Air Asia and Zest Air May Face Penalties Over Partnership

The Civil Aeronautics Board of the Philippines says that Air Asia and Zest Air may faces penalties for engaging in joint marketing activities without regulatory approval.

air asia manila
Copyright Photo: Angelo Agcamaran/PPSG
According to Wyrlou Samodio, Head of the Legal Division, the Civil Aeronautics Board will be requesting an explanation as to the use of Air Asia's website for ticket sales and reservations for both airlines. Samodio says that in order to protect the public, the nature of the relationship of the two airlines should be disclosed and that any marketing agreement requires CAB approval.

Zest Air and Air Asia completed their strategic alliance agreement officially on May 10, 2013 as the two airlines began to consolidate resources. But the Civil Aeronautics Board is adamant that if either airline violated any regulations, they would be penalized and that such an agreement requires regulatory approval first.

Neither Zest Air or Air Asia have responded publicly to the comments made by the Civil Aeronautics Board. Meanwhile, Zest Air is applying for flight entitlements to service the United Arab Emirates, Saudi Arabia, Australia, New Zealand, and Papua New Guinea. The applications suggest that the carrier intends to go head to head with Cebu Pacific and Philippine Airlines on their new routes to Australia and the Middle East. Philippine Airlines will be launching new routes to three new destinations in Australia in June 2013 while Cebu Pacific will be launching its first ever long haul service to Dubai in October.

air asia x philippines
Image Source: Wikimedia
If Zest Air is granted any of the flight entitlements that it is requesting, this may foreshadow the arrival of Air Asia's budget long-haul division, Air Asia X, into the Philippine market. That would also mean an introduction of A330-300 aircraft into the Zest/Air Asia fleet. Currently, Air Asia X focuses on destinations in Australia, China, Korea, and Japan from its main base in Kuala Lumpur. It is presently trying to set up a new base in Bangkok, Thailand. The airline may be planning to challenge Cebu Pacific in its quest to capture the long haul budget market in the Philippines.

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