directorate General of Civil Aviation which states that overweight cabin crew have three months to lose weight or be declared unfit for duties for six months.

A user @susmitsenn on migme, a social entertainment platform, was happy that the “fat aunties will finally be out and make way for sexier air hostesses”, however he was shocked they would be sacked for being ‘fat’.

While Air India shapes up to meet safety standards, migme has put together a list of airlines with flight crew that are very fit— you know what we mean.

1. Emirates Airlines (Dubai, UAE)

Image Source: Emirates

Even though our list is not in order of merit, Emirates deserves to be mentioned first. They received unanimous votes in our casual poll in the migme office.

2. Singapore Airlines (Singapore)

Image Source: Singapore Airlines

Their tagline “Singapore Girl, you’re a great way to fly”, while being somewhat sexist, is not entirely wrong as the airline prides itself on high service standards.

3. Etihad Airways (Abu Dhabi, UAE)

Image Source: Etihad Airways

Excuse me, I need to get an oxygen mask, because you take my breath away.

4. Virgin Atlantic (England, UK)

Image Source: Virgin Atlantic

You don’t need Vivienne Westwood to design your uniforms when you are looking like that.

5. Qatar Airways (Qatar)

Image Source: Qatar Airways

If there’s anything we’ve learnt from this list, it’s that the Middle Eastern airlines have a bunch of pretty good-looking crew.

6. China Eastern Airlines (China)

Image Source: China Eastern Airlines

If you didn’t know the Chinese word for elegance, now you do.

7. Lufthansa (Germany)

Image Source: Lufthansa

Hi Marc, we want a selfie too! Yes, that is his real name. Don’t ask us how we know. *shifty*

8. EVA Air (Taiwan)

Image Source:, Kat Goh

As if the Hello Kitty Jet isn’t cute enough, the crew members are all pretty darn cute too.

9. Safi Airways (Dubai-based, Afghan-owned)

Image Source: Safi Airways

Forgive me if I keep asking for assistance on the plane. I don’t really need water, I just want to look at your face.

10. Asiana Airlines (South Korea)

Image Source: Asiana Airlines

Does an electronic boarding pass mean we get to see you sooner? Checking in online right now.

11. All Nippon Airways (Japan)

Image Source: ANA

Notice me, senpai!

12. Garuda Indonesia (Indonesia)

Image Source: Garuda Indonesia

You’ve learnt a Chinese word already, so now we will teach you the Bahasa Indonesia word to describe the crew – ‘cantik‘. That means beautiful.

13. Cebu Pacific Air (The Philippines)

Image Source: Cebu Pacific

Bright uniforms and an even brighter smile? You set our pre-flight jitters at ease.

Source: Migme,

Qatar Airways Adds 6 More Flights Per Week To Manila

Qatar Airways (QA) will be adding six extra flights per week between Doha and Manila from October 26 following an expanded Air Service Agreement signed between Qatar and the Philippines.

With the increase in weekly flights, QA will operate a full twice-daily service to Manila in addition to its daily flights between Clark International Airport (approximately 96km north of Manila) and Doha.

The additional weekly flights from Doha-Manila from October 26 include: Doha – Manila which departs 8.30am and arrives 10.15pm while the Manila – Doha flight departs 11.59pm and arrives 5.05am (the next day), all every Mondays, Tuesdays, Wednesdays, Thursdays, Fridays and Saturdays. Sunday already has an existing twice-daily QA flight.

The Doha-based carrier, most recently crowned Airline of the Year at the 2015 annual Skytrax World Airline Awards, is currently flying eight flights per week to Ninoy Aquino International Airport in Manila.

“The increase in flight frequencies on the Doha–Manila route serves to further strengthen commercial and trade links between our two countries and we are delighted to be able to provide our Philippines-based passengers with greater connectivity options when they choose to fly with QA,” QA Group Chief Executive Akbar al-Baker said.

He noted that more passengers will now be able to experience QA’s award-winning hospitality and Qatar’s state-of-the-art Hamad International Airport (HIA) when transiting seamlessly onward to their final destination.

Al-Baker added that passengers travelling with QA beyond Doha can also look forward to flying on some of the world’s most advanced aircraft including the A350 XWB.

The Doha–Manila route is operated by Boeing 777 aircraft, featuring 24 Business Class seats and 356 seats in Economy Class.

Like its Manila flights, QA also continues to get positive response to its daily flights in Clark (Clark International Airport), launched in November 2013, it is learnt.

Passengers travelling in Business Class can look forward to relaxing in one of the most comfortable and high-tech, fully-flat beds with a 78-inch seat pitch. QA’s premium passengers can also enjoy its five-star food and beverage service which is served ‘dine on demand’.

QA’s Premium and Economy Class passengers travelling beyond Doha can also enjoy the airline’s state-of-the-art home base – the HIA.

Home to one of the world’s best and largest Business Class lounges, the Al Mourjan Business Lounge, HIA has more than 70 retail and 30 food and beverage outlets offering world-class duty free shopping and dining experiences for all.


2015 Skytrax World Airline Awards: Airline of the Year Is…

Airline of the Year:

1. Qatar Airways

2. Singapore Airlines

3. Cathay Pacific

4. Turkish Airlines

5. Emirates

6. Etihad Aiways

7. All Nippon Airways (ANA)

8. Garuda Indonesia

9. EVA Air (Taiwan)

10. Qantas

Philippines-Middle East Market: Philippine Airlines Woos Etihad, Cebu Pacific Expands, Emirates Seeks More Rights


Competition in the PhilippinesMiddle East market continues to intensify as Cebu Pacific expands and Philippine Airlines (PAL) looks to enhance its partnership with Etihad. But Emirates could see its share of the market decline unless it succeeds at securing new traffic rights, an initiative its Philippine competitors seem eager to block.

Cebu Pacific recently launched services to three destinations in the Middle East, giving it a total of four destinations in the region. PAL also now serves four destinations in the Middle East, all of which were launched in 2H2013, and is upgrade Abu Dhabi to daily on 1-Dec-2014.

PAL could potentially add more capacity to Abu Dhabi under an enhanced partnership with Etihad which could see PAL use Etihad to provide offline access to continental Europe and parts of North America. Eithad rival Emirates however could be forced to reduce capacity as a consequence of its recently terminated codeshare with PAL.

This is the second in a series of reports on the dynamic Philippine market.

The first report looked at the fleet challenges facing PAL’s new ownership and executive group and potential changes to the flag carrier’s business plan. This report looks at the intensifying competition between the Philippines and the Middle East and the intriguing options PAL now faces in serving this market.

Philippines-Middle East capacity has doubled in less than two years

The Philippines-Middle East market saw a rapid surge in capacity in 4Q2013 as Philippine carriers added six new routes. Cebu Pacific launched daily service from Manila to Dubai as its first long-haul route in Oct-2014. PAL re-entered the Middle East market after a several year hiatus by launching service to Abu Dhabi in Oct-2014. This was quickly followed by the launch of Dubai and Doha in Nov-2014 and the launch of Dammam and Riyadh in Dec-2014.

When also factoring in Emirates’ late Oct-2014 launch of service from Dubai to Manila alternative airport Clark, total seat capacity in the Philippines-Middle East market roughly doubled in Dec-2014 compared to Dec-2013 levels. This included capacity growth of over 120% in the Philippines-UAE market, roughly 70% in the Philippines-Saudi Arabia market and about 30% in the Philippines-Qatar market.

