Showing posts with label Cebu Pacific. Show all posts
Showing posts with label Cebu Pacific. Show all posts

Thursday, December 8, 2016

Cebu Pacific Considering Long Haul Aircraft and Network Expansion

The CAPA Centre for Aviation reports that low-cost carrier Cebu Pacific is eyeing more orders for long-haul, wide-body aircraft in order to facilitate expansion into the United States and other long haul destinations.  Among the options Cebu Pacific is considering are the Airbus A350, Boeing 787, and upcoming Airbus A330neo.

Copyright photo: Angelo Agcamaran/PPSG

Cebu Pacific already has a presence in the United States with a flight to Guam.  However, it hopes to mount flights to the US mainland, particularly the state of California, one of the largest Filipino markets that is yet to be served by the low-cost carrier.  These plans have been put in the spotlight after the Federal Aviation Administration restored Category 1 status on the Philippines.  This status allows the addition of new flights into the United States and expansion of existing services.

The low-cost carrier now has seven Airbus A330-300s in its fleet with one more expected to arrive in the first half of 2017.  The aircraft seats up to 436 passengers in an all-economy class configuration.  

It also began its foray into long-haul flights in 2013 when it flew to Dubai's International Airport.  It has also made inroads into the Australian market with flights to Sydney, Australia.  There have also been plans to make Rome as its first European destination, although it is unclear how much of a priority this is even as the carrier has been removed from a European Union blacklist of carriers deemed unsafe to fly into the 27-member bloc.  

An increasing number of low-cost carriers have initiated long-haul flights or operated wide-body aircraft in recent years.  One of the most prominent examples is AirAsia through its brand Air Asia X, which operates Airbus A330s to Japan, China, India, and Australia.  

Source: CAPA


Monday, August 8, 2016

Cebu Pacific Expands Routes in the Visayas & Bicol

Cebu Pacific, the nation's largest low-cost carrier, has announced several new routes designed to cater to the needs of passengers in the Visayas and Bicol. In the last month, the budget carrier has announced a number of new or expanded routes including Kalibo-Seoul, Cebu-Ormoc, Cebu-Calbayog, Cebu-Roxas, and Manila-Virac.

cebu pacific virac flights
Copyright Photo: Angelo Agcamaran/PPSG
Beginning October 1, Cebu Pacific will launch a daily flight between Kalibo and Seoul, Korea aboard its 180-seat Airbus A320 aircraft. According to Cebu Pacific officials, the new route is designed to create opportunities for travellers to explore some of Asia's most popular tourist destinations. 

"Cebu Pacific gears toward bringing travellers for business and leisure to magnificent countries at the lowest fare in the market," said JR Mantaring, Cebu Pacific's VP of Corporate Affairs. "The new Kalibo-Incheon route opens opportunities for passengers to explore must-see places in Incheon such as Wolmi-Do Island, Landing Memorial Hall, and Jeondeungsa Temple, among others."

The new non-stop flight between the Visayas and South Korea will complement Cebu Pacific's existing services to South Korea including daily flights to Seoul-Incheon from Cebu and Manila, and four weekly flights from Manila to Busan. The budget carrier recently revealed that South Korea is one of its largest short haul international markets.  "We will remain committed to exploring more routes to cater to more passengers and to beef up economic, trade, and tourism in this destination," added Mantaring.

Earlier this month, Cebu Pacific also announced the launch of three new domestic routes out of its hub in Cebu. Beginning on November 19, Cebu Pacific will launch new daily flights from Cebu to Ormoc and Cebu to Roxas. In addition, four-weekly flights between Cebu and Calbayog will be added. All flights will be operated by 72-seat ATR 72-500 aircraft. "With the additional routes in and out of Cebu, more guests can travel and visit scenic spots in the Visayas region," said Mantaring.

Meanwhile, travellers to Bicol will appreciate the added convenience of an additional frequency on Cebu Pacific's Manila to Virac route. The service, which is operated by a 156-seat Airbus A319 aircraft, will be increased to a total of five weekly flights. The new service is expected to boost connections in the Bicol region, complementing Cebu Pacific's existing flights from Manila and Cebu to Legazpi, and from Manila to Naga. 

Sunday, July 31, 2016

Cebu Pacific Increases A330 Wide-body Fleet

Cebu Pacific, the nation's largest low cost carrier, is increasing the size of its long-haul division, with the addition of two A330-300 aircraft. The budget carrier placed a firm order with European aircraft manufacturer Airbus to add two new wide-body aircraft to Cebu Pacific's existing fleet of six A330 aircraft. 
cebu pacific airbus a330
Copyright Photo: Angelo Agcamaran/PPSG
According to Lance Gokongwei, CEO of Cebu Pacific, the A330 has established itself as the aircraft of choice for low-cost carriers. "The A330 has proven to be the right choice for our long haul low fare product," said Gokongwei. "The newly ordered aircraft will enable us to add more long haul routes, including the launch of our first flights to the US."

Although Cebu Pacific has not revealed which routes the new aircraft will be deployed on, there is strong possibility that the aircraft will be utilised on a new non-stop route from Manila to Honolulu, Hawaii, and a route to Melbourne, Australia, after the success Cebu Pacific experienced in the Sydney market. 

Cebu Pacific originally launched service to Sydney, Australia in September 2014. Although it took time for the new route to mature, the carrier carried a leading 138,793 passengers between Manila and Sydney in 2015, earning itself a dominant 41 percent share of the market. The carrier continues to fly four to five weekly flights between the two cities.

According to the Centre for Asia Pacific Aviation, Cebu Pacific previously planned to launch flights between Melbourne and Manila by the end of 2015. However, delays were caused by the failure to secure a gate in Manila for the new route. 

The latest indications suggest that Melbourne and Honolulu remain possible destinations for 2016. The addition of the two new wide-body aircraft make this an even strong possibility. Although Cebu Pacific could redeploy one of its existing A330 aircraft to operate Melbourne flights, the carrier wants to continue utilising the aircraft on domestic trunk routes in order to maintain market share. With the acquisition of the new aircraft now complete, the launch of Melbourne flights hinges on the carrier's ability to secure the necessary gates and slots.

Meanwhile, Airbus expressed its gratitude for the order, re-affirming the efficiency of the Airbus A330 aircraft, which makes it an ideal fit for long-haul low-cost operations. "This order from Cebu Pacific is another endorsement of the unrivalled efficiency of the A330 for profitable long haul low cost services," said John Leahy, Airbus Chief Operation Officer, Customers. "Combining low operating costs, proven reliability and a great passenger experience, the A330 is the clear preferred choice of airlines in this competitive market segment."

The A330 aircraft remains one of the most popular wide-body aircraft ever built having won more than 1,600 orders. Currently, there are more than 1,300 aircraft of its type flying around the world with approximately 120 different airlines. 

Sunday, July 3, 2016

Cebu Pacific President Flies Philippine Airlines

Cebu Pacific President & CEO Lance Gokongwei was seen travelling aboard a Philippine Airlines flight from Manila to Davao City on June 19, because he believed the national flag carrier would reach Davao ahead of his very own airline, budget carrier Cebu Pacific. 

gokongwei pal flight
Image Source: ABS-CBN
Gokongwei was seen aboard Philippine Airlines flight PR 1817, as he travelled to attend a consultative meeting of the country's top businessmen and President-elect Rodrigo Duterte's incoming economic managers, which was scheduled for Monday, June 20.

It was reported in the Philippine Inquirer that Gokongwei told a fellow passenger that he booked Philippine Airlines because Cebu Pacific's 3:00pm flight gets delayed. But Gokongwei did not do much better with the national flag carrier as the Philippine Airlines flight was delayed from its originally scheduled departure time at 3:00pm to 4:30pm. In the end, the aircraft did not leave Terminal 2 at Ninoy Aquino International Airport until 5:15pm.

