Terminal Tents, Anyone?

January 26, 2013

The Transportation department (DOTC) is building temporary passenger terminal shelters at some of the country's most congested airport to relieve terminals with congestion problems.

Transport Secretary, Joseph Abaya said friday that tent terminals will  give passengers temporary shelter while expansion works are going on in a number of domestic airports across the country.

“We anticipate increase usage of some of the airport terminals. We need to address them immediately while simultaneously planning for the construction of permanent airport structures,” said Transportation Secretary Joseph Emilio Abaya.

One of the airport terminal affected is Tagbilaran which is operating beyond its original capacity and passenger traffic is still growing.

The new Tagbilaran airport project which were included in the Public-Private Partnership program did not receive any interest from prospective investors.

This is the reason DOTC is soliciting bids for a P166.4-million contract for the procurement of polyvinyl chloride (PVC) tents that will be installed in four airports.

The semi-permanent PVC tent terminal buildings is intended to augment existing check-in and or pre-departure areas of Tagbilaran, Puerto Princesa, Tacloban and Clark International airport.

Clark International Airport will have 1,500-sqm tent terminal installed, while Tacloban airport will have 825 sqm.,Puerto Princesa 300 sqm, and Tagbilaran will have 200 sqm. of additional terminal space pending expansion works.

The goal is to give people a convenient, affordable, reliable, efficient, and safe airport terminal temporarily while waiting for the completion of terminal projects.

New Battleground, Kuwait!

Airphil Express announced intention to fly Kuwait City three times a week using Airbus 330-300 by October 2013 joining Cebu Pacific's application to fly Kuwait City four times a week, while PAL requested daily flight by April 2013. Only eight flight frequences are available between Manila and Kuwait route per 2009 ASA. 

5J Grew 11% in 2012

January 25, 2013

Cebu Pacific (CEB) grew passengers as it flew 13.26 million passengers from January to December 2012, an increase of 11% over the same period last year, amidst strategic expansion to its domestic and international operations. The carrier flew 11.93 million passengers in 2011.

Ten new domestic routes were launched in 2012 paving the way for more air travel at various parts of the Philippines, particularly Visayas-Mindanao region. This includes flights from Davao to Dipolog and from Zamboanga to Cagayan de Oro, routes which were previously served by buses plying 12-14 hour rides.

CEB also launched direct flights from Manila to Hanoi, Siem Reap and Xiamen, as well as from Cebu to Bangkok and Kuala Lumpur last year. The airline also pioneered direct flights from Iloilo to Hong Kong and Singapore.

Use the Bridge

January 24, 2013

The Civil Aviation Authority of the Philippines (CAAP) has directed all Philippine-based airlines to use aerobridges in all airports across the country where facilities are available, according to its memorandum issued today.

The Order to use aerobridges was mandated after numerous complaints were lodged by passengers about budget carriers' refusal to use them to cut on costs. Non-usage also exposed passengers to bad weather and forced to walk on the airport's apron and then climb the stairs to board the plane.

"The use of aerobridges are not only for the convenience of the passengers, but also important for aviation safety and security."says CAAP deputy director general Capt. John C. Andrews.

CAAP encourages passengers to report airline abuses. Violators risks fine of P50,000.

A Look at Cebu Pacific's Long Haul

Different Dynamics of Philippine travel market could see 5J succeed in Long Haul

January 23, 2013

Best bet to Middle East

Cebu Pacific’s new low-cost long-haul unit plans to initially focus on Middle Eastern and regional markets as it works towards launching services with 436-seat A330-300s by Jul-2013. Dubai will be the Philippine carrier’s first long-haul route and will likely be followed by service to Abu Dhabi, Saudi Arabia and Kuwait in 2014. But Cebu Pacific over the medium to long-term also aims to use its new fleet of A330s to serve Australia and potentially Hawaii.

Cebu Pacific will become Asia’s fourth low-cost long-haul carrier, joining Jetstar, AirAsia X and Scoot. But Cebu Pacific is implementing a different strategy with an all-economy product and focus on point-to-point traffic. This reflects the different dynamics of the Philippine market, particularly its large overseas population.

Cebu Pacific initially unveiled plans in early 2012 to establish a long-haul unit and acquire at least eight A330-300s. The carrier, which is already the largest domestic carrier in the Philippines and serves about 20 international destinations within Asia with A320 family aircraft, has spent the last year working on its long-haul strategy and network. Dubai was announced on 17-Jan-2013 as its first long-haul destination, with daily service beginning 07-Oct-2013.