The expansion was clearly unsustainable and not surprisingly two of the new route were quickly dropped –PAL’s service to Doha in Apr-2014 and Emirates’ service to Clark at the beginning of May-2014

But Cebu’s recent launch of services to Dammam and Riyadh and Kuwait and the upcoming launch of Muscat-Manila by Oman Air add new capacity that offsets the reductions from PAL’s Doha and Emirates’ Clark services. As a result total capacity in the Middle East-Philippines market will be about flat in Dec-2014 compared to Dec-2013 at approximately 40,000 weekly one-way seats. Again this represents a doubling of capacity compared to the roughly 20,000 weekly one-way non-stop seats back in Dec-2012.

The UAE is the largest Middle East destination from the Philippines and accounts for slightly over half of the 80,000 weekly return seats between the Middle East and the Philippines. The UAE is now the fifth largest international destination from the Philippines overall after South Korea, Hong Kong, Singapore and Japan.


Rank Airport Total Seats
1 DXB Dubai International Airport 27,482
2 AUH Abu Dhabi International Airport 15,204
3 RUH Riyadh King Khaled International Airport 10,628
4 DOH Doha Hamad International Airport 9,410
5 DMM Dammam King Fahad International Airport 6,454
6 KWI Kuwait International Airport 2,616
7 BAH Bahrain International Airport 2,580
8 JED Jeddah King Abdulaziz International Airport 1,732
9 MCT Muscat Seeb International Airport 1,296

The surge in capacity was not necessarily irrational

The increase in capacity since 4Q2013 has significantly intensified competition and impacted yields and load factors. But the new flights from the Philippine carriers have mainly attracted passengers that were flying between Manila and the Middle East via sixth freedom hubs such as Brunei, Hong Kong and Singapore. There is a huge Filipino worker population throughout the Gulf but the Middle Eastern carriers were only accounting for a relatively small portion of this traffic as they have been using most of their Manila capacity to attract passengers flying beyond their hubs, particularly to Europe.

Cebu Pacific and PAL have also been able to stimulate demand by offering lower fares. Both carriers operate their routes to the Middle East with high density A330-300s, a sensible strategy given it is a price sensitive market with limited premium demand.

Cebu’s A330-300 fleet is configured with 436 seats in all-economy configuration. PAL serves Dubai, Dammam and Riyadh with 414-seat A330-300s in all-economy configuration while Abu Dhabi is served with 368-seat two-class A330-300s that include a business class cabin with 18 lie flat seats. The Dubai route is operated by PAL Express while the group’s other three routes to the Middle East are operated by PAL mainline.

Both of PAL’s A330 configurations include extra legroom seats in the front of the economy cabin that are sold as premium economy. The entire economy cabin features nine seats abreast and wireless IFE, which requires passengers to bring their own tablets, instead of seatback monitors. Almost all full-service carriers operate A330s with an eight seat abreast economy cabin while LCCs generally have nine seats abreast including AirAsia X and Cebu Pacific.

PAL currently operates 13 A330-300s, all of which were delivered since Sep-2013, with two more to be added by the end of 2014. Cebu Pacific currently operates five A330-300s, all of which were delivered since Jun-2013. The carrier is committed to adding a sixth A330-300 in early 2015 and has been looking at leasing two more aircraft which could be delivered by the end of 2015. An eight aircraft A330 fleet at Cebu Pacific would match the number of A330s that PAL has in all-economy configuration.

PAL and PAL Express offer frills on their all-economy A330 flights – including meals, drinks and bags. But their economy seat has a similar spec to Cebu Pacific, which charges for all items.

PAL becomes largest player in UAE-Middle East market

PAL currently offers 19 weekly flights to the Middle East, including seven to Dubai (operated by PAL Express), five to Abu Dhabi, four to Riyadh and three to Dammam. PAL plans to increase Abu Dhabi to daily at the beginning of Dec-2014, giving it 21 weekly flights to the Middle East.

The 21 weekly flights will give PAL and PAL Express almost 8,400 weekly one-way seats to the Middle East, enabling PAL to overtake Emirates as the largest group in the Philippines-Middle East market. Emirates currently operates three daily 777-300ER flights from Dubai to Manila, giving it about a 20% share of total non-stop seat capacity between the Philippines and the Middle East.

Philippines to Middle East non-stop capacity (seats) by group: 1-Dec-2014 to 7-Dec-2014

Rank Airline Total Seats
1 PR/2P Philippine Airlines/PAL Express 16,744
2 EK Emirates 15,582
3 5J Cebu Pacific Air 13,080
4 EY Etihad Airways 10,276
5 SV Saudia 9,526
6 QR Qatar Airways 9,410
7 GF Gulf Air 2,580
8 WY Oman Air 1,296

Cebu Pacific is now the third largest carrier in the market, slightly ahead of Etihad and Qatar. Etihad and Qatar each operate two daily flights to the Philippines.

Saudia, Gulf Air, Kuwait Airways and soon Oman Air also serve the Philippines. Saudia currently operates 11 weekly flights, Gulf Air seven and Kuwait six. Oman is launching three weekly flights to Manila on 2-Dec-2014. (The Kuwait Airways flights all operate via Bangkok and therefore are not included in the chart above.)

Qatar Airways currently serves both Clark and Manila while the other six Middle Eastern carriers that serve the Philippines only serve Manila. Qatar launched services from Doha to Clark in late Oct-2013, but this did not result in any changes to Qatar’s capacity in the Philippines-Middle East market as one of its two daily flights to Manila was dropped when Doha was launched.

Cebu Pacific quickly grows Middle East network

Cebu Pacific now operates 15 weekly flights to the Middle East including seven to Dubai and three each to Riyadh, Kuwait and Dammam. Manila-Kuwait, which is not served non-stop by any other carrier, was launched in early Sep-2014 while Dammam and Riyadh were launched in early Oct-2014.

Cebu’s expansion to Saudi Arabia and Kuwait is part of a dramatic expansion of the LCC’s long-haul network from one to five routes in the span of less than five weeks. Cebu also launched Sydney in early Sep-2014, which is currently served with four weekly flights increasing to five in Dec-2014.

With the exception of Kuwait all five new routes are highly competitive markets that have also seen large increases in capacity from PAL. But Cebu Pacific CEO advisor Garry Kingshott says all the new routes are tracking at or above expectations with Sydney performing particularly well. Mr Kingshott told CAPA TV recently that the performance of the Dubai route, which was shaky in the initial spool up period, also performed well in the northern hemisphere summer 2014 season.

The Middle East remains the main focus of Cebu’s long-haul unit. Australia and Hawaii, which is now expected to be launched in late 2015, are important destinations as it provides some diversification. But the impetus of establishing the long-haul unit was to meet the huge demand of Filipino expatriates working in the Middle East. (Cebu Pacific previously was looking to launch Hawaii in early 2015 but now expects it will take about another year to secure the 180min ETOPS rating required for the Manila-Honolulu route.)

As CAPA has previously suggested, Cebu Pacific is keen to pursue further expansion in the Middle East as early as 2015. While it has looked at several markets including Abu Dhabi, Bahrain, Doha, Oman and Jeddah, the most likely next destination is Sharjah. Cebu Pacific briefly served Sharjah from 1-May-2014 to 20-Jul-2014 during runway construction works in Dubai and was pleased with bookings, including passengers that connected to flights operated by Sharjah-based LCC Air Arabia.

Cebu Pacific is confident of securing more traffic rights to the UAE

Cebu Pacific is seeking seven additional traffic rights for the UAE, which would enable it to launch flights to Sharjah. Cebu Pacific is confident it will receive the rights as seven of the 28 weekly frequencies to the UAE available to Philippine carriers are now unused.