When Gokongwei arrived in Davao, he was greeted by Cebu Pacific employees prior to heading to dinner with President-elect Duterte at the Marco Polo Hotel.

References: Inquirer

Saturday, July 2, 2016

Cebu Pacific Diverts A330 Flight to India, Passengers Stranded for 3 Days

A Cebu Pacific flight bound for Manila from Dubai was diverted to Chhtrapati Shivaji International Airport in Mumbai, India at 10:40am on June 29 due to a “technical requirement” of the assigned 436-seat Airbus A330 aircraft. Flight 5J 015 was carrying 347 passengers on board when it landed safely in Mumbai.

cebu pacific diverted india
Copyright Photo: Angelo Agcamaran/PPSG
Passengers were given special entry permits to India as they were required to stay in Mumbai while their transfers were finalised by the airline. The affected passengers were given accommodation, meals, and transfers, while travel desks were setup at their hotels.

In a statement released on Friday evening, Cebu Pacific reported that 252 passengers had been assigned to Manila bound flights operated by other carriers and that the passengers were expected to arrive early on Saturday morning. Passengers were stranded in India for as many as three days due to the incident.

According to Cebu Pacific, the remaining passengers are being reserved on the "soonest available flights" to Manila. Although the Philippine budget carrier has not given any official explanation as to what happened to the aircraft, they issued a formal apology to all passengers. Reports from passengers that have surfaced online suggest that the incident resulted from engine-trouble or even a possible engine-fire.

"We regret the inconvenience this has caused our passengers and hope for their understanding since our priority is their safety," stated the carrier in a Cebu Pacific Advisory. The carrier admitted that the 347 affected passengers "unfortunately had to wait inside the plane while their special entry permits were being worked out."

-travelling_bk

References: Cebu Pacific, Inquirer




Tuesday, May 17, 2016

Cebu Pacific Forms Alliance with Asian Budget Carriers

Eight low-cost carriers (LCCs) from Asia forged an airline alliance called the Value Alliance on Monday.  The aim of this new alliance is to provide greater convenience for its passengers.  

Image by Wayside765/Wikimedia
The alliance is composed of the Philippines' Cebu Pacific, Jeju Air, Nok Air, NokScoot, Scoot, Tigerair Singapore, Tigerair Australia and Vanilla Air.  Among notable LCCs missing from the alliance are AirAsia and Jetstar.  Nonetheless, this alliance is posed to become the world's largest for LCCs.  

Altogether, the Value Alliance has a network of over 160 destinations and a fleet comprising 170 aircraft.  Passengers can book flights on any of the members and request for extra services such as baggage and meals through a single website, according to an emailed statement by Vanilla Air.

Chief executives of the airlines in the alliance look forward to the potential benefits it may bring.  Cebu Pacific's Lance Gokongwei indicates that the Value Alliance is "a clear example of how LCCs can accomplish more by working together than we could do individually".  Scoot's CEO Campbell Wilson says that “By working together we can offer our guests a wider choice of destination and flights – at the most competitive airfares – all in one go”.

Industry analysts welcome the move.  Dan Lu of JP Morgan Securities Japan Co, for instance says that unlike full service carriers, LCCs lack a network brand and through this new alliance, they will be able to expand their network.

With this move, Cebu Pacific becomes the first Philippine carrier to join an alliance.  Philippine Airlines has expressed interest in joining an alliance but has not yet been able to do so.  

This is also not the first time carriers in the alliance have done business together.  In 2014, Tigerair's Philippine arm has been absorbed into Cebu Pacific's network.  In addition, Tigerair and Scoot, which are both owned by Singapore Airlines, have existing partnerships to facilitate baggage transfers for their passengers.



Sunday, May 1, 2016

Cebu Pacific Selects Recaro Ergonomic Seating for A321 Fleet

Cebu Pacific, the nation's largest low-cost carrier, is slated to become the first carrier in the Asia-Pacific region to operate aircraft configured with Recaro SL3510 ergonomic seating. The carrier plans to use the seating on its new fleet of thirty Airbus A321neo aircraft. 

cebu pacific a320
Image Source: Cebu Pacific
The Recaro SL3510 seat is currently one of the lightest economy-class seats available on the market weighing approximately 9 kilograms, which is around 40 percent less than conventional economy class seating. 

cebu pacific economy seat
Image Source: Cebu Pacific
The ergonomic seating utilises a thinner and much lighter innovative netting material as opposed to foam, which forms the core of the seat's backrest. Because the backrest is thinner than conventional economy seating, the space between seat rows increases, providing a more spacious environment for passengers. In addition, the netting material ergonomically conforms to the shape of a passenger's spine.

"We have always been a firm advocate of innovative and economic solutions that ensure the best travel experience for our passengers," said Lance Gokongwei, Cebu Pacific CEO. "The ergonomic seats will not only contribute to our valued guests' comfort on-board, but also help us reduce fuel burn with their lightweight, cost-efficient design."

cebu pacific recaro a321 seat
Image Source: Cebu Pacific
When the new A321 aircraft arrive, the Cebu Pacific fleet will gradually expand to more than 80 aircraft over a five-year period. The A321neo aircraft are due to be delivered between 2017 and 2021. Meanwhile, Cebu Pacific recently accepted delivery of its 36th brand-new Airbus A320 aircraft displaying the carrier's new livery. Cebu Pacific flew thirteen percent more passengers in the first quarter of 2016 compared to the same period last year. Between January and March, the budget carrier's flights were on average 87% full. 

Tuesday, February 23, 2016

Cebu Pacific Cleared for Flights to Russia

Cebu Pacific, the nation's largest low-cost carrier, has received approval from the Civil Aeronautics Board to fly between the Philippines and Russia, following the establishment of a new air services agreement between the two countries in August 2015. 

cebu pacific moscow flights
Copyright Photo: Angelo Agcamaran/PPSG
Under the agreement signed last year, Philippine carriers are able to fly from any point in the Philippines to as many as three destinations in Russia. Cebu Pacific was granted entitlements to operate up to three weekly flights from Manila to Moscow, the capital of Russia, and to Vladivostok, the nearest major Russian city to the Philippines.

According to Cebu Pacific's Vice President of Corporate Affairs, JR Mantaring, there are no confirmed schedules in place to begin flights to Russia. However, the budget carrier is currently working on the possibility of launching flights in the future with announcements being made as new aircraft join the fleet. 

"We sincerely thank and commend the members of the Civil Aeronautics Board for enabling Cebu Pacific to expand operations to key international destinations," said Mantaring. "We've always maintained that traffic rights are valuable resources that must be rationally allocated to carriers that are willing and able to utilise and operate flights."

National flag carrier Philippine Airlines was granted up to five weekly flights between Manila and Moscow. Additional entitlements were also granted for three weekly flights from Manila to Khabarovsk and four weekly flights from Cebu to Khabarovsk.

Philippine Airlines is currently the only Philippine carrier operating flights to Russia. For the past two years, PAL has operated charter flights from Manila and Kalibo to Vladivostok. In 2014, those charter flights brought in 40,000 Russian tourists, which typically spend $1,000 per person during their stay. 

Meanwhile, Cebu Pacific is gearing up for the launch of its first flight to the United States, when it introduces non-stop service between Manila and Guam on March 15. The budget carrier is also planning to launch service to Honolulu and Melbourne. However, those routes have been pushed back to 2017 as Ninoy Aquino International Airport continues to face congestion issues. 

