Thursday, July 23, 2015

Thai Airways Bows Out of Los Angeles

If the latest airline timetables are to be believed, Thai Airways will soon have no more direct link to the United States.  

Image source: Wikimedia

After October 25 2015, Thai Airways will end its service between Bangkok and Los Angeles via Seoul.  Previously, Thailand's flag carrier operated a non-stop flight between those two cities until 2012.  It also had a non-stop flight between Bangkok and New York's JFK airport until 2008.  Thai Airways is also going to end its flights to Rome Fiumicino on that day.  

Thai Airways is not the only Southeast Asian carrier to lose direct flights to the US.  In 2014, Malaysian Airlines also ended its flights between Kuala Lumpur to Los Angeles via Tokyo in an effort to cut losses.  This was planned even before the twin disasters of MH370 and MH17, both of which involved the Malaysian flag carrier's Boeing 777-200ER aircraft.  

This leaves only Philippine Airlines and Singapore Airlines as the two Southeast Asian carriers having direct flights to the United States.  

In fact, even as Malaysian Airlines and Thai Airways end their service to the US, Philippine Airlines has made good on its promise to open new routes.  Just last March, the Philippine flag carrier reintroduced flights to New York City via Vancouver.  Although it is too early to say how the route is fairing, the flag carrier indicated that it is not yet done with US expansion as it is also considering opening flights to Chicago and cities in Florida.  

Passengers from Bangkok can use Philippine Airlines to connect to various destinations in the United States via Manila and vice versa.  PR731 leaves Bangkok at 1.30 pm and arrives in Manila at 6.00 pm.  Flights to the United States begin as early as 7.45 pm.  Likewise, passengers arriving from the United States on Philippine Airlines flights who wish to visit Bangkok can take PR730 which departs at 9.35 am.  

Philippine Airlines does not operate flights to Kuala Lumpur but maintains a codeshare agreement with all Malaysia Airlines flights between Manila and Kuala Lumpur.  However, passengers will need to transfer between Terminals 1 and 2, and wait for up to 8 hours starting in August 15 as service reductions between the two cities are also planned.

Singapore Airlines also maintains flights to Los Angeles (via Tokyo), San Francisco (via Hong Kong and Seoul), New York JFK (via Frankfurt), and Houston (via Moscow).

Outside Southeast Asia, Bangkok has an abundance of flights to Hong Kong, Seoul, Taipei, and Tokyo where Thai Airways' Star Alliance partners and other carriers can take care of transporting passengers to the United States.

Saturday, July 11, 2015

Ethiopian Airlines Begins Manila Operations

The Philippines finally has a direct flight to Africa.  After months of preparation, Ethiopian Airlines began its flights to Manila on July 9.  

Ethiopian Airlines Boeing 767-300ER
Image by Adrian Pingstone/Wikimedia

Flight ET628 arrived in Manila at around 7.19 pm to a traditional water cannon salute.  It docked at Ninoy Aquino International Airport's Terminal 1.

The carrier's Chief Executive Tewolde Gebre Mariam flew on the maiden Manila flight along with hundreds of other Filipino passengers.  He indicated that the Philippines is an important destination for the carrier as the country is a source of investments for the African continent.  Likewise, Tourism Secretary Bengzon also expressed confidence that the new flight provides more opportunities for tourists to come to the country.

The flight that takes passengers to Addis Ababa, ET629, departed shortly after midnight, several hours after its scheduled departure time of 10.00 pm.  

Flight ET628 is currently scheduled to fly three times a week (Tuesdays, Thursdays and Saturdays) from Addis Ababa to Manila.  The flight departs at 12.40 am and arrives in Manila at 7 pm.  The return flight, ET629, arrives back in Addis Ababa at 6.00 am the following day.  A Boeing 767-300 aircraft is used for the flight.  Both legs have a stopover in Bangkok, though Ethiopian Airlines currently does not have rights to sell seats for passengers who wish to travel between Manila and Bangkok only.  The carrier hopes to have daily flights to Manila.    

Ethiopian Airlines is a member of the Star Alliance network.  This means passengers who subscribe to a frequent flyer programme of any Star Alliance member (e.g. Singapore Airlines' KrisFlyer, Lufthansa Miles and More) will be able to earn and redeem miles on Ethiopian Airlines flights.  Ethiopian Airlines is currently in talks with Philippine Airlines for the latter to possibly codeshare with the former.