PAL currently holds traffic rights for 14 weekly frequencies while PAL Express and Cebu Pacific each hold seven. PAL is now using only five (soon seven) for Abu Dhabi. It had been using the other seven until the end of Oct-2014 under a controversial codeshare arrangement with Emirates in which Emirates was able to use PAL traffic rights although it was the operating carrier.

Cebu Pacific has been a longstanding critic of Philippine authorities allowing Philippine carrier traffic rights to be used by foreign carriers under the guise of codeshares. Emirates and previously Qatar were seen as essentially trading traffic rights from PAL. In theory PAL had codeshares with both carriers but the codeshares were very limited and it is unusual in the global industry for the traffic rights to be held by the marketing rather than operating carrier.

The PAL-Qatar Airways arrangement ended in Oct-2013, forcing Qatar to move one of its two daily Manila flights to Clark. As Clark is an open skies airport it does not count for entitlements under the bilateral. Qatar has only seven weekly traffic rights to Manila.

End of Emirates-PAL codeshare leaves Emirates seeking more rights

Philippine authorities decided earlier this year to not allow the PAL-Emirates arrangement to be extended beyond Oct-2014. But the PAL-Emirates codeshare would likely have ended anyway due to the partnership PAL forged with Emirates rival Etihad in Jul-2014.

Emirates stopped carrying PAL’s code on Dubai-Manila in late Oct-2014. Emirates for now has been able to maintain its thrice daily service to Manila using seven temporary traffic rights as well as its 14 permanent rights. Emirates continues to include three daily flights in its forward schedules but there is a risk the temporary rights will not be extended beyond an initial one or two months.

The UAE is pushing for new bilateral talks with the Philippines which would potentially give Emirates 21 (or more) permanent rights to Manila. But these talks have been pushed back to 1Q2015 at the earliest. Further delays are possible as Philippine carriers do not see a need for a further expansion of the bilateral agreement with the UAE.

It is clearly in Cebu’s and PAL’s interest for Emirates to be forced to reduce Manila to 14 weekly flights as both operate the Dubai route. Total capacity on the Manila-Dubai route has increased by about 160% since Nov-2012, when there was a total of only two daily non-stop flights in the market (both from Emirates). An overall reduction would benefit both Philippine carriers.

Emirates is unlikely to resume Clark and unable to use A380 to serve Manila

Emirates does have the option of maintaining its total capacity in the Philippine market by moving one of its three daily Manila flights to Clark. But Clark proved to be a difficult market for Emirates in late 2013 and early 2014. Emirates obviously prefers to maintain three daily flights in Manila and ideally it would also gain the flexibility to increase in Manila to four daily flights.

Unfortunately for Emirates it does not have the option of maintaining capacity in the Manila market by switching from three 777-300ER to two A380 flights. The Philippines-UAE bilateral is based on frequencies rather than seats and in theory would allow A380 operations. But Manila Airport has decided it cannot accommodate A380s following a trial with an ad hoc Emirates A380 flight.

Due to the limited separation between the airport’s main runway and a parallel taxiway Manila has determined it would need to shut down a parallel taxiway every time an A380 landed. This is seen as an unacceptable compromise as Manila is a very busy airport. Closing a main taxiway once or twice a day would be an inconvenience for other airlines, particularly the two main Philippine carriers.

PAL could potentially pursue further expansion in Manila-Abu Dhabi market

Emirates’ success at securing more traffic rights to Manila could ultimately hinge on whether Cebu Pacific succeeds at securing the rights that had been used by the now terminated Emirates-PAL codeshare. PAL could end up keeping these rights by adding a third flight in the Philippines-UAE market, which would quickly change Cebu’s position that an expanded bilateral with the UAE is not needed.

PAL could potentially start using the seven unused rights to support a second daily flight to Abu Dhabi as part of an expanded partnership with Etihad. PAL president Jaimie Bautista recently told CAPA that PAL is interested in expanding its codeshare with Etihad to cover destinations in Europe and the US.

The two carriers currently only codeshare on their respective services between Abu Dhabi and Manila as well as domestic connections within the Philippines.

PAL could use Etihad and Etihad Alliance carriers to serve Europe

Abu Dhabi could emerge as a transfer point for continental Europe as PAL’s new ownership and management team is not interested in implementing the business plan of former controlling shareholder San Miguel, which envisioned several new destinations in continental Europe. PAL is instead now focusing on trying to improve its performance on Manila-London Heathrow and using partnerships to cover the rest of Europe.

PAL currently does not have any European codeshare partner. Etihad is a logical partner for PAL in the European market as Abu Dhabi is well connected to Europe. Etihad also has stakes in several European carriers that could also end up as PAL partners.

PAL also does not have any codeshare partners for the US market. PAL is interested in using Etihad to serve offline destinations in the eastern half of the US. A combination of Etihad and other potential new or existing partners, such as All Nippon Airways, could be used by PAL to improve its position in the North American market.

An expanded partnership with Etihad could potentially include Etihad placing its code on PAL-operated international flights beyond Manila. Guam and Honolulu could be two markets Etihad serves via Manila.

With the right connections, an expanded partnership could justify additional flights between the two hubs. Etihad is currently capped at two daily flights but PAL could potentially further increase its capacity to Abu Dhabi to match the two daily fights operated by Etihad.

PAL clearly has sufficient capacity to operate a second daily flight to Abu Dhabi as it is now significantly under-utilising its A330 fleet, as outlined in the first part of this series. In fact PAL could even been attracted to operate A330 flights beyond Abu Dhabi with Etihad’s support, particularly if PAL does not succeed in its current effort to sublease or sell several of its A330s.

PAL will need to move fast on a potential increase on Manila-Abu Dhabi as otherwise the seven weekly traffic rights that it has been using for the Emirates codeshare will be allocated to Cebu Pacific. PAL may not be able to conclude an expanded partnership with Etihad quickly enough, resulting in Cebu receiving the rights.

PAL Express may drop Manila-Dubai

But PAL also has the option of potentially moving its Dubai flight to Abu Dhabi, which would allow PAL to increase Abu Dhabi to double daily while still giving Cebu Pacific the 14 rights it seeks without requiring an expanded bilateral.

PAL Express’ Dubai flight has been highly unprofitable as competition with Cebu Pacific and Emirates has been intense, impacting load factors and yields. PAL’s Abu Dhabi route has been performing better, with the Etihad partnership likely helping.

PAL Express now has two A330s in its otherwise all-narrowbody fleet just for the Dubai route, resulting in a very low average aircraft utilisation rate. It would be sensible for these two aircraft and the route to be operated by PAL, which operates the rest of the group’s A330 fleet. But the traffic rights for Manila-Dubai are currently held by PAL Express.

Shifting the traffic rights now held by PAL Express to PAL would require relinquishing the rights held by PAL Express. This would allow other Philippine carriers, particularly Cebu Pacific, to bid for the rights. PAL may not want to risk losing these rights but as seven other frequency rights are currently available, it probably could be successful at transferring the rights if it makes a move now.

PAL Express giving up its UAE rights would increase the pool of available UAE rights to 14. With 14 rights available, Cebu Pacific would likely receive seven and PAL the other seven, enabling PAL to either take over PAL Express’ Dubai flight or add a second daily flight to Abu Dhabi.

Philippines-UAE market has become a high stakes chess game

Clearly there is a lot at play – and at stake. The ball is primarily in PAL’s court as it has several options for the Middle East component of its new business plan.