Sunday, November 29, 2015

Cebu Pacific Launches First US Destination, Flights to Guam Now on Sale

Cebu Pacific, the nation's largest low cost carrier, has confirmed its commitment to launch flights to the United States with the official announcement that it will begin flying to Guam in March. Earlier this week, Cebu Pacific launched its first US route with all-in fares between Manila and Guam for as low as P2,500.
cebu pacific flights to guam
Copyright Photo: Angelo Agcamaran/PPSG
The flights are expected to begin on March 15 with Cebu Pacific operating four weekly flights to Guam from Ninoy Aquino International Airport in Manila. Flights will be operated by the carrier's Airbus A320 aircraft. Cebu Pacific is now the only low-cost carrier flying between Guam and the Philippines.

Flights will be operated every Tuesday, Thursday, Saturday, and Sunday. Each flight will depart Manila at 3:45am and arrive in Guam at 10:15am. The return trip will depart Guam at 12:30pm, and arrive back in Manila at 2:55pm.

"Having Guam in our network sets us off on another expansion path across the Pacific," said Lance Gokongwei, CEO of Cebu Pacific. "With the launch of Guam, we offer fares that are up to 83% lower than other airlines. Fares this low can only mean more tourists to both countries, more Filipinos visiting home, and more opportunities for everyone."

Cebu Pacific believes that the Manila to Guam route is currently underserved compared to other destinations with even smaller Filipino populations. At present, 26 percent of Guam's population is Filipino. Currently, United Airlines and Philippine Airlines offer 5,900 weekly seats between Manila and Guam. Cebu Pacific will add an additional 1,440.

Cebu Pacific is once again banking on its lowest fares to stimulate demand and increase traffic between the two destinations. When promo fares to Guam are not available, Cebu Pacific's year-round all-in fares to Guam will start at just P7,197, which is forty percent lower than its competitors.

Sunday, November 22, 2015

APEC 2015: Local Airlines Lost Millions in Revenue

Following the end of the 2015 Asia Pacific Economic Cooperation summit held recently in Manila, airline industry analysts estimate that both local and foreign carriers lost nearly $2 billion in revenue after more than 1,000 flights were cancelled at Ninoy Aquino International Airport in Manila.

trudeau manila
Image Source: Toronto Star
According to a report in the Philippine Star, an airline industry expert stated that the airlines that were hardest hit were budget carriers as they were unable to rebook passengers immediately or transfer them to hotels. However, most of the losses incurred by airlines were covered by insurance.

Philippine Airlines, the nation's flag carrier, lost an estimated $18.7 million according to spokesperson Cielo Villaluna. PAL usually grosses $7.5 million each day in sales revenue operating approximately 260 domestic and international flights daily. As a result of APEC, the airline was forced to cancel 700 flights, representing nearly 2.5 days of operations, added Villaluna.

Cebu Pacific, the nation's largest low-cost carrier, indicated that nearly P400 million in revenue was lost due to the flight cancellations. In total, local airlines in the Philippines cancelled approximately 1,800 domestic and international flights during APEC, which lasted from November 16 to 20.

Airlines were forced to cancel flights due to the temporary runway closures at Ninoy Aquino International Airport, where world leaders were given priority arrivals and departures. It is believed that the cancellations had a ripple effect throughout the Philippine archipelago, where other cities reported a reduced number of tourist arrivals.

AirAsia Philippines, the third-largest carrier in the country, cancelled a total of 84 domestic and international flights during the closure of the runway in Manila. Several foreign carriers also cancelled, rescheduled, or rerouted their flights during the APEC summit. Both Cebu Pacific and Qatar Airways diverted several flights to Clark International Airport in Pampanga.

According to Clark International Airport Corporation, Cebu Pacific diverted its flights from Dubai and Singapore, as well as several domestic flights, while Qatar Airways diverted one of its Boeing 777 flights. Qatar currently operates the only long-haul flights from Clark International Airport, while its remaining flights typically operate from Ninoy Aquino International Airport in Manila.

However, in spite of the flight cancellations and lost revenue, airlines were quick to point out that there are long term benefits to be had by hosting the APEC summit. "We must stress, however, that the long term benefits of APEC outweigh these aforementioned losses," added Villaluna of Philippine Airlines.

References: Philippine Star

Saturday, November 21, 2015

Cebu Pacific to Launch Guam Flights in March 2016

Competition between Manila and Guam is set to intensify as Cebu Pacific prepares to launch its very first route to the United States. According to the Pacific News Centre, Cebu Pacific, the nation's largest low cost carrier, is planning to launch flights to the US territory on March 15, 2016.

cebu pacific flights to guam
Copyright Photo: Angelo Agcamaran/PPSG
The budget carrier has been planning its entry into the US market for quite some time. Cebu Pacific had originally planned flights to Guam before the end of 2015 pending regulatory approvals. But according to a spokesperson of the Guam International Airport Authority, Rolenda Faasuamalie, Cebu Pacific will launch flights between Manila and Guam in March of 2016.

Faasuamalie indicated that the inaugural flight was set for March 15 with Cebu Pacific offering four flights weekly aboard an Airbus A320 aircraft. She added that a Cebu Pacific team is planning to travel to Guam in the near future to conduct an inspection of facilities and search for office spaces.

Filipinos residing in Guam have been eagerly anticipating the entry of Cebu Pacific, which will provide much needed competition for Philippine Airlines and United Airlines. Residents of the island territory are hoping that Cebu Pacific will be able to stimulate the market with its low airfares increasing tourism to Guam and enabling Filipinos to return home for visits more frequently.

At present, there are approximately 50,000 Filipinos living on the island of Guam, comprising nearly 26 percent of the entire population. Filipinos make up the second largest ethnic group on the island. Round-trip airfares for the four hour flight between Manila and Guam typically average US $300. The entry of Cebu Pacific could see airfares drop anywhere from ten to thirty-five percent.

Last year, Cebu Pacific was cleared by the US Department of Transportation to operate flights to the United States. While it is no secret that Cebu Pacific is eager to enter the US market, Guam has a unique advantage over other US destinations given its close proximity to the Philippines, which puts it within range of Cebu Pacific's A320 fleet.

As the Cebu Pacific fleet is composed primarily of A320 aircraft, the budget carrier has much greater flexibility in launching flights at the earliest possible opportunity, making Guam Cebu Pacific's first US destination.

References: Pacific News Centre


Monday, October 5, 2015

Cebgo Becomes Domestic Turbo-Prop Carrier, Cebu Pacific Goes All-Jet

After its rebranding from Tigerair Philippines earlier this year, Cebgo, a subsidiary of Cebu Pacific, has terminated all jet operations as it transforms into a domestic turbo-prop carrier based at Ninoy Aquino International Airport Terminal 4.

Image Source: Cebu Pacific
In a report released by CH Aviation, Cebgo ceased jet operations following the return of its last remaining A320-200 aircraft. The jet registered, RP-C3270, was returned to Cebu Pacific last week. Cebu Pacific began transferring its ATR 72-500 fleet to Cebgo on September 25 with up to eight aircraft expected to be transferred by the end of October.

Cebu Pacific is expected to operate its last turbo-prop flight in October. Once all ATR aircraft are transferred to Cebgo, Cebu Pacific will become an all-jet carrier operating a fleet of Airbus A320 and A330 family aircraft.

