Sunday, February 1, 2015

United Airlines Seeks Expansion in Philippines

American carrier United Airlines is interested in expanding its operations in the Philippines as it explores new destinations and routes beyond its existing routes from Manila to Guam and Koror. The airline is currently contemplating growing its four percent market share in the Philippines by launching new routes to San Francisco and Honolulu.

united airlines philippines
Copyright Photo: Angelo Agcamaran/PPSG
United Airlines currently operates thirteen weekly flights from Manila to Guam and Koror, using a Boeing 737-800 aircraft. United inherited the route, when it merged with Continental Airlines, which previously operated the route under Continental Micronesia.

According to United Airlines Country Manager for the Philippines, Maria Concepcion Perdon, the Philippines is an important market for the US based carrier. "Right now we have a four-percent market share and we hope to grow it," said Perdon. "The Philippines is a very important market for United that is why we have been here for 30 years."

Perdon noted that United Airlines currently enjoys a load factor of 80 percent for its Philippine operations. "The Manila-Guam route has been profitable for us," said Perdon. "There are many Filipinos living in Guam." With United Airlines' success in the Philippines over the last three decades, the airline sees an opportunity for expansion.

United Airlines is presently considering launching its own flights between Honolulu and Manila, to capture the market share, previously held by Hawaiian Airlines, that stopped serving Manila in 2013. If United was to launch a route to Honolulu, it would compete directly with Philippine Airlines, which currently operates the only direct flight between Manila and Honolulu. 

When it cancelled the route, Hawaiian Airlines cited the lower cost-base of Philippine Airlines, which put them at a competitive disadvantage, unable to match the low fares offered by Philippine carriers to make the route viable. United Airlines may face a similar challenge, when the market becomes even more price-competitive as Cebu Pacific prepares to launch its own flights to Honolulu later this year. The entry of Cebu Pacific could pose a serious challenge as United seeks to gain market share on the route.

Meanwhile, United Airlines is exploring other US destinations that could prove to be profitable routes for the carrier from the Philippines. It may even consider serving other Philippine destinations such as Cebu. According to Jake Cefolia, United Airlines' Vice President for Sales in Atlantic and Pacific, the airline is currently exploring non-stop service to Manila from destinations such as San Francisco. 

"The Manila-San Francisco route is always on the drawing board," said Cefolia. He added that United is carefully studying opportunities to ensure that it only enters markets, where it has a presence below the gross domestic product growth in order to avoid overcapacity. "We intend to keep the capacity growth between the level of GDP growth in the markets that we serve because we want to keep from a situation wherein there is more supply than demand."

Philippine Airlines has long been the sole carrier operating non-stop routes between the Philippines and the United States. With the largest population of overseas Filipinos, the United States is a highly lucrative and profitable market for Philippine Airlines, which has been uncontested on its Los Angeles and San Francisco routes for the past several years. "There is a tremendous amount of demand," said Cefolia. "Sometimes it seems insatiable demand in Manila. It is the highest volume market between Asia and the US. However, it is also an incredibly price sensitive market."

The price sensitivity of the Philippine market is likely one reason that US carriers have avoided the Philippines, preferring to enter routes with higher yields and stronger demand for premium services such as Business Class. But with the rapidly expanding economy, growing middle class, and rising popularity as a tourist destination, the Philippines is becoming a highly attractive market. 

"The Asia-Pacific region, including the Philippines, remain a critical asset for our airline," said Perdon. "We operate ideal Pacific gateways in San Francisco and Los Angeles, the two largest local markets on the west coast, and offer our customers an unmatched level of service to Asia Pacific."

United Airlines is currently in the process of a re-fleeting program that will see the carrier accept delivery of more than thirty brand-new Boeing aircraft including the Boeing 787-9 Dreamliner. Although the airline has not confirmed what aircraft it may deploy on any new routes to the Philippines, the Boeing 787 may be a possibility. 

