Market Developments in Philippines

This summer, airlines in Philippines are planning significant expansion in both the domestic and international markets. The Southeast Asian country is never going to be one of the major economies of the region but air travel is certainly showing positive signs of development as new entrants and the emergence of low-cost travel options are pushing growth.

Source: Flightbase (March 14-20, 2011)

As the table above illustrates, the domestic market is important, accounting for more than 70 per cent of the weekly flight capacity. National carrier Philippine Airlines has historically dominated both the domestic and international sectors, although over the past couple of years AirPhil Express (formerly known as Air Philippines) and more recently Zest Airways, have increased their share of the market. Not currently included in these figures is the latest expansion from budget carrier AirPhil Express which will see it add a number of new domestic routes and boost frequencies on existing flights this summer as it expands its Airbus A320 fleet. The airline will introduce daily links from Manila to Kalibo from April 1; to Tacloban from July 21 (increasing to twice daily from October 20); and Cotabato and General Santos from October 20. It will also increase frequencies between Cebu and Davao from March 27 and between Manila and Bacolod and Cagayan de Oro from July 21 with the introduction of a third daily rotation on each route. The Manila – Iloilo connection will also see a fourth daily rotation from October 20. It is not all growth for the low-cost carrier though and it has confirmed that there will be cuts on Manila – Cebu (from five to four flights per day) and Manila – Legazpi (from twice to a single daily rotation) from March 27.

However, it is independent carrier Cebu Pacific Airways that now dominates capacity in the domestic skies and has a growing share of the international market too. The airline offers flights to 48 destinations, including 32 in the Philippines, and will boost its schedules by adding a three-times weekly schedules to Calbayog and Surigao from June 9; routes already served by Philippine Airlines and Zest Airways. This summer it is to add a second destination in South Korea, launching a four-times weekly flight between Manila and Busan from June 15, a route that is witnessing a strong recent growth. Although just 37,000 O&D passengers travelled between the two cities in 2010, South Korean carrier Air Busan has recently joined Jeju Air in the market, inaugurating twice weekly flights on March 10 – it will double capacity to four flights per week from the end of this month. Cebu Pacific will also increase weekly rotations to Singapore from 29 to 32 from April 14, a market in which it holds a 23 per cent share of the just over one million O&D passengers.

Source: IATA BSP (January 2010 – December 2010)

This expansion will boost Cebu Pacific’s share of the Filipino market. As the table above shows, traffic from, to and within Philippines has almost doubled since 2005 with more than 27 million O&D passengers being recorded last year, and every year the budget carrier has increased its share of the market. From 14 per cent in 2005, it now holds an almost 30 per cent share and is likely to overtake national carrier Philippine Airlines as the market leader in terms of passenger traffic, this year or next.

Elsewhere in the country, Zest Air is to boost frequencies on two of its routes from Kalibo, the capital of the province of Aklan, in the northwest of Panay Island. From June 21, its four-times weekly link to Seoul Incheon will be increased to a weekly schedule and its Shanghai Pu Dong service doubled from two to four flights per week. The airline is the largest operator at Kalibo, accounting for more than two thirds of the weekly traffic.