According to AirlineRoute.net, nineteen ATR-operated domestic routes will be transferred to Cebgo including the following:

  • Manila to Busuanga effective September 25 (21 weekly)
  • Manila to Caticlan effective September 25 (55 weekly)
  • Manila to Naga effective September 25 (11 weekly)
  • Manila to Laoag effective October 1 (1 daily)
  • Cebu to Caticlan effective October 1 (20 weekly)
  • Cebu to Dipolog effective October 6 (7 weekly)
  • Cebu to Siargao effective October 6 (1 daily)
  • Cebu to Tacloban effective October 6 (21 weekly)
  • Cebu to Camiguin effective October 7 (5 weekly)
  • Cebu to Tandag effective October 7 (3 weekly)
  • Cebu to Butuan effective October 8 (7 weekly)
  • Cebu to Dumaguete effective October 8 (7 weekly)
  • Cebu to Iloilo effective October 8 (9 weekly)
  • Cebu to Legazpi effective October 8 (4 weekly)
  • Cebu to Ozamiz effective October 8 (5 weekly)
  • Cebu to Pagadian effective October 8 (7 weekly)
  • Cebu to Surigao effective October 8 (11 weekly)
  • Davao to Cagayan de Oro effective October 8 (10 weekly)
  • Cebu to Bacolod effective October 26 (7 weekly)
Turbo-prop flights departing or arriving at Ninoy Aquino International Airport in Manila will now operate from Terminal 4. Last June, Cebu Pacific placed an order for sixteen ATR 72-600 aircraft in an effort to boost the carrier's inter-island operations. However, it remains unclear whether the new aircraft will be operated by Cebu Pacific or by Cebgo.

Cebu Pacific rebranded Tigerair Philippines as Cebgo earlier this year to better reflect the budget carrier's relationship with its parent company. According to Cebgo CEO Michael Shau, the new brand clearly identifies the low cost carrier as part of the Cebu Pacific Group. 

Cebgo flight and ground crew are now wearing Cebgo uniforms as the two companies streamline operations. In addition, crew are now playing fun games aboard all Cebgo flights to remain consistent with the Cebu Pacific flight experience.

According to the Centre for Asia Pacific Aviation, Cebu Pacific Group now controls 60% of the Philippine domestic market compared to less than 30 percent ten years ago. The company's acquisition of Tigerair Philippines has proven to be a success based on the quick turn around of the carrier and the continued growth of its domestic market share.

Sunday, October 4, 2015

Cebu Pacific: Honolulu Flights Coming in 2016

Cebu Pacific is gearing up to launch its first flights to the United States. The budget carrier had initially stated that it was targeting service to Hawaii by the end of this year. However, the carrier is now indicating that flights to Honolulu will launch in early 2016, following the acquisition of the required permits.

cebu pacific hawaii flights
Copyright Photo: Angelo Agcamaran/PPSG
According to Lance Gokongwei, CEO of Cebu Pacific, the budget carrier believes that Honolulu will be a strong market given the large number of Filipinos living in Hawaii. "We are looking at early next year for Honolulu," said Gokongwei. "Once we have the necessary approvals, we will make the announcement."

When Cebu Pacific begins flights to Hawaii, it will compete directly with Philippine Airlines. The budget carrier is expecting the same market stimulation that it has seen in its other long-haul markets, as the price of airfare is driven down by the new competition.

The Philippines to Hawaii market has been without competition since 2013 when Hawaiian Airlines cancelled its non-stop service between Manila and Honolulu, citing intense competition from Philippine Airlines. Hawaiian Airlines previously stated that it could not compete with lower airfares due to its higher operating costs. But Cebu Pacific will undoubtedly be able to level the competitive landscape with its even lower operating cost-structure than Philippine Airlines.

Cebu Pacific is also hoping to attract connecting traffic to lure those bound for cities on the United States mainland, as well as passengers travelling from North Asian cities to Honolulu. The carrier believes that Manila is in a good position to attract this type of traffic. "Using Manila as a hub, probably a lot of North Asian countries can have more direct flights to Honolulu," added Gokongwei.

Cebu Pacific is currently unable to reach the cities on the West Coast of the United States due to range limitations of its existing fleet. The carrier currently flies six Airbus A330-300 aircraft on long-haul routes. However, the carrier is presently studying its options for the acquisition of aircraft that can serve longer range destinations.

Cebu Pacific recently strengthened its position in Southeast Asia, following the establishment of an agreement with Singapore-based Tigerair, which will provide enhanced connectivity for travellers that will be able to tap into the extensive route networks of both Cebu Pacific and Tigerair. Cebu Pacific hopes to source more feeder traffic with the new strategic alliance.

Meanwhile, Cebu Pacific is also seeking regulatory approvals to fly to Guam and expand its footprint in China. In a petition filed with the Civil Aeronautics Board, Cebu Pacific applied for the reallocation of 1,260 seats, currently held by AirAsia Zest. Cebu Pacific would like to use the new allotments to operate three additional flights from Manila to Beijing and four additional flights from Manila to Guangzhou.

Cebu Pacific currently operates long-haul flights from Manila to Sydney, Doha, Riyadh, Dubai, and Kuwait. The budget carrier is presently looking at increasing flights to Australia. Last week, it accepted delivery of its thirty-second brand-new Airbus A320 aircraft.

Thursday, October 1, 2015

Public Angered by Cebu Pacific's Treatment of Sick Baby

Budget carrier Cebu Pacific is facing yet another public relations fiasco after a cardiologist revealed on social media how the carrier nearly placed the life of a six-day old baby that suffers from congenital heart disease in danger after what the cardiologist referred to as "heartless" treatment.

Copyright Photo: Angelo Agcamaran/PPSG
Dr. Josephine Dela Cerna, a pediatric cardiologist, revealed in a post on Facebook on Sunday night, that she was accompanying her patient for emergent cardiac surgery in Manila. Dela Cerna, along with the baby and father, were to depart on a Cebu Pacific flight from Cagayan de Oro to Manila at 6:30am.

According to Dela Cerna, upon arrival at Laguindingan Airport, Cebu Pacific staff advised them that the oxygen cylinder they brought for the baby could not be brought on board the aircraft. 

Image Source: Facebook
The father was left with no choice but to return to Cagayan de Oro in search of an electric oxygen concentrator, which could apparently be used on the aircraft. But after obtaining the equipment, they discovered that it was incompatible with the electrical outlet on board the aircraft. 

After what became a nearly ten hour ordeal, Cebu Pacific allowed the baby to travel without the oxygen tank. But Dela Cerna vowed to never fly Cebu Pacific again. "Heartless is the word. Why can't they bend the rules for service and compassion?" said Dela Cerna. "Can't fly because the baby is six days old? The doctor is already with the baby!"

Officials at the Civil Aviation Authority of the Philippines stated that Cebu Pacific made the right call. According to Captain Beda Badiola, Executive Director General of CAAP, Cebu Pacific was right to not permit the oxygen tank inside the aircraft, citing that the Civil Aviation Authority holds each carrier responsible if it was found to have violated its operations manual.

In an interview with the Philippine Daily Inquirer, Cebu Pacific's Corporate Communications Manager, Michelle PestaƱo-Fojas, stated that the airline apologizes to the infant and father "for not being able to fly them sooner." In a statement, Cebu Pacific reiterated that it follows all safety protocols for the safety of the flight and its passengers. The budget carrier asked for the public's understanding as compliance with safety procedures is a priority on all flights.

Meanwhile, Dela Cerna is not the only passenger that has recently vowed to never travel with Cebu Pacific again. Max Sangil was attending a forum of the Philippine Councillors League in Caticlan, when his Cebu Pacific flight was delayed twice before eventually being cancelled. Sangil was forced to board another flight the following day, which was also delayed by two hours but eventually flew to Caticlan. On the way back to Manila, Sangil endured much of the same frustration as the carrier repeatedly delayed and cancelled several flights. Sangil joins the growing number of people that have been disappointed by what many passengers now refer to as "Cebu Pathetic."

Tuesday, September 15, 2015

Cebu Pacific Introduces Three New International Routes

Cebu Pacific, the nation's largest low-cost carrier, has announced that it will introduce three new international routes beginning in December, that will help the Philippine government to reach its tourism goals. 

cebu pacific a320
Copyright Photo: Angelo Agcamaran/PPSG
On December 17, the carrier plans to launch new flights from Manila to Fukuoka, Cebu to Taipei, and Davao to Singapore. The new flights are expected to open up new opportunities for business and tourism. 

