Air Asia Eyes Growth in the Philippines

AirAsia is planning an aggressive expansion in the Philippine market that will see the budget carrier take on the major players of the industry: Cebu Pacific and Philippine Airlines. According to AirAsia officials, the carrier would like to increase passenger volume in the Philippines by 50 percent this year. 

Copyright Photo: Angelo Agcamaran/PPSG

"I just turned 50 and I still have the energy to live in the next 50 years," said Tony Fernandes, AirAsia Group CEO. "Cebu Pacific and Philippines Airlines should watch out for that growth." AirAsia is currently preparing to make Kalibo International Airport its secondary hub in the country after Ninoy Aquino International Airport. "We have a very exciting plan outside of Manila where we can open up new markets through tourism growth," Fernandes added.

AirAsia is planning to nearly double the current number of flights it offers from Manila to Kalibo from seven to thirteen daily. The carrier also has an aggressive international expansion plan ready for China that would see the airline launch new flights from Kalibo to Guangzhou, Chengdu, Ningbo, Changsha, Xiamen, Hangzhou, and Wenzhou.

According to Marianne Hontiveros, President & CEO of AirAsia Philippines, once the final consolidation with AirAsia Zest has been completed, the airline will be able to drive major growth in the country. "We are in the final stages of consolidation with AirAsia Zest," said Hontiveros. "We are just waiting for the approval of the Senate before moving to final acquisition." 

Once AirAsia Philippines receives controlling interest of AirAsia Zest, the AirAsia Group plans to increase its initial $100 million investment in the Philippine affiliates to enable them to drive growth by adding more aircraft and new routes. Last year, AirAsia Philippines purchased a 49 percent stake in Zest Air that was later rebranded to AirAsia Zest. The two carriers recently completed consolidation and rationalization of domestic routes. 

With consolidation and rationalization now complete, the combined partnership of AirAsia Philippines and AirAsia Zest now operates an extensive route network comprised of 20 international flights and 50 domestic flights. Hontiveros added that the carrier is just awaiting approval from the Civil Aeronautics Board to begin flying to Singapore, Japan, and Bangkok from Manila or Kalibo. 

AirAsia is also seeking additional slots at Ninoy Aquino International Airport with a view to expand its operations from Terminal 4, while adding additional slots from Terminal 3. The carrier has expressed interest in the past in constructing a low-cost carrier terminal at the country's primary international gateway. "The restoration of Category 1 by the United States Federal Aviation Administration and the lifting of the European Union ban will open many opportunities for AirAsia and the Philippines," said Hontiveros. 

Although the AirAsia Group continues to be bullish on the prospects of the Philippine market, it stressed that it will never be able to reach its full potential unless the nation begins to accelerate investments in infrastructure. Tony Fernandes said that he believes in the tourism potential of the country and is encouraged by a "great government that wants to talk and listen."

"AirAsia's first year in the Philippines has been a 'tough' ride, but the company is focused on its game plan of 'making money, growing, entering new areas and creating new markets,'" said Fernandes. "We have a baptism of fire with the Civil Aviation Authority of the Philippines grounding us last year. We got two strong competitors in PAL and Cebu Pacific, but we've ridden the storm and things are looking good for the future."

Fernandes said that future Asean integration will benefit the country and the region but more work needs to be done. "We believe in this market. I love this place. Tourism here is exploding," said Fernandes. "You have 80-100 million people here, but we can't maximize that until you build some airports here, roads, and infrastructure."

Fernandes added that the region is moving in the right direction by liberalizing the aviation sector. "From where Europe is to us, we may be 50 percent behind, but we've gone a long way from where we were," said Fernandes. "There are many ways of blocking areas like slots and air traffic. If you want to be open, you have to be open."

Fernandes also noted that there are a number of "invisible areas" that impede growth. "It's not just about open skies but in terms of freedom of labor movement -- if a Filipino pilot can work in Malaysia without permit, the aviation sector will benefit not just with open skies but reducing the cost of doing business by having just one market." said Fernandes. "I'm a big fan of that, but it ain't gonna happen overnight."

AirAsia Group recently donated P97 million to the victims of super typhoon Haiyan. The money that was collected as cash donations on board flights and at airports across AirAsia's network will be used to rebuild 500 homes and to finance livelihood opportunities for survivors.