A330 operation to Hong Kong and Singapore

The general manager of Cebu Pacific’s new long-haul division, Alex Reyes, told CAPA that the carrier will use its first A330-300 to operate regional routes and its second aircraft for Dubai. Cebu Pacific’s first A330-300 is slated to be delivered in Jun-2013 with the second A330-300 to be delivered in Sep-2013.

Mr Reyes said the first A330 will be placed into service “as soon as we can” as Cebu Pacific always aims to be efficient. Regional routes will be announced over the next couple of weeks. The first aircraft will continue to operate regional routes as Cebu Pacific builds up its new widebody fleet. For now the fleet plan, which includes an initial fleet of eight A330-300s, envisions one aircraft for regional flights with the other seven aircraft being used for long-haul flights to the Middle East, Australia and potentially Hawaii if the Philippines regains a Category 1 safety rating from the US FAA.

Cebu Pacific initially said in early 2012 that it would only use the new widebody fleet on medium/long-haul routes. But the carrier quickly realised that some of its densest regional A320 routes could be better and more economically served by A330s.

Cebu Pacific’s two biggest international routes, Manila-Singapore and Manila-Hong Kong, are logical markets to up-gauge some A320 frequencies to the A330-300. Cebu Pacific currently has 32 weekly frequencies between Manila and Singapore and 28 weekly frequencies between Manila and Hong Kong. Both are by far the largest routes based on seat capacity from Manila and are also among the top 20 largest international routes in the world – with Manila-Hong Kong (13th in the world) currently consisting of almost 28,000 weekly one-way seats and Manila-Singapore (16th in the world) currently at almost 26,000 weekly one-way seats.

Cebu Pacific currently has a 22% share of seat capacity of the Manila-Singapore market, second to Singapore Airlines (SIA) at 32%, according to Innovata and CAPA data. Cebu Pacific has an 18% share of capacity in the Hong Kong-Manila market, third behind Cathay Pacific Airways at 47% and Philippine Airlines (PAL) at 32%. SIA and Cathay already operate widebody aircraft in these markets while PAL only operates widebodies on the Hong Kong route and a mix of A330s and A320s to Singapore. Up-gauging some of its flights to A330s would allow Cebu Pacific to close the gap with its full-service competitors and further reduce its already very low per seat operating costs.

Cebu Pacific top 10 international routes by capacity (seats): 21-Jan-2013 to 27-Jan-2013

Cebu may also use its A330-300s in smaller markets where it can’t expand due to slot restrictions such as Shanghai Pudong. Cebu Pacific currently serves Shanghai with one daily A320 flight. As it would only be able to add a second frequency at a similar middle of the night timing, increasing capacity in Shanghai by up-gauging to an A330 could be an attractive option.

Frequency increases rather than gauge changes are more likely at least for now at Cebu Pacific’s three other mainland Chinese markets –  Beijing, Guangzhou and Xiamen. These markets are now served with three to four weekly flights in the late evening or middle of the night hours.

Dubai logic

Manila-Dubai was the most logical first long-haul route for Cebu Pacific as it is the biggest long-haul route from Manila and the seventh largest international route overall based on current seat capacity. Cebu Pacific believes the market is under-served as origin and destination (O&D) passenger data shows that 70% of passenger travelling between Manila and Dubai are flying on one-stop services.

Emirates is the only carrier currently operating non-stop flights between Manila and Dubai, offering three daily flights with 777-300ER aircraft. The third daily frequency began on 01-Jan-2013. Etihad also serves Manila from nearby Abu Dhabi with two daily 777-300ER frequencies.

While Emirates and Etihad carry on their Manila flights a large volume of Filipinos working in the UAE, the carriers also dedicate a large portion of their Manila capacity to one-stop markets in the Middle East, Africa and Europe. Many of these markets are higher yielding, limiting the number of point-to-point passengers carried. Cebu Pacific will likely not take a large number of passengers from Emirates or Etihad but end up attracting more of the 70% of Dubai-Manila passengers which are now going one-stop by other carriers.