An expanded partnership with Etihad is highly likely as it would be a win-win for both carriers. Manila is Etihad’s second largest international market after Bangkok. As an added incentive Etihad would be able to potentially increase its share of the Philippine market at the expense of Emirates.

The best scenario for Emirates – and Filipino consumers – would be an expansion of the UAE-Philippines bilateral. But that is far from guaranteed, as the Philippines will also take into account what it sees as being in the best interests of its airlines.

Qatar so far has been unable to get the seven additional traffic rights that would allow it to revert back to its original double daily Manila schedule. It will be fascinating to see if Emirates can avoid a similar fate.







Cebu Pacific Long-Haul Low-Cost: New Period of Growth Begins As 5 Destinations Are Added


Cebu Pacific Air is planning to grow its long-haul network from one to six destinations over the next six months. In addition to the already announced new destinations of Sydney and Kuwait, the Philippine low-cost carrier is close to setting a launch date and beginning ticket sales for Dammam and Riyadh in Saudi Arabia.

Cebu Pacific is also aiming to launch Honolulu in early 2015 and is keen to secure additional traffic rights to the UAE to enable the launch of Sharjah. Cebu Pacific already serves Dubai, its only current long-haul destination which is now performing relatively well following an extremely disappointing initial performance.

The forthcoming network expansion will provide the biggest test yet for Cebu Pacific’s long-haul unit. In the first 14 months of widebody operations Cebu Pacific has mainly used its fleet of A330-300s to operate regional routes.

This is the second in a two part series of analysis reports on Cebu’s now 14-month-old widebody operation. The first part focused on the ManilaSydney route, which will be launched on 9-Sep-2014, and connection opportunities beyond Manila. This report looks at Cebu’s plans for Saudi Arabia and the prospects of a Sharjah service. It will also examine the overall Philippines-UAE market including Cebu’s performance in Dubai.  

Kuwait to become Cebu Pacific’s second long-haul destination

Cebu Pacific’s second long-haul destination will be Kuwait, which will be served with three weekly flights from 2-Sep-2014. Manila-Kuwait will be a unique route for Cebu’s long-haul unit as it is the only route among its first six long-haul routes (including five that have not yet been launched) that is not currently served non-stop by any carrier.

The Manila-Kuwait market is now served on a one-stop basis by several carriers, led by Emirates,Etihad Airways and Qatar Airways. Cebu Pacific is banking on Kuwait having a sufficient Filipino community to support a non-stop service. Kuwait does have a sizeable Filipino community – approximately 200,000 – although it is smaller than the Filipino communities in Cebu’s other initial long-haul markets (the UAE, Saudi Arabia, Australia and Hawaii).

Cebu Pacific began selling Kuwait in Jul-2014 – at the same time as Sydney. Unlike the Sydney market, where Cebu Pacific expects some outbound Australian leisure traffic as well as a significant share of transit traffic, Kuwait will be virtually entirely a point to point Filipino labourer market.    

Cebu Pacific will be the ninth LCC serving Kuwait, according to OAG data. But it will be the first LCC in Kuwait with long-haul services. LCCs currently account for about 30% of total seat capacity at Kuwait International Airport.

Kuwait-based Jazeera Airways is by far the largest LCC in the Kuwait market and its approximately 14% share of total seat capacity makes it the second largest airline in Kuwait after flag carrier Kuwait Airways. Jazeera could emerge as a potential partner for Cebu Pacific as its Kuwait base features 15 routes throughout the Middle East, Egypt and Turkey. But at least for now Cebu Pacific is targeting the local Kuwait-Philippines market and the approximately 200,000 Filipinos living in Kuwait as well as their families residing back in the Philippines.

Cebu Pacific to launch Saudi Arabia shortly after Kuwait

Saudi Arabia is also expected to be almost entirely a point to point market for Cebu Pacific although there could potentially be an opportunity to work with Saudi LCC flynas. Cebu Pacific has not yet set a launch date or begun tickets sales to Saudi Arabia but has been preparing for the last year to serve both Dammam and Riyadh.

Initially Dammam and Riyadh were slated to be Cebu Pacific’s second and third long-haul destinations after Dubai, with a launch anticipated in 1H2014. But Cebu Pacific has encountered several delays in securing approvals from Saudi authorities.

The general manager of Cebu Pacific’s long-haul division, Alex Reyes, told CAPA prior to CAPA’s Australia Pacific Aviation Summit (held in Sydney on 6-Aug-2014 to 8-Aug-2014) that that the final approvals from Saudi Arabia should be secured shortly, allowing for a launch within the next couple of months. “We are about ready to push the button,” he said.

As passengers (or their labor contractors) in the Philippines-Middle East market typically make purchasing decisions with short notice, Cebu Pacific believes it can launch Saudi Arabia within only a few weeks of starting ticket sales. Cebu Pacific is initially planning to operate three weekly flights to Dammam as well as three weekly frequencies to Riyadh.

It will compete against Philippine Airlines (PAL) on both routes, which launched Manila to Dammam and Riyadh services in late 2013. PAL currently serves Riyadh with four weekly A330 flights and Dammam with three weekly A330 flights, according to OAG data. Saudia also serves the Manila-Riyadh market with seven weekly flights and operates three weekly flights from Manila to Dammam, according to OAG data.

Cebu Pacific has sufficient traffic rights to operate up to seven weekly flights to Riyadh and has unlimited access to Dammam, which has been designated by Saudi Arabian authorities as an open skies airport. Cebu Pacific could also potentially use some of its seven weekly Philippines-Saudi Arabia rights for Jeddah but earlier ruled out Jeddah as it sees a larger market in Riyadh and Dammam. (PAL also initially planned to serve Jeddah but prior to launching services to Saudi Arabia in late 2013 decided to only enter the Dammam and Riyadh markets.)

Cebu Pacific to take fifth A330 in late Aug-2014

Mr Reyes said that Dammam, Riyadh, Kuwait, Sydney and Dubai will use the equivalent of three A330s. That will leave the equivalent of two A330s for short-haul routes.

Cebu Pacific plans to take its fifth A330-300 at the end of Aug-2014 (prior to the launch of Kuwait and Sydney). Cebu Pacific sees leaving two aircraft for short-haul flights as ideal given the success it has had over the past year in operating A330s on short-haul routes.

Mr Reyes told CAPA TV in a 6-Aug-2014 interview that Cebu Pacific has discovered the A330 is efficient for shorter sectors, enabling the airline to lower its cost per seats in thick short-haul markets.

Cebu Pacific plans Manila-Honolulu service

The sixth and final A330-300 from Cebu’s current commitment with leasing companies is slated to be delivered in 1Q2014. This aircraft will support the launch of services to Honolulu, which Mr Reyes says will initially be served with three weekly flights.

Cebu Pacific is now working on securing FAA authority to operate flights into the US. Previously the carrier was unable to even seek such authority as the Philippines had a Category 2 safety rating. Philippine authorities secured a Category 1 rating in Apr-2014, enabling Philippine Airlines (PAL) to pursue expansion and gauge changes in the US market and enabling Cebu Pacific to begin preparations to enter the US market.

As previously outlined by CAPA, Cebu Pacific’s first US route will be Honolulu-Guam. Cebu Pacific plans to launch Guam by the end of 2014 using its A320 fleet. Honolulu will take slightly longer to launch as Cebu Pacific first needs to secure extended range twin-engine operations (ETOPS) approval for its A330 fleet. (Cebu Pacific is not seeking ETOPS for its A320s, which will necessitate a slightly longer routing to Guam in order to meet diversion airport requirements.)