Flights between Manila and Fukuoka, Japan will be operated three times weekly. These will be the first low-cost flights operated between the two cities. Cebu Pacific will compete directly with Philippine Airlines, which is presently the only carrier operating flights between the two cities. 

Flights to Fukuoka will depart Manila on December 17 at 2:15pm and arrive in Fukuoka at 6:55pm. The return service will depart Fukuoka at 8:00pm and arrive back in Manila at 10:40pm. Fukuoka becomes Cebu Pacific's fourth destination in Japan. 

The new route between Davao and Singapore will be operated twice weekly. The flight will become the only international low-cost carrier route operated from Davao, where Singaporean regional carrier, SilkAir, operates full service flights between Davao and Singapore. 

Flights from Davao to Singapore will depart at 5:35pm. Arrival in Singapore is scheduled for 9:10pm. The return service departs Singapore at 9:55pm and arrives in Davao at 1:40am. This will be the first international route for Cebu Pacific from Davao.

The flights between Cebu and Taipei will become the first regularly scheduled flights between the two cities. China Airlines operates charter service between the two cities. The new Cebu Pacific route will be operated three times weekly. Taipei flights will depart Cebu at 9:45pm amd arrive in Taipei at 12:25am. The return flight departs Taipei at 1:05am and arrives in Cebu at 3:45am. 

According to Candice Iyog, Vice President for Marketing & Distribution for Cebu Pacific, the new flights are designed to support the growth of tourism. "It has always been our commitment to contribute to the country's economic and tourism agenda," said Iyog. "We will continue to develop our Philippine hubs to offer fast, affordable flights to more travelers across our network."

The addition of these three routes brings Cebu Pacific's network up to 63 cities and 97 routes. All routes will be operated by the Airbus A320 aircraft. 

Sunday, August 30, 2015

Analysis: UAE Air Talks Yield Positive Results for Both Countries

The Philippine air panel ignored the pleas of the national carriers as they met with their counterparts to renegotiate and expand the existing air agreement between the Philippines and the United Arab Emirates. While both Cebu Pacific and Philippine Airlines opposed the renegotiation, the outcome is viewed as fair to both sides.

emirates clark
Copyright Photo: Angelo Agcamaran/PPSG
The new agreement increased the maximum flights per week between the two countries from twenty-eight to thirty-five. Although it remains unconfirmed which UAE carrier will utilize the seven additional entitlements, it is widely believed that Emirates will use them to relaunch its third daily flight between Manila and Dubai. 

Both Philippine Airlines and Cebu Pacific opposed any increase to the previous number of flight entitlements, citing that it would hurt local airlines, who are presently unable to maximise their existing number of entitlements. In addition, Philippine carriers accused the Gulf carriers of competing unfairly, claiming that they receive huge subsidies from their respective governments.

According to the Centre for Asia Pacific Aviation, the United Arab Emirates is presently the largest destination in the Middle East from the Philippines. More than half of the 80,000 weekly return seats from the Philippines to the Middle East are routed to the United Arab Emirates. In its report on the Philippines-Middle East market, CAPA stated that the "best scenario for Emirates and Filipino consumers would be an expansion of the UAE-Philippines bilateral."

Philippine Airlines recently argued that there was insufficient demand between the Philippines and the UAE to warrant additional flights. According to Jaime Bautista, President of Philippine Airlines, the national flag carrier has the data to prove that the majority of passengers on board Etihad and Emirates are bound for destinations outside of the UAE. 

"The figures that we got is that Emirates carries less than 30% of passengers who stay in the UAE," said Bautista. "So around 70% of its passengers are those that fly beyond Dubai. The other carrier, Etihad, is carrying passengers in the same percentage. Going by those figures, it shows that PAL and Cebu Pacific are actually carrying more passengers between the two countries so that's why we think there is an overcapacity in the market."

Bautista may indeed be correct in his assertions. However, the Philippine government has an interest in growing traffic from points beyond the Middle East to not only serve overseas Filipinos, but to attract more foreign tourists as well. Unfortunately, Philippine Airlines and Cebu Pacific do not have the aircraft or the demand to launch additional non-stop flights to Europe. Moreover, European carriers have expressed little interest in offering additional non-stop service to the Philippines, which leaves the Gulf carriers as the only carriers able to meet the growing demand and continue developing the market at the present time.

Developing New Gateways to Decrease Congestion in Manila

The new agreement successfully addresses many of the concerns presented by Philippine carriers and helps to level the playing field in spite of whatever subsidies may exist for Gulf carriers. The Philippine Civil Aeronautics Board attached a condition that whichever UAE carrier picks up the additional seven flight entitlements, must launch separate service within one year from the UAE to either Cebu or Clark Airport. 

Although pioneering a new route may seem like a huge risk, it may work out favourably at Mactan Cebu International Airport, which is rapidly growing as a domestic hub. Even Philippine Airlines is planning to launch non-stop service from the airport to Los Angeles. Emirates previously attempted non-stop service to Clark International Airport, which was withdrawn within a year after launch due to weak demand. 

While there may be insufficient origin and destination traffic between Cebu and the UAE, Emirates or Etihad may be able to leverage connecting traffic to and from popular destinations in the Visayas, Palawan, Boracay, and Mindanao just as it has in Manila and connect these passengers to their global network that extends throughout the Middle East, Europe, and Africa. Many Filipinos in those regions would appreciate the opportunity to bypass Manila. If a UAE carrier fails to begin service to Cebu or Clark within a year of signing the agreement, they will lose the additional rights to operate to Manila.

Philippine Carriers Can Now Leverage Connection Opportunities

As Philippine Airlines indicated previously, much of the demand and success of the UAE carriers can be attributed to connecting traffic, which is heading to destinations beyond Dubai or Abu Dhabi. With the absence of code-share agreements with partner airlines, neither Philippine carrier was able to capture this traffic as their services terminate in the UAE.

However, the recent negotiations will now empower the Philippine carriers to tap into this market and serve other destinations beyond the UAE without the need for code-shares as they have been granted fifth freedom rights to Europe, the United Kingdom, United States, and Saudi Arabia. This enables either Cebu Pacific or Philippine Airlines to fly to the UAE, pick up passengers and continue onto a destination in any of those countries.

According to Carmelo Arcilla, Executive Director of the Civil Aeronautics Board, the fifth-freedom rights will help to level the competitive playing field between carriers of both nations. "This will improve Philippine connectivity and also the commercial viability of our routes to the UAE," said Arcilla.

Moreover, both countries also agreed to co-terminalization, which will enable a Philippine carrier to fly to Dubai and then onto Abu Dhabi without picking up passengers for the domestic leg. This will increase the viability of the existing flights of Philippine carriers to the UAE as they can now carry passengers bound for both Abu Dhabi or Dubai on the same flight and aircraft. Co-terminalization will apply to all cities in the United Arab Emirates and the Philippines. In the case of Emirates, the carrier could launch new flights from Dubai to Cebu and continue on to Davao. 

"This also improves connectivity and viability," added Arcilla. "Overall, the talks are a success for Philippine connectivity and network development. The Philippine government panel and our airlines view the exchange as more or less fair, as the increase in traffic rights for both sides, which our airlines opposed, is minimal."

Philippine Airlines Must Act to Improve Prospects

Philippine Airlines seems to be in the weakest position in the Philippines-UAE market. If the national carrier wishes to boost its load factor, it must leverage its current partnership with Abu Dhabi based Etihad and utilize the newly negotiated fifth freedom rights to expand flights to Saudi Arabia, the United States, or Europe.

According to the Centre for Asia Pacific Aviation, Philippine Airlines could begin utilising the seven unused rights from the previous set of entitlements to launch a second daily flight to Abu Dhabi to better leverage its partnership with Etihad. It could expand its code-sharing relationship with Etihad to cover destinations in the United States and Europe. At present, the code-share relationship only covers flights between Abu Dhabi and Manila, as well as domestic services within the Philippines. 