Source: ABS-CBN News, Flightradar24, Star Alliance

Saturday, June 27, 2015

EU Lifts Blacklist on All Philippine Carriers

The European Union (EU) has finally decided to lift its five-year ban on all the remaining Philippine carriers.

The decision was arrived after a five-man team conducted a review and series of inspections of the Philippine aviation scene in April.  

Under the ban, most Philippine carriers were not only barred from mounting flights to any point in the EU but they were also prohibited from merely flying through the 28-nation bloc's airspace enroute to other destinations.  

However, the EU  has gradually lifted the ban for several carriers over the past two years.  It started with Philippine Airlines in July 2013.  Last year, Cebu Pacific was also released from the ban.  Eric Apolonio of the Civil Aviation Authority of the Philippines (CAAP) says that this effectively means that the remaining seven Philippine carriers can fly to or through the EU.  This includes AirAsia Philippines and AirAsia Zest.

Copyright photo: Angelo Agcamaran/PPSG

Lubomir Frebort, EU charge d'affaires in the Philippines expressed the significance of this decision.  He said "This is truly breaking news since it is the first time that the entire aviation sector of one country is removed from the European Air Safety List".  

Currently, Philippine Airlines has been the only Philippine carrier to take advantage of the lifting of the EU ban.  Within five months of its own ban being lifted, the flag carrier reintroduced its London service after an 18-year absence.  But Apolonio reiterated that even Philippine carriers that do not fly to the EU directly also stand to benefit from this.  This is as EU residents are expected to feel more encouraged to use local carriers.  EU residents who fly with carriers subject to the ban will not be covered by their insurance in case something happens.  

This move also culminates two years of major international aviation bodies expressing confidence in the Philippine civil aviation system.  Last year, the United States' Federal Aviation Administration (FAA) finally restored a 'Category 1' rating on the Philippines.  With this, Philippine carriers can introduce new services to the US and use more modern aircraft on existing US services.  Shortly after the restoration of 'Category 1', Philippine Airlines started deploying its flagship Boeing 777-300 aircraft to San Francisco and Los Angeles.  In less than a year, the flag carrier also restored service to New York via Vancouver.  Cebu Pacific is currently considering the introduction of flights to US cities such as Honolulu. 

Source: ABS-CBN News

Monday, June 22, 2015

Philippine Airlines to Finance New Long-Haul Aircraft through Cancelled A330 Leases

A clear shift in focus is under way at Philippine Airlines as it shifts its attention from its medium-haul routes to its long-haul future. Reversing the decision of the previous management to acquire A330-300 aircraft for Middle East routes, Philippine Airlines now plans to return the aircraft to help fund the acquisition of new long-haul aircraft. 

Copyright Photo: Angelo Agcamaran/PPSG
It became apparent that the spending spree of former PAL President Ramon Ang had been overly ambitious when it was announced in April 2014 that Philippine Airlines would be cancelling five orders for A330-300 aircraft in favour of additional A321 aircraft.

Since regaining control of Philippine Airlines, the Lucio Tan Group under the leadership of returning PAL President Jaime Bautista has made it no secret that the San Miguel Corporation ordered too many aircraft with no routes to fly. 

Bautista is now acting on the findings by returning eight of the previously ordered mono-class Airbus A330-300 aircraft to German lessors as Philippine Airlines changes strategy and abandons plans to expand in the Middle East. San Miguel Corporation had ordered the aircraft with the intention of competing directly against Cebu Pacific on Middle East routes. 

Since 2012, Philippine Airlines did launch flights to Dubai, Riyadh, Abu Dhabi, and Dammam. However, previous plans to serve Jeddah, Doha, Kuwait, and Muscat are now on hold as the national flag carrier focuses more on lucrative long-haul routes and the non-budget sector. 

Bautista would prefer to fly the carrier's multi-class A330-300 fleet to the Middle East, acknowledging the demand for premium services on the routes, while abandoning the budget model that Cebu Pacific has adopted. Bautista's strategy seems to be working as Philippine Airlines has increased service on some of its Middle East routes, while Cebu Pacific was forced to scale back.

Philippine Airlines posted a $50 million profit in the first two months of 2015 due to what Bautista calls "fleet rationalization." Last October, Bautista criticized San Miguel management stating that, "We have too many A330's and A321's with nowhere to fly to. There were too many orders from Mr. Ang's management," said Bautista. "We really have to check if the markets we're servicing now require all these planes."