43 comments :

  1. Air Canada is also planning to fly again in Manila using its brand new B787 dreamliners..after adding additional international routes in New Dehi and Dubai this year.

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  2. Maybe to be successful they should partner with PAL. That way, PAL could enter Star Alliance. Diba dati they were trying to get into Oneworld?

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    1. W h a t ???????????????????????????
      Q u e ????????????????????????????

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  3. Yes to all airlines like United Airlines and Air Canada. Competition will bring down ticket fares and make air travel affordable.

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    1. Do not forget to mention Aero Mexico to fly to Manila as well! How I wish this Mexico's national airline will open its eyes to a historic brother (Filipinas) and renew their centuries-old bonding thru travel, tourism, business and camaraderie. Remember that Mexico (like Filipinas) was also a "criada" of Spain. But that's now a history, so let's come together again, this time in decency. If Aero Mexico comes to Filipinas, many Pinoys from the US southern states, California, Nevada, etc. would gladly patronize it.. For your info, this airline flies to Japan, Korea and plans to add China to its route. Mexico, it's time to review your route and plan to come to Filipinas; Don't forget, we are like "blood brothers". A profitable route suggestion: Tijuana to Manila on your B787. Bienvenidos, amigos!

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  4. Just to clarify their country manager, their presence in the Philippine market of 30 years is not continuous. UA pulled out if I recall in the late 90's or early 2000's, their final route being MNL-SEL-SFO, serving the MNL-SEL sector with DC-10's. They only returned to MNL as a result of the merger with Continental a few years ago, & not because they wanted to restart service. Unlike NW (now DL), UA only concentrated on higher yielding Asian destinations. CO was a different case altogether... Air Micronesia was their subsidiary & it was a niche operation serving the GUM market, & to a lesser extent HNL & beyond.

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    1. The manager was right to say United airlines presence in the Philippines is continuous and has been there in Manila for 30 years. The US flights stopped, yes but United keeps it's sales office selling tickets for US flights where United passengers take Cathay Pacific to Hongkong then Filipino passengers take the United flights to mainland US via Hongkong. I know, I am flying with United for 19 years now.

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  5. ust so you know, continental bought united airlines that is why UAL is still using Continental's livery and Logo with UAL's name on their fleet to honor them as a founding member of star alliance. Jeff Smisek, the CEO of UAL is the Senior CEO of Continental. So it will still be considered that they are still having their presence in our country WITH THEIR NEW BRAND

    --this is a tip, NOT AN ARGUMENT; FROM A PHILIPPINE BASED UNITED EMPLOYEE--

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    1. And as an elite member of UA's Mileage Plus for many years, I can also tell you that your employer left this country for many years, and only came back recently due to the merger with CO! So no, they had no presence in this country for over a decade because if they did, I wouldn't have had to fly to HKG separately just to catch the nonstop to ORD or SFO so I could keep earning my miles and redeem upgrades, etc. The JV with ANA only started last year. And, even when CO was flying here all these years, I could not earn UA FF points with them because before the two companies merged, CO was in bed with NW & DL!

      --This is not a tip nor an argument, just the truth and nothing more. From a Philippine-based elite frequent flyer of United Airlines!

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    2. And also, Continental was NOT a founding member of Star Alliance! They were in Skyteam. They only switched to Star when it was clear they were merging with United!

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    3. Just to clarify also that CO never bought UA its a United Buyout as per shares swap. Old CO shares was lower than UA so United has more value of their stocks. Old CO is 49% the Old United holds 51%. So its not CO bought United. United Hold the majority of the ownwership. Regarding the airplane livery it is agreed upon in the merger before signing the contract they will used Old CO livery but the WHQ will be in Chicago where as per the United side request.


      United employee ORD Based.

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    4. United stock was worthless. CO stock was second highest to Alaska Airlines at the merger time. United stock was in the low single digits. Do your homework.