Cebu Pacific is also confident it can significantly grow the market by stimulating demand through lower fares. Many of the estimated 700,000 Filipinos working in the UAE only come home for visits every few years but Cebu Pacific believes lower fares will allow them to visit their families more frequently. Cebu Pacific says its regular Manila-Dubai fare is 40% lower than Emirates and its current promotional fare, which starts at PHP6,748 one-way (USD166) including the fuel surcharge and PHP1,350 (USD33) in ancillaries, is 68% lower.

Cebu fares on Manila-Dubai versus competing direct services

In recent years Cebu Pacific has seen how its low fares can stimulate more frequent trips home for Filipinos living in other Asian countries, particularly Malaysia, Singapore and Hong Kong. Malaysia, Singapore and Hong Kong combined have a Filipino population of about 1 million and it is no coincidence the trio along with South Korea (which has a smaller Filipino population and is more an inbound tourism market) are Cebu Pacific’s four largest international markets.

Sufficient demand for Dubai and Abu Dhabi services

Cebu Pacific expects to attract with its initial Dubai service Filipinos working in both Abu Dhabi and Dubai, which are about 150km apart, as well as the other smaller Emirates that comprise the UAE. Mr Reyes said the carrier aims to eventually serve both Abu Dhabi and Dubai markets but selected Dubai first as it is the larger market.

He pointed out that Abu Dhabi has a faster growing Filipino population. There is currently an average deployment of 550 new Filipino workers to the UAE per day, with Abu Dhabi now accounting for more of the new deployments than the more mature Dubai market.  But Dubai still has a larger Filipino community and Dubai is also more convenient for the Emirates of Sharjah and Fujairah, where there are also Filipino communities.

Dubai is also a bigger gateway. Cebu Pacific says its Dubai passengers will have the opportunity to self-connect to 41 destinations in the Middle East and Europe. But Cebu Pacific does not plan to partner with any other carriers serving Dubai and sees a sufficient local UAE-Philippines market to support a Dubai and Abu Dhabi flight without having to pursue any partnerships.

Abu Dhabi could potentially be added to Cebu Pacific’s network in 2014 as the carrier takes delivery of additional A330-300s. Mr Reyes said the network plan has Cebu Pacific serving both of UAE’s main airports with one daily flight rather than expand the Dubai operation to a second daily flight.

Malaysian long-haul LCC AirAsia X withdrew service to Abu Dhabi in 2010 as the route proved to be unviable despite local incentives. But the Kuala Lumpur-UAE market is much different as it is more an inbound leisure market rather than migrant worker or visiting friends and family (VFR) focused. Malaysia Airlines also dropped the UAE from its network in early 2012 when it discontinued service on the Kuala Lumpur-Dubai route.

Fighting for more UAE traffic rights

Cebu Pacific is now trying to secure from Philippine authorities the traffic rights for seven additional weekly frequencies to the UAE to support the opening of Abu Dhabi. In 2012 the two countries extended their bilateral agreement, opening up 14 additional weekly frequencies on both sides for a total of 28 weekly frequencies. Cebu Pacific was originally allocated all 14 additional weekly frequencies but Mr Reyes said that two weeks later the allocation was changed and Cebu Pacific ended up with only seven of the frequencies. PAL’s budget subsidiary AirPhil Express, which has also been looking at adding A330s and launching long-haul services in 2013 with the Middle East its main target market, ended up receiving seven of the frequencies while PAL held onto its original 14 frequencies.

Cebu Pacific has been pushing for a ruling from Philippine authorities that would give priority to Filipino carriers that operate into the UAE with their own aircraft. PAL, determining several years ago that it could no longer compete in the UAE market, handed its Philippines-UAE traffic rights to Emirates and Etihad as part of a codeshare arrangement with both UAE carriers.

Under the old UAE-Philippines bilateral with 14 frequencies for both sides, Emirates and Etihad each operated one daily flight with their own rights while Philippine authorities allowed the carriers to operate their second daily flight using PAL’s rights. Mr Reyes said this unusual transfer of Filipino carrier rights to UAE carriers is continuing and Cebu Pacific would like to see it stopped and for Filipino carrier rights to be given to Filipino carriers if a Filipino carrier is interested in using the rights to operate their own flights. Cebu Pacific also believes it is unfair for the PAL Group to control 75% of the available rights given that Cebu Pacific is now set to become the first Filipino carrier to serve the UAE in several years.