Bautista's decision to ditch the mono-class A330 fleet acknowledges the need for aircraft with multiple classes of service, as well as the decision to not open any additional routes in the Middle East in the near future. Furthermore, it is an acknowledgement of the dissatisfaction of passengers with the mono-class budget service, which failed to gain any traction among Philippine Airlines passengers.

Philippine Airlines now plans to use the savings from the cancelled A330-300 leases to fund new orders for long-haul aircraft. According to Bautista, Philippine Airlines currently prefers the A350-900 for its ability to fly Manila to New York non-stop without payload restrictions.

PAL is hoping to accept delivery of new long-haul aircraft by 2018 as it intends to retire the A340-300 from the fleet permanently in that year. Philippine Airlines is expected to make an announcement on a new aircraft order in the near future.

Most recently, PAL revealed that it entered into a lease agreement with Intrepid Aviation for two additional Boeing 777 aircraft, which will be delivered next year. These aircraft will be used on routes to North America such as Manila to Los Angeles and Manila to San Francisco as Philippine Airlines attempts to standardise its long-haul fleet and in-flight experience.

Air Asia X and Cebu Pacific Race to the US Mainland

Hawaii is about to become the battle ground for what may end up being a race to the west coast of the United States. Two of Asia's long-haul low-cost carriers, Cebu Pacific and AirAsia X, are preparing for what will become the region's first low-cost long-haul services from Asia to Hawaii. The flights to Hawaii will serve as a test of each carrier's respective low-cost model before reaching further to the US mainland.

Copyright Photo: Angelo Agcamaran/PPSG
According to the Centre for Asia-Pacific Aviation, the trans-Pacific market is already one of the most competitive in the world. However, Asian low-cost carriers have a distinct advantage in having some of the lowest unit costs in the world. There are presently no long-haul low-cost carriers from the United States. However, that may change as foreign low-cost carriers from other parts of the world begin landing on US soil.

Honolulu is set to experience a massive drop in airfares as Cebu Pacific and AirAsia X enter the market. AirAsia X submitted an application to the United Stated Department of Transportation in April to operate four weekly flights from Kuala Lumpur to Honolulu via Osaka beginning in November 2015. 

Cebu Pacific secured certification in April of this year, but it is awaiting final approval from the US Transportation Security Administration, which needs to complete an assessment of Manila Airport's Terminal 3 before the Philippine budget carrier can serve the United States. In addition, Cebu Pacific will also need to secure the necessary slots at Honolulu International Airport. However, the carrier remains optimistic that it will be able to begin flights before the end of the year. 

AirAsia X intends to utilise fifth freedom rights between Japan and the United States. Given that Malaysia has a small portion of travellers bound for Hawaii, the majority of passengers on the AirAsia X flights will be sourced from Osaka, Japan.

The Osaka to Honolulu market is large and competitive with three other carriers competing on the route. Delta Airlines, Hawaiian Airlines, and Japan Airlines each offer one daily flight between the two cities. Delta Airlines is presently the market leader with a 39 percent share. 

Copyright Photo: Angelo Agcamaran/PPSG
AirAsia X is also banking on its soon to launch Japanese affiliate, AirAsia Japan, which is set to launch in late 2015. That would enable AirAsia X to offer one-stop connections to the Honolulu flights from a number of domestic cities throughout Japan. 

Cebu Pacific will have a distinct advantage over AirAsia X in that Hawaii to Southeast Asia is not a large sector with the exception of Hawaii to the Philippines. A large portion of overseas Filipinos reside in Hawaii. Filipinos are believed to be the second largest racial group in Hawaii with close to 175,000 Filipinos living in the US state. 

Cebu Pacific is hoping to stimulate the market with its low fares to not only draw more Filipinos to visit the mother country, but also to increase the frequency in which they visit. The Philippine budget carrier has less competition to face than AirAsia X, where Philippine Airlines is currently the only airline flying the Manila to Honolulu route. 

It remains unclear whether AirAsia X will attempt to compete against Cebu Pacific in the Hawaii-Philippines market. Although the route via Osaka would be rather circuitous for Filipino travellers, low-cost carrier operations often have the ability to stimulate unpredictable traffic when the right price is offered. 