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    5. In total agreement with you. CO was the only major airline not in bankruptcy after 9/11. If the name Continental was kept instead of United, we would have had to pay back all existing monies that United owed. That is why we didn't stay CO. Too bad....

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  6. Yes Virginia, the UA flight from Guam to Manila and back is really very profitable. On my three times flying that route with the same airline, it was always full! Add to that the skillful and impressive in flight services by a mix of American and Asian flight crews, that's a jackpot of a service that is better than the likes of CX, KE or SQ! Virginia, I am not an American, so there is no suspected politicking here!

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    1. UA or Continental should field a larger A321 or B787 on this popular route as there's always a long line of "standby passengers".....

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  7. What a good news to hear UAL's plan to fly SFO and LAX non-stop to the Philippines. I am sure, this will tighten competition which can improve better services and lower air fares! Gone will be the perennial monopoly of one carrier on that route (PR). Another one will also join the fray (Cebu Pacific) to serve that same route! I hope JetBlue will review this market as well as I know Lufthansa (part owner)can back it up on the strategies and operations, etc. I am seeing very strong and robust competition now......wake me up to reality!!!!!!!!!!!!

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  8. "key word" price sensitive market a.k.a a lot of cheap fares going in and out of MNL except for PAL that commands more as they offer "direct flights" I see this rolling out with the 2 class 777's that is the staple of HNL-GUM-HNL. Stay tuned...if oild continues to be where its at this could be really happening.

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    1. It will indeed happen! A country full of OFW craving for a way to vacation to their homeland is not a dream, it is a reality! Now, if more airlines serve the route very soon, it will be a blessing and a relief for Pinoys.who really want to fly on low, low fares. Please adjust your English to American and not "Elizabethan" as we are talking about the Republic of the Philippines! Thank you.

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    2. So what if his English is "Elizabethan"? That's how he writes so let him be. I think it's classy and proper. If you don't understand it, TFB!

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    3. Knowledgeable people from NYC, LAX, Chicago would rate your English as the one you see or hear from Bombay, Karachi or Dhaka. Use it there, Miss classy!!!!!!!!!!!!!

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    4. Then obviously people from NYC, LAX, Chicago are not knowledgeable if they think his English is from Bombay, Karachi or Dhaka. Deal with it you imbecile!

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    5. Who the fuck cares @6:57AM? The world does not revolve around USA and the Philippines!

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    6. Then you imbecile and hypocrite stop sharing views about Philippines and USA because for you, they stink. I hope you are not living or making pesos in the Philippines or making dollars in the USA because you are making yourself a "triple hypocrite"!!!

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    7. Blah blah blah who gives a flying fuck about what this loser @2:55PM thinks? Triple hypocrite my ass! Go drink some milk you buffoon!

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  9. CEB-GUM-CEB...game changer!

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    1. Don't forget Davao for Mindanao passengers...

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  10. In my opinion, the best bet of even UAL's mainline carrier having a footing from the mainland US to the Philippines would be a codeshare with PAL.

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    1. Hybridace, UA just wants to fly non-stop flights to the Philippines this time... Do not forget that it also flies USA to Philippines as a result of its merger with Continental Airlines years back and it is still dominating the USA/HNL/GUAM/MICRONESIA/Southeast Asia market. It is still the world's biggest airline in terms of destinations flown. UAL has also a battery of airline partners/codeshares with Asiana Airlines of Korea, ANA Airlines of Japan, Air China, Eva Air of Taiwan, Thai International, Singapore Airlines, Emirates of AUE, Turkish Airlines. All of the above airlines are topnotched members of Star Alliance and they all serve USA to Philippines as a route; the last two via Atlantic. Now, would you still believe that UAL (their top seed) will still think of making alliance with a 3-star third world country struggling (financially) airline? Please be logical. (My apology to PAL).