Cebu Pacific looks to lease two more A330s but South Africa, Russia and NZ are not likely

While Cebu Pacific is only committed to one additional A330 beyond the fifth aircraft it will take at the end of Aug-2014 the business plan for its long-haul unit has always envisioned a fleet of eight A330-300s. Cebu Pacific is now looking at potentially leasing two more A330s in 2015 (in addition to the one aircraft already committed for 1Q2015), giving it a fleet of eight aircraft by the end of 2015.

The two additional aircraft will enable further expansion of the long-haul network beyond Honolulu, which is expected to become Cebu Pacific’s sixth long-haul destination after Dubai, Kuwait, Sydney, Dammam and Jeddah. One option under consideration as Cebu Pacific’s A330 fleet expands to up to eight aircraft in 2015 is Sharjah, which the carrier served briefly from 1-May-2014 to 20-Jul-2014 during the runway repair project at Dubai.

Other new long-haul destinations including South Africa, New Zealand and Russia have been mooted but ruled out as Cebu Pacific is focusing on markets with large Filipino expatriate communities. The Middle East continues to be the main focus as it has the largest overseas Filipino population outside North America, which is not within range of Cebu’s A330s with the exception of Hawaii. (Of the approximately 4 million Filipinos residing in North America about 350,000 live in Hawaii.)

Air Arabia partnership is key to potential Cebu Pacific Sharjah service

Cebu Pacific does not want to rely significantly on inbound tourism although in markets such as Australia inbound traffic is being pursued (along with transit traffic) to help make the market viable. Sharjah is a more traditional Cebu Pacific market as it will cater to Filipino workers with the added benefit of being an LCC hub, enabling connections to destinations throughout the Middle East (as well as parts of Eastern Europe, Central Asia and Africa) which have Filipino populations but may not be large enough to support non-stop service.

Air Arabia’s Sharjah hub currently consists of almost 1,000 weekly flights to about 60 destinations. Air Arabia currently accounts for an overwhelming 83% of total capacity at Sharjah, according to CAPA and OAG data. In terms of seat capacity Air Arabia’s Sharjah hub is about four times the size of Jazeera’s Kuwait hub and about double the size of flynas’ hubs in Riyadh and Jeddah.

The Dubai hub of the Middle East’s other main LCC, flydubai, is about 50% larger than Air Arabia’s Sharjah hub. But a Cebu Pacific-flydubai relationship is unlikely given flydubai’s ties to Emirates, which competes against Cebu Pacific in the Manila-Dubai market. Emirates is also a large one-stop carrier in other Manila-Middle East markets (such as Kuwait and Saudi Arabia) that Cebu Pacific is now preparing to enter.

Mr Reyes said Cebu Pacific is now looking to add Sharjah on a permanent basis to leverage the connection opportunities with Air Arabia as it was pleasantly surprised by the transit traffic generated during its time in Sharjah. Air Arabia in particular promoted connections to Manila from the Saudi Arabian cities of Dammam, Riyadh, Gassim and Hail with one-way through fares starting at SAR1250 (USD333) including checked bags and a meal.

Cebu Pacific returned to Dubai International Airport in Jul-2014 after the recent completion of the runway renovation project. Cebu Pacific is not considering moving its Dubai International flight to Sharjah (or Dubai World Central) and remains committed to Dubai, where its load factor has improved significantly after a dismal start. But it believes there is sufficient demand in the Philippines-UAE market to support separate services to both Dubai and Sharjah.

Cebu Pacific keen to expand in Philippines-UAE market

Cebu Pacific originally was looking at supplementing Dubai with Abu Dhabi but now sees more potential in Sharjah, partly because of the connection opportunities with Air Arabia. There is also a sizeable Filipino community in Sharjah and in the part of Dubai that is close to Sharjah.

Cebu Pacific however first needs to secure additional UAE traffic rights before a service to Sharjah can be added. Cebu Pacific has long pushed Philippine authorities to adopt a policy of prohibiting Filipino carriers from loaning their traffic rights to UAE carriers. As part of codeshare deals PAL over the years has been able to loan its traffic rights for the UAE to Emirates and Etihad, which lacked the ability to expand as they were fully utilising their own traffic rights.

Etihad is no longer using PAL rights but Emirates is still using seven weekly traffic rights allocated to PAL to support one of its three daily flights to Manila. These rights are expected to be returned and could potentially be reused by PAL or partner Etihad to expand in the Manila-Abu Dhabi market. If they are not reused by PAL the rights could be reallocated to Cebu Pacific.

The UAE also has been seeking an extended air services agreement with the Philippines. This could enable Emirates to maintain three daily flights without having to use PAL’s rights for one of the flights as well as potentially support a new service from Cebu Pacific if it is unable to secure the Filipino carrier rights now used by Emirates.

There are currently 28 weekly flights allocated to both sides under the Philippines-UAE air services agreement. Of the 28 weekly flights available to Filipino carriers in the UAE market 26 are currently used, including seven from Cebu Pacific (to Dubai), seven from PAL Express (to Dubai), five from PAL (to Abu Dhabi) and seven by Emirates on behalf of PAL (to Dubai). Of the rights available to UAE carriers, 14 are currently used by Etihad (from Abu Dhabi) and 14 by Emirates (from Dubai).

There are currently no services from the Philippines to Sharjah or any other point in the UAE. In the Philippines all services to the UAE originate in Manila. (Emirates from Oct-2013 to Apr-2014 also operated one daily flight to Manila alternative Clark, which is an open skies airport. But demand from Clark is limited and Emirates is unlikely to return to Clark.)

See related report: Philippines-UAE market suffers from overcapacity, impacting Cebu Pacific, PAL, Emirates and Cathay

Cebu Pacific optimistic Philippines-UAE market can support even more capacity

Operating two (likely daily) routes to the UAE seems rather ambitious given the initial challenges Cebu Pacific faced in the Manila-Dubai market. But Cebu Pacific is confident it has overcome the initial setbacks and believes the Philippines-UAE market is growing rapidly and can support more LCC flights, particularly given the stimulation effect of low fares.

Mr Reyes says the total number of passengers travelling between Manila and Dubai has grown by 30% over the last year (includes passengers flying via other cities such as Hong Kong). Some of the growth was driven by stimulation as lower fares in the market have enabled more frequent trips home for Filipinos as well as visits from friends and family living in the Philippines.

The number of Filipinos working in Dubai and the UAE also has continued to grow more than anticipated. Dubai is now the largest outbound Filipino market, giving Cebu Pacific confidence it can maintain a daily Dubai service as well as add a second destination in the UAE.

Sharjah also offers connection opportunities as Cebu Pacific is keen to pursue an expanded and potentially more formal relationship with Air Arabia. With Filipinos spread across the Middle East, using Sharjah and Air Arabia to serve the rest of the region is logical.

Cebu Pacific has looked at other potential non-stop routes in the Middle East including Bahrain, Omanand Qatar. A more sensible approach would be to serve these and other smaller Filipino worker communities via Sharjah and not growing the Middle East network beyond five destinations (and three countries).

Cebu Pacific sees encouraging improvement on Dubai route

Cebu Pacific is also confident recent improvement on its Manila-Dubai route, which Mr Reyes says is now “doing quite well,” shows more capacity to the UAE and Middle East can be supported. While Cebu Pacific is keen to diversify its long-haul network with Australia and Hawaii the Middle East remains the main focus of its long-haul strategy.