AirAsia X currently competes against Cebu Pacific in the Philippines to Australia market, where Cebu Pacific offers non-stop service from Manila to Sydney, while AirAsia offers one-stop service via Kuala Lumpur. AirAsia Philippines does not presently fly to Japan. However, the carrier previously revealed intentions to serve the Japan-Philippines market in the future, making a one-stop service from Manila or Cebu to Honolulu possible via Osaka. 

AirAsia X will serve the route with a two-class 377-seat Airbus A330-300, while Cebu Pacific will operate a 436-seat mono-class A330-300. The Osaka to Honolulu flights are approximately seven hours long, compared to Manila to Honolulu, which is a more than ten hour flight in each direction.

Although Honolulu will be the first US destination for both carriers, which is a challenge in itself, the length of each respective flight is not unfamiliar to either budget airline. AirAsia X already operates s nine hour service from Kuala Lumpur to Jeddah, while Cebu Pacific operates a 10 hour service between Manila and Kuwait. 

While realizing success in the Hawaii market would be no doubt an achievement for either carrier, the real prize lies on the US mainland. If Los Angeles was the next target city for either carrier, flights from Japan would range between 10 to 12 hours, while flights between Manila and Los Angeles would be 13 to 14 hours. But Cebu Pacific will need to acquire long-range aircraft before it can enter that market. Even with a low-cost model and low fuel prices, making these long-haul routes viable would be a challenge for even the strongest low-cost carrier. 

Using Hawaii as a testing ground provides both Cebu Pacific and Air Asia X with an opportunity to test the US market before making the longer leap and accepting the bigger risk that is the US mainland. 

Honolulu may be a challenge for AirAsia X, which must rely on the Japanese market, where its brand is less established compared to Southeast Asia. On the other hand, Cebu Pacific already enjoys a strong reputation within the Filipino community at home and overseas, which will give it an advantage heading into the new service. 

Although the outcome remains uncertain for either carrier, there is no doubt that the legacy carriers in Asia and the United States will be monitoring the results of the low-cost models closely as the threat of eroding their market share looms ahead, especially for Philippine flag carrier, Philippine Airlines. 

AirAsia and Cebu Pacific will not be the first long-haul low-cost carriers to serve the Honolulu market. Jetstar Airways already offers non-stop service to Honolulu from Sydney, Melbourne, and Brisbane. 

Canada's WestJet also operates non-stop service from a number of Canadian cities including Vancouver, Calgary, and Victoria. Allegiant Air is the only US low-cost carrier to have tested low-cost carrier service to Honolulu but has since scaled back operations significantly. Virgin America will be testing its own low-cost model when it launches flights from San Francisco in November.

References: CAPA

Air Asia Eyes International Expansion From Iloilo in 2016

Iloilo's Mayor Jed Mabilog has indicated that AirAsia Philippines is planning to launch direct flights from Iloilo to China by September 2016. The planned flights will carry passengers between Iloilo and Xiamen.

Copyright Photo: Angelo Agcamaran/PPSG
According to Mabilog, 80 percent of Iloilo's Chinese-Filipino population come from Xiamen. "AirAsia's commitment is that starting next year by September 2016, they are going to launch the first Iloilo direct flights to Xiamen, China," said Mabilog.

However, Mabilog added that AirAsia is interested in building the airport's international presence further with the intention of opening direct flights from Iloilo to Seoul Incheon, South Korea by the last quarter of 2016.

Iloilo International Airport currently offers direct flights to two international destinations: Hong Kong and Singapore. Both flights are operated by Cebu Pacific. Cebu Pacific's flights to Hong Kong operate from Iloilo three times weekly, while the Singapore flights operate twice weekly.

Meanwhile, AirAsia is set to increase its flights from Manila to Kuala Lumpur to accommodate the rising number of travellers. The budget carrier, which was recently named the World's Best Low-Cost Airline for the seventh consecutive year, will be adding a third daily flight between the Philippine and Malaysian capital beginning on July 12. It is believed that the third daily flight will be operated by AirAsia Malaysia.

Tony Fernandes, AirAsia Group CEO indicated earlier this year that AirAsia Philippines will pursue an initial public offering to raise funds to finance the carrier's expansion. "We can confirm today that AirAsia Indonesia and AirAsia Philippines will hold an Initial Public Offering subject to respective board approvals," said Fernandes. "Business in both Philippines and Indonesia is doing real well. Great support from both governments."