Manila is presently the second largest international market for Etihad after Bangkok. Any increase of Etihad's share of the Philippine market would come at the expense of Emirates. If Philippine Airlines does not wish to launch any further non-stop services to Europe, Abu Dhabi could serve as a transit point, where Philippine Airlines passengers could connect to Etihad and Etihad partner carriers to reach other destinations in Europe. 

Philippine Airlines currently does not have codeshare partners in Europe. However, the flag carrier is currently pursuing new partnerships with European and US based carriers. Etihad is an ideal partner as they have an extensive network in Europe and several stakes in European carriers that could partner with Philippine Airlines. 

In addition, Etihad could be used to serve additional destinations in the eastern United States. This would improve the position of Philippine Airlines in both the European and North American market. However, PAL must act quickly before Emirates gains further share. Moreover, it must improve its on-board product, loyalty programs, and alliances to enhance competitiveness.


Friday, August 28, 2015

Opinion: Does the Philippines Need More UAE Flights?

As bilateral talks progress between the Philippines and the United Arab Emirates, many are wondering what the future holds for the nation's carriers in the Middle East. Gulf carriers like Emirates are asking for more flights, while Philippine carriers cannot even fill theirs. Some Filipinos fear that additional flight entitlements for Gulf carriers would bleed our national carriers. But the Philippine government seems to view the issue differently. The issue requires more clarity and perspective than what the Philippine carriers are willing to offer.
emirates manila
Copyright Photo: Angelo Agcamaran/PPSG
Cebu Pacific and Philippine Airlines have been strongly opposed to re-opening air talks with the United Arab Emirates, suggesting that the market is already saturated with carriers and flights. But Gulf carriers are reporting completely sold out flights, having used all of their flight entitlements, while Philippine carriers have not even used their entire allocation of flights. 
In a joint statement, Philippine Airlines and Cebu Pacific asked "the Philippine government to resist any and all pressure to grant unfair advantage to the airlines of the United Arab Emirates in the form of unjustified and unnecessary disruptive additional rights to serve Manila."
Earlier this week, both Philippine carriers dared the Gulf carriers to attempt operating outside of Manila. This is a move that has already been made by Emirates and Qatar Airways, when they launched service to Clark International Airport in Pampanga. Although the Emirates route did not survive, the Gulf carriers demonstrated more courage than Philippine carriers, which have never attempted to operate Middle East flights outside of Manila in recent years. If PAL believes Cebu and Clark are viable markets for Middle East flights, PAL should put its money where its mouth is. After all, the national flag carrier has excess aircraft that need routes to fly. In addition, Clark Airport would like to see the return of non-stop service to the United Arab Emirates.
The Philippine carriers claim that additional entitlements to Manila are unnecessary because supply exceeds the actual demand for the UAE market. However, this statement requires further clarification. The current supply of seats exceeds the demand for Philippine carriers. However, it does not exceed the demand for Gulf carriers like Emirates, which are operating most flights at 100% capacity in economy class. In short, the services of Gulf carriers are in demand, while those of Philippine carriers are not.
Is that something that we should blame the Gulf carriers for? When Cebu Pacific launched flights to Dubai, Emirates did not attempt to match or undercut their fares. Therefore, the travelling public has spoken. If there is anyone to blame, let it be the passengers, most of whom are the overseas Filipinos that the Philippine carriers are targeting. If Philippine carriers are so vital or important to the UAE market, then why aren't the passengers choosing them out of their own free will?
If Filipinos truly believe in standing behind their national carrier, then perhaps they should protest the decision of the Philippine government to re-open air talks by using their wallets and "Flying the Flag." After all, Emirates would not be looking to increase flights if they did not believe the demand was there. 
But again, Philippine carriers are trying to force the travelling public to fly with Philippine carriers by denying them the right to choose out of fear that they might indeed choose the Gulf carriers. We could understand the unfairness of the situation for Philippine carriers if subsidized Gulf carriers were offering the lowest fares but we know that Cebu Pacific has the lowest fares and still fails to attract the same demand. 
According to Emirates, since the carrier lost their third daily flight to Manila, the two remaining daily flights have been operating at near capacity. "Since the removal of the third daily flight, Emirates' two daily flights on the Dubai-Manila route have been operating at 100 percent capacity in economy class on most of the flights - with no seats left for international tourists and overseas Filipino workers," said Emirates Country Manager Abdalla Al Zamani. "Taking this into consideration, we are confident that the restoration of Emirates' third daily flight to Manila will ensure widespread and sustained benefits to all stakeholders." He added that there is a significant gap between the supply and demand for seats.
Philippine carriers are concerned that an increase in flights by Emirates will undermine the investments Cebu Pacific and Philippine Airlines have made in Dubai. But what about the investments that Emirates has made in the Philippines? Having served Manila for the last 25 years, it is safe to say that Emirates played a vital role in both trade and tourism, which has led to job creation. Is denying them the right to grow and satisfy demand for flights to the Philippines the right way to thank a partner and investor in the country, particularly when national tourism goals are at stake?
Having said all of this, it is fair to say that not all the passengers travelling aboard Emirates are bound for Dubai. A good portion of them are connecting to other destinations in Europe and the Middle East. These are important markets for sourcing potential tourists. Unfortunately, it doesn't seem like the market in European cities is large enough for Philippine carriers to serve with more direct flights. Therefore, the Gulf carriers are currently the only hope of attracting more tourists from that part of the world.
If Philippine carriers wanted to obtain their fair share, they could utilize their own existing partnerships to replicate the Emirates model. Cebu Pacific could partner with low-cost carriers based in the UAE to attract more connecting traffic in the region, while Philippine Airlines could work with Etihad to obtain more feeder traffic from cities in Europe. However, neither Philippine carrier has made a move.
What we do know for sure is that the Philippine government wants to build traffic and increase visitor arrivals in order to continue developing the fledgling tourism industry. As noted above, the Gulf carriers are the only airlines with the financial capability and muscle to further connect Europe, the Middle East, and Africa with the Philippines in an effort to grow traffic by providing more flights. Let's be honest, international airlines from the west are not exactly beating down the door to fly to the Philippines. Therefore, if the government wants to even come close to meeting their tourism targets, they must attract sufficient capacity from whatever airline is willing to offer them.
But should Filipinos remain worried about Philippine carriers? Firstly, it is highly unlikely that Cebu Pacific will drop out of the market given the demand for low-cost travel. Emirates will never dip into this market so Cebu Pacific is pretty safe with a wide margin against competing airfares. As for Philippine Airlines, they are not in as strong a position particularly with their inadequate on-board product and the absence of code-sharing relationships to destinations beyond Dubai or Abu Dhabi. 
If PAL ends up pulling out, blame the passengers. After all, it is they who voted PAL out of the market with their wallets. Will jobs be cut dramatically? Perhaps at Dubai Airport, but PAL will find another route to fly their aircraft profitably in a less competitive environment. It will not affect any of PAL's other operations. Besides, PAL has pulled out of other markets in the past, where they failed to turn a profit such as Kuala Lumpur. Did anybody cry foul then? 
A similar phenomenon happens in Hong Kong and Singapore, where Cathay Pacific and Singapore Airlines manage to fill multiple wide-body flights per day from Manila, while Philippine Airlines primarily fills narrow-body aircraft. This illustrates once again that demand is higher for foreign carriers that offer higher standards and greater connection opportunities. 
Philippine Airlines is merely jumping on a bandwagon that was triggered by US and European carriers, who are also complaining about the threat of the Gulf carriers in their own respective markets. However, American carriers have far more to lose than Philippine carriers do. Philippine aircraft could easily be redeployed to Russia, Australia, or New Zealand where PAL has a real opportunity to develop promising markets.
Traffic from foreign carriers grew by an unprecedented 47 percent in the Philippines to 2.8 million passengers in the first quarter of 2015. This far outpaced the growth of Philippine carriers. In addition, international commercial air traffic soared by 28 percent with the addition of Turkish Airlines and Oman Air. 
According to Tourism Secretary Ramon Jimenez, pursuing air talks with the United Arab Emirates follows the government's objective to increase tourist arrivals. PAL President Jaime Bautista believes that more entitlements should be coming from the nation's top source markets for tourism such as South Korea, Japan, China, and the United States instead. However, the Department of Tourism is eager to grow and develop tourism from other markets such as the Middle East and Europe, where capacity is presently limited in comparison to the number of flights offered within Asia. Tourist arrivals from markets in the Middle East and Europe cannot grow without sufficient airline capacity.
If jobs do end up being lost in the Philippines resulting from this battle for market share, the Philippine government is banking on the increased number of tourists arriving, which will help to drive growth in other industries such as hotels and restaurants, which will create more jobs. The truth is that there is far more for the Philippines to gain in the development of the tourism industry, than there is to lose in the aviation industry from Dubai. In addition, if Emirates does bring more Filipinos and tourists to Manila, they will most likely connect to flights operated by Philippine Airlines and Cebu Pacific as Emirates does not fly to Boracay or Palawan. The increase for domestic travel will fuel job growth once again.
The two Philippine carriers suggested that they "are not afraid of competition" because they have not objected to Ethiopian Airlines, Turkish Airlines, or Oman Air flying to the Philippines. However, none of these carriers are a competitive threat to either Philippine Airlines or Cebu Pacific in the first place as none of the Philippine carriers fly any of these routes with the exception of Cebu Pacific's service to the Sultanate of Oman. 
According to Maria Elben Moro of the Civil Aeronautics Board, people should come ahead of profits. "More than the competition among the carriers, we should promote the welfare of the overseas Filipino workers," said Moro. In fact, Filipinos in the United Arab Emirates indicated that more flights between the two countries are needed.
Meanwhile, Emirates continues to challenge allegations that the Dubai based carrier receives subsidies or competes unfairly. According to a statement released by the carrier, the accusations are patently false. In the case of the United States, Emirates noted that denying them further access to the US market would only harm American consumers, communities, and the national economy.
Emirates released a detailed statement responding to each allegation. According to Emirates CEO Tim Clark, the carrier has been profitable for 27 years straight and never depended on government bail-outs or protection from competition like their accusers. He added that the government of Dubai told the carrier from the start that they must deliver profit and stand on their own as Dubai has no oil reserves, which is why it diversified its economy through tourism and air transportation. 
"That directive is what led us to pioneer a successful business model as an efficient long-haul connector that offers customers a best in class experience," said Clark. "Our global expansion is funded from our own cash flow, and debt raised in the open market through banks and financial institutions. Our success is due to superior commercial performance. To date we have paid our shareholder, the Dubai government, more than $3 billion in dividends. All of this is laid out in our financials, audited by Pricewaterhouse Coopers. We are financially transparent, and have published fully audited accounts for over 20 years."
Emirates believes that their opponents are complaining out of their own narrow interests. The Aquino administration has stepped away from the protectionist governments of the past and advocated in favour of Open Skies. Emirates says that they proudly contribute to the goals of Open Skies, which are greater competition, increased flight frequency, consumer choice, promotion of business travel and tourism, improved service, and customer-centric innovation. 
Emirates serves the Philippines by offering flights to more than 50 cities that are not directly served by any Philippine carriers. They transport tourists, business travellers, and goods, connecting them to some of the fastest growing economies in the world, in Africa, Europe, and the Middle East. Emirates says that travellers should not become the victims of a protectionist campaign.