As CAPA previously analysed, Cebu Pacific’s average load factor on Manila-Dubai was a dismal 36% in the first month of operation, Oct-2013. But the load factor started improving in late Nov-2013 and after still struggling in 1Q2014 was above 80% in Apr-2014, May-2014 and Jun-2014. Cebu Pacific has not provided data on July but it likely dipped due to low demand during Ramadan despite a temporary reduction to four weekly flights during the fasting month.

Mr Reyes is confident in the future success of the Dubai route as the carrier has made adjustments in its sales and distribution approach after learning about the nuances of the Philippines-Middle East market. While Cebu Pacific was disappointed with the new initial performance Mr Reyes points out new routes typically take a year to mature. For example the airline had even lower initial load factors on some regional international routes launched in recent years – although obviously the losses were significantly lower as they were shorter routes operated with narrowbody aircraft.

Cebu Pacific still faces challenges as long-haul operation matures

Cebu Pacific’s long-haul operation seems to have gotten over the hump and is on the path to an improved performance. But it still faces huge challenges and a relatively sceptical investment community.

Cebu Pacific’s stock dropped by about 40% in the last seven months of 2013 – the first seven months of the A330 operation – as the new long-haul operation dented its profitability. The stock has recovered partially so far in 2014 but is still trading almost 30% below May-2013 levels.

Even with the Dubai route performance improving, Cebu Pacific has not yet proven its version of the long-haul model can be successful. The adjustment to focus more on transit traffic, starting with the pursuit of North Asia connections on the Sydney-Manila route and to potentially be followed by a partnership with Air Arabia at Sharjah, should help. But Cebu Pacific still has a long road ahead.

Australia will be particularly challenging as Cebu Pacific faces stiff competition and potentially overcapacity as PAL is increasing its Manila-Sydney service from four weekly flights to daily in Dec-2014. Cebu Pacific also plans to add a fifth weekly frequency to Sydney from Dec-2014 while Qantas maintains its Manila service at four weekly flights.

Cebu Pacific faces intensifying competition from Philippine Airlines

Honolulu will also be challenging from a competitive standpoint as PAL is increasing Manila-Honolulu from four to seven weekly flights ahead of Cebu’s expected entry into the Hawaii market. PAL’s response thus far to Cebu Pacific’s long-haul expansion has been extremely aggressive. PAL also launched Dubai and Abu Dhabi at about the same time as Cebu Pacific entered Dubai and also has launched Dammam and Riyadh ahead of Cebu Pacific.

Virtually everywhere Cebu Pacific has turned with its long-haul operation PAL has fought back with new flights and requests for more traffic rights. But Cebu Pacific is prepared to weather the storm. If anything PAL is more likely to retreat as questions again surface over PAL’s future ownership structure.

Already the PAL Group has adjusted its Middle East expansion plan by deciding against taking another five A330-300s in single class configuration. Initially six A330s from the group’s A330 order had been allocated to regional subsidiary PAL Express for use on routes to the Middle East in 414-seat single class configuration. PAL Express now operates only one A330-300, which it uses to compete against Cebu Pacific on the Manila-Dubai route, but is no longer planning to expand this operation to other Middle Eastern markets.

Cebu Pacific considers acquiring new generation widebodies

Cebu Pacific’s long-haul unit clearly faces a critical juncture over the next six months as it launches five routes. How the five new markets perform and how well Dubai does in its second year – as well as what happens with the PAL Group – will be key drivers in determining the pace of future Cebu Pacific widebody expansion.

While the current business plan envisions only eight A330s a phase two featuring new generation widebodies has always been a possibility – and a necessity if Cebu Pacific is to keep up with Asia-Pacific’s other rapidly growing long-haul LCCs.

Cebu Pacific is now evaluating the A330neo, which AirAsia X signed up for in Jul-2014 as the launch airline customer with 50 commitments. Cebu Pacific was already evaluating the A350, 787 and the 777X. The latter is still several years away but would enable flights from Manila to the west coast of the US, which have traditionally been PAL’s largest and most lucrative long-haul markets. Cebu Pacific does not see the A350 or 787 as a possibility for California (as the variants that may have the range are too small for Cebu’s requirement) but could use either type or the A330neo to pursue growth to the Middle East and Australia and replace current generation A330-300s.

Cebu Pacific certainly will have several options as it looks to grow its long-haul fleet and network. But first it needs to get the basics right and make sure it has the right long-haul low-cost model for its market.

Adjustments will be necessary as the long-haul low-cost sector is evolving rapidly and the Southeast Asian market is extremely dynamic. Cebu Pacific is now barely scratching the surface. Cebu Pacific is still too new to the long-haul low-cost game to determine if it will be a winner.

Source: CAPA, Centre for Aviation

World Airline Awards 2014: World’s Top 10 Airlines

World's best airlines for 2014
World’s best airlines for 2014

World’s Top 10 Airlines 

1. Cathay Pacific Airways

2. Qatar Airways

3. Singapore Airlines

4. Emirates

5. Turkish Airlines

6. ANA All Nippon Airways

7. Garuda Indonesia

8. Asiana Airlines

9. Etihad Airways

10. Lufthansa


Best Inflight Entertainment

1. Emirates

2. Singapore Airlines

3. Turkish Airlines

4. Qantas

5. Cathay Pacific Airways

6. Virgin Atlantic

7. Qatar Airways

8. Air New Zealand

9. Virgin Australia

10. Etihad Airways


Best Cabin Crew

1. Garuda Indonesia

2. Cathay Pacific

3. Singapore Airlines

4. Asiana Airlines

5. Malaysia Airlines

6. Qatar Airways

7. EVA Air

8. ANA All Nippon Airways

9. Thai Airways

10. Hainan Airlines


Best Low Cost Carrier

1. AirAsia

2. Jetstar Airways

3. Virgin America

4. AirAsia X

5. Indigo

6. Norwegian

7. Jetstar Asia

8. easyJet

9. WestJet

10. Azul Airlines


CAPA: Philippine Airlines Seeks A Strategic Investor As International Expansion Continues


ANA: Not Planning To Invest In PAL

Attracting an investor from the airline sector has so far proven challenging. All Nippon Airways (ANA) emerged as a potential suitor in 2013 as part of the Japanese carrier’s initiative to invest in foreign airlines with focus on Southeast Asian market.

But ANA has since ruled out an investment in PAL. ANA also has decided not to complete a planned investment in small Myanmar carrier Asian Wings, which when announced in Aug-2013 was seen as a toe in the water with the idea it would be followed by larger investments in Southeast Asian airline sector.

ANA’s rival Japan Airlines also has been ruled out as a potential investor in PAL. Japan was a logical place for PAL to turn as Japan is PAL’s largest market accounting for about 22% of the carrier’s international seat capacity.

PAL currently operates 63 weekly flights to five Japanese destinations (FukuokaNagoya, Osaka, Tokyo-Haneda and Tokyo-Narita), according to OAG data. But synergies with Japanese carriers are relatively limited. ANA and JAL are strong competitors in the Philippines-US market.

PAL is now planning to expand its US operation, which is made possible by Philippine authorities securing a Category 1 rating from the US FAA earlier this year. As PAL expands in North America it will try to woo away passengers that have been flying via North Asian hubs including Tokyo, Hong KongSeoul and Taipei, thus increasing the competitive posture towards airlines from those countries.

Japan is an important and growing source market for the Philippines tourism sector. But Philippines-Japan is primarily a leisure point to point market and seemingly is not of sufficient importance to Japanese carriers to justify an investment. There are also limited opportunities to offer Japanese passengers connections beyond Manila.

