Air Asia Philippines' Marriage to Zest Air Gets Serious

The strategic alliance that Air Asia Philippines entered into with Zest Air in March is about to get serious. As management of Zest Air gets consolidated and transferred under Air Asia Philippines, change is in the air.

Zest Air & Air Asia Philippines Management at the launch of the Strategic Alliance in March
Photo Copyright: Air Asia / Zest Air

May 10, 2013 is an important day in the history of this young marriage as it represents significant steps forward toward further integration. In addition to the transfer of Zest Air management, Air Asia Philippines will also be assuming control of Zest Air reservations. That means bookings for all Zest Air flights from May 10th onwards will now be redirected to the Air Asia website.

Zest Air's fleet of MA-60 turbo-prop aircraft will be phased out

May 11, 2013 will see the end of turbo-prop service operated by Zest Air. Zest's turbo-prop destinations of Masbate, Marinduque, Busuanga, and Tablas will be delisted from the airline route network. The MA-60 aircraft will be returned to the lessor in China. This is partly due to the fact that turbo-prop aircraft do not fit into the Air Asia business model but also because it will enable the airline to free up badly needed slots for new domestic and international Airbus A320 services at the severely congested Manila airport.

Zest Air will transition to an all Airbus fleet following the Air Asia model

The slots freed up by the removal of the turbo-props will likely be used for the newly announced destinations of Zest Air which will include service to Bacolod and Cagayan De Oro domestically while the new international destinations of Kota Kinabalu, Saigon, Macau, and Kuala Lumpur will be added to the Zest Air route network out of their Manila hub. The new route to Kuala Lumpur is a natural fit as it will offer connection opportunities for passengers to parent airline Air Asia and its subsidiaries to several destinations in South East Asia, Japan, India and Australia.  In addition, it will give Air Asia immediate access to feeder traffic from the largest domestic markets in the Philippines via Zest Air's current domestic route network.

In December 2012, Air Asia's parent confirmed an order for 100 additional Airbus A320 aircraft of which three aircraft are scheduled for delivery to the Philippines in 2013. These aircraft will likely be painted in Air Asia colours but operated by Zest Air crews on the new additions to the Zest-Air Asia route network.

New aircraft are likely to be painted in Air Asia colours as the brand seeks to expand in Manila
Photo Copyright: Wong Chi Lam/Planespotters.net

The newly announced routes finally gives Air Asia the badly needed presence at Manila airport after struggling in its first year of operation. Since launching its operation out of Clark Airport in May 2012, Air Asia Philippines posted a load factor of 46.5% for 2012 while reporting a loss of  USD30 million which resulted in repeatedly pushing back fleet expansion. But the Philippine skies are clearing.

Ninoy Aquino International Airport will become the home of battleground Manila

Air Asia Philippines recently reported a load factor of 76% in Q1 2013. It has been focusing on its international operations from its Clark hub where it currently serves four international destinations and two domestic destinations with its fleet of two aircraft. There is no doubt that the prospects for this strategic alliance look brighter for 2013 as does the Philippine air industry which will see further rationalization of the market after a year of fierce competition in 2012. But the focus will now likely shift to battleground Manila where strength, endurance, and competitiveness will be put to the test. As competition heats up in the already crowded market, only the toughest will survive. Tiger Airways subsidiary Southeast Asian Airlines (SEAIR) might suddenly find itself at a disadvantage.

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