Wednesday, August 26, 2015

Opinion: Will Philippine Airlines Cancel Flights to Dubai?

In its on-going battle to stop the airlines of the United Arab Emirates from obtaining additional flight entitlements to the Philippines, Philippine Airlines made a revelation this past weekend, suggesting that it and other carriers may cease to operate flights to Dubai and Europe if Gulf carriers are able to increase their market share.

philippine airlines a330
Copyright Photo: Angelo Agcamaran/PPSG
According to Jaime Bautista, President of Philippine Airlines, any move to increase flight entitlements of the Gulf carriers would undermine investments made by Philippine carriers in the region. "Should the UAE airlines get the additional entitlements they seek during the coming Philippine-UAE air talks, this will undermine the investments PAL and other airlines have made for the country in opening new routes to serve Philippine tourism and overseas Filipino workers," said Bautista. 

While Bautista's comments may be accurate, it is not the role of the Philippine government to carry out protectionist policies to protect private Philippine corporations at the expense of the travelling public. In any free market, it is the responsibility of the business to ensure that they can withstand the test of time by making prudent business decisions and ensuring they remain competitive. 

However, competitiveness is where the problem lies. Philippine Airlines feels threatened by Emirates, a highly-decorated, award-winning carrier, because it simply does not have a product to compete. Ramon Ang made the miscalculated move of entering the Dubai market with PAL Express, believing that all that mattered to Filipinos was that they obtain the cheapest fare regardless of the sacrifices that must be made in passenger comfort. 

Consequently, PAL entered Dubai with a cramped 414-seat bi-class configured A330-300 with only economy service and no in-flight entertainment to be found anywhere. According to a past passenger, there was no beer, in-flight magazine, newspaper, or television screen to be found anywhere. In short, it was a flying bus. But what added insult to injury for most passengers was the initial belief that they were travelling on board Philippine Airlines, rather than PAL Express, and being charged the corresponding airfares for what they believed would at least be a three-star service. But what they received was reminiscent of a low-cost carrier.

Philippine carriers lag behind the rest of the world when it comes to in-flight entertainment. At a time when Philippine Airlines chose to ditch traditional in-flight entertainment under the leadership of San Miguel Corporation, low-cost carriers in other parts of the world such as Norwegian chose to install personal television screens at every seat on both short and long-haul aircraft.

Philippine Airlines used to code-share with Emirates when it was unable to serve the Middle East profitably using its own aircraft. Currently, they codeshare with Etihad, which operates flights from Abu Dhabi. However, PAL does not seem to be concerned of any competitive threat from Etihad.

Cebu Pacific is in a different position. They enjoy an enviable reputation as a successful low-cost carrier that knows how to meet the needs of their passengers. While their long-haul fleet is indeed cramped and lacks amenities, it is in line with their fares and their passengers know exactly what to expect. In addition, they have added passenger comforts such as wireless internet for an additional fee to restore some sort of humanity to long-haul low-cost flying. The unbundled pricing of a Cebu Pacific ticket works well for their passengers as they get to dictate how cheap or expensive their ticket should be according to the services they desire. Cebu Pacific does not compete directly with Emirates in that they serve an entirely different type of passenger with a completely different set of priorities. Moreover, much of Emirates' traffic continues onwards to Europe. There is indeed room for competition but how much and how many carriers remains unseen. 

Although Gulf carriers are a formidable threat, it is not impossible for multiple carriers to survive. Philippine Airlines is already a code-share partner with Abu Dhabi-based Etihad Airways. Leveraging this partnership further would be an important first step in enhancing competitiveness, particularly code-sharing to additional cities in Europe. In addition, PAL must improve its on-board products and services if it is to compete effectively against a carrier like Emirates. After all, when was the last time Singapore Airlines or Cathay Pacific flinched at competition from Emirates?

If the national flag carrier is prepared to compete on a level playing field, then it must spend less time lobbying for protectionist policies and find ways to compete and survive on its own merit, rather than through government intervention -- a competitive environment that it has enjoyed for too many years at the expense of passengers. 