Securing Investment from Korean Carriers Would Be Challenging

South Korea is also an important and growing source market for Philippine tourism sector. South Korea is PAL’s second largest market based on current seat capacity and is served with 46 weekly flights across five routes (Seoul to Cebu, Kalibo and Manila and Busan to Kalibo and Manila).

Korean Air and Asiana each have large presences in Philippine market, supported by strong inbound demand from Korea as well as sixth freedom traffic, particularly to North America.

Asiana is the second largest foreign carrier in Philippine market based on seat capacity and currently has 39 weekly flights to the Philippines while KAL is the fourth largest and has 23 weekly flights. It is similarly hard to build a business case for a Korean carrier to invest in PAL.

As is the case with Japanese carriers, potential opportunities for Korean carriers to use Manila as a transit hub for other regions of Asia are limited. San Miguel has talked up building Manila into a transit hub. PAL is generally not well positioned for this type of traffic and will need to compromise yields to attract passengers in markets such as Australia-London and Singapore-North America.

And potential North Asian partners would be impacted if PAL were to pursue this type of traffic aggressively. While an investment seems unlikely PAL could still use partners in Korea and Japan. A Korean and/or Japanese partner would help with local point of sales and connections to secondary cities in Japan.

A Japanese or Korean carrier could also potentially help provide offline coverage to smaller North American markets which PAL does not intend to cover on its own.

Cathay Pacific Codeshare Or Relationship With A Chinese Carrier Is Unlikely

Currently PAL has codeshare with only two North Asians carriers, Air Macau and Cathay Pacific. But both partnerships are limited. The Air Macau codeshare is limited to the MNL-Macau route, which is currently served only by PAL (as well as Cebu Pacific).

The Cathay codeshare is limited to the CEB-HKG route, which is only served by Cathay (as well as Cebu Pacific). The Cathay partnership excludes the much larger and more competitive MNL-HKG route or any destinations beyond Hongkong.

The Cathay-PAL partnership is unlikely to be extended as Cathay competes with PAL in several key PAL markets including Philippines-North America, Philippines-Middle East and Philippines-North Asia. Cathay is now the largest foreign carrier in the Philippines with 43 weekly flights and 12,000 one-way seats.

Cathay regional subsidiary Dragonair also operates nine weekly flights to the Philippines, giving the Cathay group about 25,000 weekly seats and over 5% of capacity in Philippine international market. A partnership with a mainland Chinese carrier would be more appealing as PAL only now serves four destinations in mainland China with a combined 22 weekly return flights.

But a strong partnership or investment from a Chinese carrier may be made less likely in view of the tense state of relations between China and the Philippines. A partnership with a Taiwanese carrier would be more conceivable but again would likely be relatively limited.

Taiwan is a much smaller local market for the Philippines than Hong Kong, Korea or Japan. PAL has only 11 weekly frequencies to Taiwan while China Airlines and EVA Air serve the Philippines with 20 weekly flights and seven weekly flights respectively. The close proximity of Taipei and Manila mean the two hubs compete for traffic and are not synergistic.

Singapore Airlines: Not A Likely Suitor for PAL

PAL’s codeshare partnerships in Southeast Asia are also relatively limited. Currently PAL has codeshares with Garuda IndonesiaMalaysia Airlines (MAS) and Vietnam Airlines.

Garuda and Vietnam Airlines currently do not serve Manila although Garuda is planning to enter the Jakarta-Manila route by the end of 2014.

The MAS codeshare initially provided PAL with offline access to Kuala Lumpur and has been maintained since PAL resumed services to Kuala Lumpur in early 2013. None of these airlines are in position to invest in PAL or any other foreign carrier.

A partnership with Singapore Airlines (SIA) would be more intriguing as Singapore is by far the largest Southeast Asian market from the Philippines. There are currently over 60,000 weekly seats between Singapore and the Philippines, making it the Philippines largest market after South Korea. But there would be limited synergies for SIA.

PAL is not believed to be on SIA’s list of potential acquisition targets.

PAL Forges A New Partnership With Etihad

In recent years most of PAL’s codeshare partners have been from the Mideast. PAL currently codeshares with Emirates and Gulf Air, according to OAG data. But PAL also previously codeshared with Etihad and Qatar Airways.

Most of its codeshares with Gulf carriers were forged during a period when PAL did not operate any services to the Middle East. In some cases Philippine authorities allowed PAL to have its codeshare partners use PAL traffic rights to Middle East countries, which enabled Gulf carriers to continue expanding in Manila after their own traffic rights were exhausted.

PAL and other Philippine carriers have since taken back most of these traffic rights. In 2H2014 PAL launched Abu Dhabi, Dubai, Dammam and Riyadh services (Dubai is served by PAL Express).

Cebu Pacific launched Dubai and is planning to launch Kuwait in Sep-2014. (Cebu Pacific also has been looking to serve Saudi ArabiaOman and Qatar.) PAL forged a partnership agreement with Etihad in late Apr-2014 that builds on the original codeshare between two carriers.

The two carriers announced on 9-Jul-2014 that the new partnership will initially cover the Manila-Abu Dhabi route, which Etihad and PAL both operate. For now the only extension announced beyond the parallel routing is to be on PAL/PAL Express services to 20 Philippine destinations, including holiday destinations such as Cebu, Palawan and Kalibo (a gateway to Boracay Island).

Etihad has said it has no intention of acquiring a stake in PAL. While an investment is always a future possibility for any carrier Etihad partners with, PAL has a better chance of finding a suitor within Asia – although even there it faces an uphill battle to secure an investment.

PAL recognizes the need to work with a Gulf carrier to support its effort to build a more global network. PAL currently does not codeshare with any European carrier. The new Etihad partnership could potentially be extended to destinations beyond Abu Dhabi in continental Europe and Africa as well as secondary destinations in the Mideast.

Much of the foundation for Philippine services to the Mideast is in carrying migrant worker traffic, but Gulf countries in particular have shown increasing interest in holidaying in friendly countries outside the region.

PAL has been looking at launching several potential destinations in continental Europe including AmsterdamFrankfurt, Paris and Rome. One or two European destinations may still be added over the medium term but following the Category 1 upgrade by the US FAA it is more likely to focus on expanding in the US market.

As PAL’s only current European destination is London, which is not generally considered a convenient hub for Asia to Europe connections, using Etihad and the Abu Dhabi hub to cover the rest of Europe would be a sensible move.

PAL Expands In US But Lacks A US Partner

In US, PAL currently serves Los AngelesSan FranciscoHonolulu and Guam. Restoration of Category 1 status has allowed PAL to shift all its LAX and some  its SFO flights to the 777-300ER.

PAL plans to shift its remaining San Francisco 747-400 flights to the 777-300ER at the beginning of Sep-2014. This will allow PAL to finally retire its 747-400s after an initial plan to retire the fleet in May-2014 had to be postponed.

Moving the 777-300ERs to the US market improves PAL’s product and efficiency but comes with a catch as PAL has to transition its Vancouver and Toronto services from 777-300ERs to A340s to free up 777s for the US market. PAL currently serves LAX with 11 weekly frequencies, SFO with seven weekly frequencies, GUM with five weekly frequencies and HNL with three weekly frequencies. Vancouver is served with seven weekly frequencies, three of which continue onto Toronto.

PAL has been looking at launching new destinations in the US in late 2014 or 2015. Chicago and New York are the most likely candidates. PAL is also planning to increase GUM and HNL to daily services from late Oct-2014. PAL uses A320s to GUM and A340s to HNL.