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    2. And it is very timely to plan long-haul destinations for the versatile B-787 which is starting to flourish (irrespective of its recent battery flaws). I can see successful flights of airlines like LAN of Chile flying it from Santiago to Sydney; Norwegian Air from Oslo to Los Angeles and to Bangkok; ANA from Tokyo to various USA west coast cities, etc. So it is not a surprise for UAL to increase more its dominance in the airline market as it can fly B787 from SFO or LAX nonstop to Manila. Hurray, welcome competition!!!!!!!!!

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    3. The thing is last-minute business travellers (LMBTs) and high-rolling tourists (HRTs), the market who would want to spend for a long-haul UA flight are thin. Yes it does have alliances with top-notch carriers, but none of them fly to the Philippines directly.

      Now, had the merger between UA and CO not taken place, would they still plan to resume flights to the Philippines? That is what I am skeptical about.

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  11. How about non-stop from east coast to MNL? Is that possible? I'd like to go from IAD-MNL, JFK-MNL, BOS-MNL

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    1. But of course, Charlie! There are no non-stop flights but you can fly with Singapore Air, Emirates Air, Turkish Air. You can find these airline flights and their respective fares from the website or from travel agents. The fares, though, are higher because of the miles travelled!

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  12. Jeff and DL and AA CEOs press Washington to invoke consultation with Middle Eastern governments over abuse of Open Skies treaties
    Jeff and the CEOs of American Airlines (AA) and Delta Airlines (DL) last week met in Washington, D.C., with representatives from the White House, the DOT, the State Department and other government agencies to ask U.S. government officials to invoke the consultation provisions under the Open Skies agreements in place with Qatar and the United Arab Emirates, in light of the abuse of those treaties by state-owned carriers Qatar Airways (QR), Etihad Airways (EY) and Emirates Airline (EK).

    The CEOs cited compelling, documented evidence that Qatar and the UAE had granted more than $40 billion in subsidies and other unfair benefits to QR, EY and EK over the past 10 years.Those subsidies, Jeff and the other CEOs said, have enabled a massive deployment of subsidized capacity by the Middle East carriers at rates almost four times the rate of global gross domestic product growth, unfairly taking substantial current and potential future market share from other airlines, including U.S. carriers.

    The CEOs pointed out that, because Gulf carriers do not meaningfully stimulate passenger demand, the only way those carriers can grow at their projected rate -- 10 times more available seat miles (capacity) in 2020 compared with 2007 -- is to use their subsidies to take substantial share from other airlines, including U.S. carriers. Because more than half of U.S. carriers' long-haul international flights connect to and from domestic flights at U.S. hubs, long-haul flying that is adversely affected by the Gulf carriers’ subsidized capacity has a negative impact on U.S. domestic service and smaller communities.

    "U.S. carriers can compete successfully against any airline in the world when the playing field is level, free of multi-billion dollar subsidies and the market distortions that those subsidies cause," Jeff said. "We need revised Open Skies agreements with Qatar and the UAE to address the abuse of the treaties by Qatar Airways, Etihad and Emirates. Having used their massive subsidies to expand dramatically into Europe, Asia and Australia, the Gulf carriers are targeting the U.S. and our employees next."
    UA employee married to Filipina

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    1. Sour grapes against the ME3?

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    2. ME3 make money because they know what airline service and amenities mean. Who would fly American carriers when one could have other options? What's this, dictatorial monopoly? I thought America is the model of freedom? If so, then fly with the airline you want.................

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    3. Why don't you tell the USA government to let those ME3 stop flying to USA cities or tell the Irish government to not let Etihad making code-share agreements? You know, when someone becomes better, i.e., ME3 making profits, they become the objects of both envy and ridicule. The result: they become more popular and make more money....simple capitalistic economics! Just compete in order for your airline to succeed!

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  13. This comment has been removed by the author.

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  14. The time has come to activate the UA SFO - MNL nonstop destinations. To as Star alliance partners.

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  15. The time has come to activate the UA SFO - MNL non stop destination. To as Star alliance partners code share flight.

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