In Western nations with free-market policies and highly competitive environments, carriers do not uphold passenger rights or employ effective customer service policies because the government forces them to. They do so out of the competitive nature of their business alone because they all understand that to win the customer is to win the battle. 

In recent years, all Philippine carriers have been accused of failing to provide their passengers with a customer-centric experience. Whether it be cancelled flights, failure to provide fair compensation, or the inability to issue a refund in a timely manner, all carriers have left much room for improvement. But if even just one carrier proved to be reliable and customer focused, they would easily outperform the competition. However, Philippine carriers have gotten away with sub-standard customer service just as the Ninoy Aquino International Airport has gotten away with inadequate facilities for years simply because passengers have no choice. The truth is passengers pay the price in a protectionist or monopolistic environment. 

In a free market and competitive environment, passengers emerge as the winners, enjoying the best quality of service for the most competitive price. It's safe to say that even on Philippine Airlines' flagship routes from Manila to San Francisco and Los Angeles, if Cathay Pacific was given the opportunity to compete with direct, non-stop flights, PAL would feel the heat and be forced to step up its game. 

Philippine Airlines blames the Gulf carriers for forcing them out of the region between 1997 and 2006. PAL claims that the subsidies these carriers receive create an unfair advantage as Gulf carriers steal traffic from Philippine carriers. Philippine Airlines also blames the Gulf carriers for the suspension of routes to the Philippines by six European carriers. 

Indeed, in any business environment, there is should always be an element of competition. However, are the Gulf carriers solely to blame for the original demise of Philippine Airlines in the Gulf region and for the lack of European carriers serving Manila? 

One could argue that the demise of PAL in the Gulf region during the nineties, can be partially attributed to competition, but more so due to a failure on the part of Philippine Airlines management to maintain a competitive product, while introducing cost efficiencies in its own operations. In addition, PAL was hit severely by the Asian Financial Crisis, which forced the airline into receivership, cutting in several areas including domestic routes and reducing the size of its fleet. This suggests that the financial health of the airline and its operations were in question long before the entry of the Gulf carriers. 

As for the European carriers, they seem to tell another story. Pressure from Gulf carriers did indeed cause many European carriers to scale back on certain routes and pull out of some markets completely. But while the Gulf carriers have always presented a competitive element, the absence of European carriers in Manila should be attributed to an unhealthy economic climate, coupled with protectionist policies employed by the Philippine government, which for several years, gave Philippine Airlines an unfair advantage over its competitors as the Philippine government slapped foreign carriers with a 3% common carrier's tax and a 2.5% gross Philippine billings tax.

These government policies led to an unhealthy and uncompetitive operating environment for foreign carriers, which hurt the airlines dramatically at a time when the airline industry was already in rough shape due to rising fuel prices and a challenging economic environment. Ultimately, one only needs to look at neighbouring countries in Southeast Asia, which still continue to enjoy regularly scheduled service by European carriers in spite of the presence of the Gulf carriers. These carriers have continued to serve cities like Kuala Lumpur, Singapore, and Bangkok without disruption. 

While the future in the Gulf region does indeed remain uncertain for Philippine carriers, what is certain is that Ramon Ang's strategy of charging full-service carrier fares for a low-cost carrier experience did not work. As for Cebu Pacific, the operation is fairly transparent with passengers paying a fair price for the service that they expect. Now that Philippine Airlines is under the leadership of the Lucio Tan Group once again, hopefully, the national flag carrier can resolve its identity crisis once and for all and focus its energy on enhancing its competitiveness by forming more partnerships and strengthening its product, instead of trying to masquerade as a low-cost or hybrid carrier. 

As for the Filipino people, they owe the nation's carriers absolutely nothing regardless of the investments that have been made. Neither Cebu Pacific or Philippine Airlines invested in Dubai primarily as a mission to rescue overcharged overseas Filipino workers from the dreaded Gulf carriers or to promote Philippine tourism. They did it primarily for their own business interests, with the intent of stealing traffic from the Gulf carriers to grow their respective businesses. But if they fail to do so on the merit of their own products and services alone, then it is not a right for a Philippine carrier to operate the route any more than it is a right for a Filipino to travel with a Philippine carrier. Therefore, may the best carrier win.

The Philippine government must protect the consumer ahead of private corporations. While the government is free to create protectionist policies, they must first determine if it is in the best interests of passengers. Tourism will develop in spite of the Gulf carriers and foreigners especially overseas Filipinos can afford to pay the fares.

The Gulf carriers are without a doubt a threat to Philippine carriers and other airlines around the world. However, they alone are not enough to put another carrier out of business. Airlines are complex operations with several variables that influence their financial performance. Malaysia Airlines, Thai Airways, and Garuda Indonesia are currently facing financial struggles of their own.

As the Centre for Aviation reported when Philippine Airlines launched its non-stop flights to London, it was recommended that the national flag carrier concentrate on the lucrative US market, rather than compete in risky areas such as Europe and to a lesser extent, the Middle East. The Centre for Aviation noted that these markets would be a major challenge for Philippine Airlines to penetrate given that major Asian carriers and Gulf carriers have more established brands, along with strong loyalty programs, airline alliances, and premium products and services.

Philippine carriers already carry an advantage in the fact that Filipinos are generally loyal to their own. But the greatest loyalty is shown to those who offer value. If Philippine Airlines can strengthen its product to a world-class standard, it would have a much better chance of competing against these established global carriers. 

The Philippines and United Arab Emirates are set to hold air talks in Manila on August 27 and 28.

Tuesday, August 25, 2015

Philippine Airlines Apply for Flights to Russia

After the successful expansion of the air services agreement between Russia and the Philippines, the nation's three largest carriers have all submitted their intent to the Civil Aeronautics Board to operate flights between the Philippines and Russia. According to an article in the Manila Times, Cebu Pacific, Philippine Airlines, and AirAsia are all planning to tap into the large Russian market in an effort to further develop tourism.

Image Copyright: Maks Maydachenko/Flickr
Philippine Airlines has applied for flights to link the capital cities of each nation. PAL would like to operate five weekly flights between Manila and Moscow using an Airbus A330-300 aircraft. In addition, the national flag carrier also plans to operate flights to Khabarovsk from both Manila and Cebu with a narrow-body aircraft. Flights would be offered to Khabarovsk four times weekly from Cebu and three times weekly from Manila.

Cebu Pacific plans to add Moscow as part of its low-cost carrier long-haul network. The budget carrier is planning to link Manila and Moscow three times weekly with its 436-seat Airbus A330-300 aircraft. In addition, Cebu Pacific also plans to serve Vladivostok from Manila three times weekly with an Airbus A320.

AirAsia Zest plans to link Vladivostok to its hub at Kalibo International Airport with four weekly flights aboard A320 aircraft. Flights would provide Russian tourists with a direct flight to the popular resort island of Boracay. 

The Department of Tourism has identified Russia as one of its top target markets. The Philippine government has already increased visa free entry to the Philippines for Russian tourists from 21 days to 30 days in an effort to attract more Russians to the various holiday hotspots around the country. 

In 2014, approximately 40,000 Russians visited the Philippines with numbers rising sharply each year. It is estimated that the average Russian tourist will spend USD $1,000 on each visit to the Philippines. It is hoped that the introduction of regularly scheduled flights all year long will help to increase the number of tourist arrivals.

Meanwhile, Russian carriers Transaero and Aeroflot have both applied with Russian authorities to launch flights between Moscow and Manila. Prior to new air services agreement, a number of Russian and Philippine carriers had been operating charter flights between the two countries. Philippine Airlines operated non-stop flights between Vladivostok and Manila as well as Kalibo and Khabarovsk, while Russian carriers, S7 and Transaero, operated direct services from Khabarovsk to Cebu.

If the applications are approved, it is expected that flights would not begin until the winter at the earliest.