The increases in these markets come ahead of Cebu Pacific’s planned launch of services to the US, which is also made possible by the Philippines regaining a Category 1 ranking. Cebu Pacific aims to launch Guam by the end of 2014 using its A320 fleet and begin serving Hawaii in 2015 using its A330-300s. Category 1 also enables Philippine carriers to codeshare with US carriers.

A codeshare partnership with a US carrier would improve PAL’s position in the US market as PAL would gain offline access to domestic destinations. But PAL could find it challenging to attract a US major and may have to settle for a codeshare or interline with a smaller carriers such as Alaska AirlinesJetBlue and Virgin America. Partnering with a top European carrier may also be challenging although this may not be as critical if its able to expand its new partnership with Etihad.

In addition to potentially providing offline access to Europe via Abu Dhabi, the Etihad partnership could lead to partnerships with European carriers that are part of the Etihad equity alliance such as Alitalia and airberlin.

Australia: Philippine Airlines vs. Cebu Pacific

PAL would also find partnership with an Australian carrier valuable, although options are few.

PAL is pursuing significant expansion in Australia. PAL currently operates four weekly A340 flights to Sydney, three weekly A340 flights to Melbourne and three A320 flights to Darwin, with continuing service to Brisbane.

PAL plans to upgrade Sydney to daily in late Oct-2014. At about the same time PAL reportedly is intending to upgrade Melbourne to daily and begin non-stop flights to Brisbane and Perth. PAL briefly served Perth in 2013 with four weekly flights via Darwin but quickly dropped the route while maintaining Manila-Darwin-Brisbane.

The Australia expansion comes just as Cebu Pacific enters the Philippines-Australia market. Cebu Pacific plans to initially operate four weekly flights to Sydney from Sep-2014 and is looking at adding Melbourne in 2015. While Cebu Pacific should stimulate new demand, overcapacity is likely if PAL implements its plan to double capacity to Australia.

Overcapacity is also likely in the Hawaii and Guam markets as both PAL and Cebu Pacific expand. Overcapacity has already resulted in the Philippines-UAE market after both PAL and Cebu Pacific entered the market in 2H2014. Both carriers have also been pursuing significant expansion to Japan.

The prospect of overcapacity and irrational competition results in a relatively gloomy short to medium term outlook for the Philippine international market. The inevitable discounting has the potential to stimulate new business but there is no indication just how the market would respond to lower prices.


Source:, Centre for Aviation

Budget Jets Take On Long Hauls

Image Source: Ryotaro Shinozaki,
Image Source: Ryotaro Shinozaki,

By Rory Jones and Robert Wall

Budget airlines have gutted the short-haul businesses at established network rivals from Singapore Airlines Ltd. to Air France-KLM SA.

Now a new breed of low-cost operators, armed with more fuel-efficient planes, is threatening to do the same to most big airlines’ most profitable business: long-haul flying.

The emergence of intercontinental discount airlines also represents the first serious low-cost challenge to the Middle East’s rapid-growth airlines, including Emirates Airline and Qatar Airways Ltd. Their focus on connecting continents had left them less exposed to the emergence of the region’s short-haul budget carriers such as Air Arabia Co.

Cebu Air Inc.’s Cebu Pacific began operations from Manila to Dubai last year, targeting the Persian Gulf region’s large Filipino diaspora. The carrier is using Airbus Group NV A330s in a high-capacity, nine-abreast configuration seating 436 to keep costs low.

Emirates quit flying to Clark International Airport, about 60 miles from Manila, after just six months of operations earlier this year, in part due to increased capacity that was also bolstered by Philippine Airlines Inc.

Emirates President Tim Clark is a believer in the discount model, even though his airline is more famous for luxury amenities than low frills. “I think it is a question of time,” he said.

Closer to home, flynas, a Saudi Arabia-based discount airline, has launched services to the U.K., North Africa and Asia.

“Price-sensitive passengers will choose us for connecting flights,” said Wael Al Sarhan, the marketing director for flynas. “We have the edge,” he added, as the airline offers return fares to London for GBP200 ($334), about half the typical ticket price offered by its regional peers.

It isn’t uniformly accepted that low-fare competition is inevitable on intercontinental routes, though. “You cannot pack people like a sardine can,” Qatar Airways Chief Executive Akbar Al Baker told reporters in October. “I don’t think it will work.”

Among the challenges to the discount model on long routes: Many cost-saving techniques used by short-haul operators can’t be replicated. Discount carriers like Southwest Airlines Co. and Ryanair Holdings PLC, the U.S. and European leaders, try to get planes unloaded and back in the air quickly. That is harder to do on intercontinental flights, which face more departure restrictions.

Getting more favorable labor contracts also has pitfalls. Norwegian Air Shuttle A/S’s efforts to expand to North America using offshore contracts have drawn fierce opposition from the U.S. pilots union, the Air Line Pilots Association. The union has argued that the carrier employed unfair labor practices through its Irish registration, a charge the company rejects.

Trying to bring discount operations to long-haul flying may be in vogue, but it isn’t a new idea. For many Americans and Europeans, the Skytrain service set up by British aviation pioneer Freddie Laker was their first opportunity to afford trans-Atlantic flights in the early 1980s. The airline connected cities such as London with New York and Los Angeles.

The business eventually failed amid an economic downturn in the 1980s and price cuts by network carriers in response to Mr. Laker’s service.

More recent attempts included AirAsia X Bhd’s flights to London and Paris from Kuala Lumpur, which were scrapped in 2012 after management realized it couldn’t make money on the routes using the gas-guzzling Airbus A340.

A new generation of more fuel-efficient, long-range jets from Boeing and Airbus is spurring the concept’s revival. Norwegian Air CEO Bjørn Kjos said the business only works with jets like the Boeing 787 Dreamliners he is betting on or the Airbus A350. AirAsia X will test the European market again using twin-engine Airbus A330s.

Norwegian, whose long-haul network links Scandinavian capitals with the U.S. and Asia, plans to start London-to-Los Angeles service July 2, with New York and Fort Lauderdale, Fla., to follow.

British Airways, whose parent, International Consolidated Airlines Group SA, derives most of its profit from trans-Atlantic flights, isn’t worried about the newcomer so far.

IAG CEO Willie Walsh has said that some of the rock-bottom teaser fares are simply unprofitable given mandatory flight charges, such as the U.K.’s passenger tax, which can add as much as GBP188 to each ticket. In other instances, British Airways’ sale fares can match what rivals offer, he said.

A more serious threat to British Airways could be an oft-discussed push by Ryanair CEO Michael O’Leary to begin a long-haul business. Mr. O’Leary said he is waiting for prices of the more fuel-efficient planes to drop.

Slow to respond to the budget-airline threat in their short-haul operations, network carriers want to avoid repeating that mistake.

Deutsche Lufthansa AG has converted some of its Airbus A340-300 long-range planes to squeeze in more seats, and Air France is doing the same with its Boeing 777 wide-bodies.

Whereas short-haul discount airlines generally focus on all-economy cabin configurations, most airlines are adopting a different approach for multihour flights.

David Neeleman, founder of Brazil’s Azul Linhas Aéreas Brasileiras SA, said his proposed long-haul budget operations will feature 35 business-class seats and 50 extra-legroom economy seats because 60% of the carrier’s business is corporate travel. Azul expects profitability on long-haul routes to outpace that on its domestic network, Mr. Neeleman said. “I think we are going to stimulate a lot of traffic.”


Daniel Michaels in Frankfurt and Susan Carey in Chicago contributed to this article.