According to Innovata and CAPA data, Emirates currently has about 15,600 weekly seats at Manila while Etihad has about 10,600 weekly seats. This makes Emirates and Etihad the third and fourth largest foreign carriers at Manila, behind only Cathay and SIA.

Philippines to UAE capacity by carrier (one-way seats per week): 19-Sep-2011 to 14-Jul-2013

Manila international capacity (seats) by carrier: 21-Jan-2013 to 27-Jan-2013

Three routes to Saudi Arabia

Cebu Pacific’s new long-haul unit also has Saudi Arabia and Kuwait in its network plan and is considering serving Bahrain and Qatar. At least one destination in Saudi Arabia is likely to be launched in early 2014.

Saudi Arabia has the largest population of Filipinos in the Middle East, with over 1.5 Filipinos currently living in the Kingdom. But as the Filipino population in Saudi Arabia is more spread out than the UAE there is no single city pair as big as Dubai-Manila. Cebu Pacific is looking at serving the Saudi Arabian market with flights to up to three Saudi cities – Dammam, Jeddah and Riyadh.

Philippine authorities have already allocated Cebu Pacific seven weekly Saudi Arabia frequencies which can be used for Jeddah and/or Riyadh. Dammam could be launched separately without counting against the Filipino carrier allocation as there are no restrictions on Filipino or Saudi Arabian carriers serving the Manila-Dammam market.

Cebu Pacific management is not interested in tagging two cities or operating a triangle routing as it believes there is sufficient demand to operate directly to each market and does not like the complexity of combined routes. The carrier has not yet decided if it will operate daily to Jeddah or Riyadh or divide its allocation by operating to one destination four times per week and the other destination three times per week.

SkyTeam member Saudia now operates 11 weekly flights to Manila, all using 747-400s, which makes it the seventh largest foreign carrier serving Manila. Six of the frequencies go to Riyadh while two of the frequencies go to Jeddah and three go to Dammam.

As in the case of Dubai, Cebu Pacific sees ample opportunity for a second carrier in the Manila-Saudi Arabia market given the huge size of the Filipino population in Saudi Arabia and the ability of a LCC to stimulate demand. PAL previously served Riyadh, initially dropping service in 2006 as it pulled out of the Middle East after struggling to compete with Middle Eastern carriers. PAL resumed Manila-Riyadh in 2010 but dropped it again in 2011. Entering the market with a much lower cost base, Cebu Pacific believes it can succeed where PAL previously failed.

Opportunities in Kuwait, Qatar and Bahrain

Cebu Pacific also recently applied for traffic right in the Manila-Kuwait market. There are eight frequencies available for Filipino carriers to Kuwait. Hearings were held in mid-Jan-2013 but an allocation between Cebu Pacific and AirPhil/PAL has not yet been decided.

Kuwait Airways currently serves Manila with six weekly flights via Bangkok. There are almost 200,000 Filipino workers in Kuwait, making it the fourth largest Filipino community in the Middle East after Saudi Arabia, the UAE and Qatar.

Countries with Filipino overseas populations that exceed 100,000: as of Dec-2011
Country Filipino expats
United States 3,430,864
Saudi Arabia 1,550,572
Canada 842,651
UAE 679.859
Malaysia 569,081
Australia 384,637
Qatar 342,422
Japan 220.882
United Kingdom 220,000
Kuwait 186,750
Italy 184,638
Singapore 180,000
Hong Kong 174,851
Cebu Pacific has already been allocated two of the eight weekly frequencies available to Filipino carriers in the Philippines-Qatar bilateral. But the carrier is not keen to invest in a market in which it can only serve twice per week and is now trying to secure some of the six frequencies being held by PAL.

As in the case of the Philippines-UAE bilateral, PAL has given its Philippines-Qatar traffic rights to Qatar Airways as part of a codeshare arrangement. Qatar currently operates 14 weekly flights to Manila, with eight flights using the traffic rights available to Qatari carriers and the other flights using six of the eight traffic rights available to Filipino carriers.

As in the case of UAE, Cebu Pacific is hoping for a ruling to force PAL to return the rights it is only using for a codeshare under a scenario in which another Philippine carrier is willing to use the rights with their own aircraft. Such a ruling could ultimately impact the Gulf carriers and PAL’s relationship with the leading Gulf carriers.

Bahrain-Philippines enjoys open skies so unlike with the other Middle Eastern markets there are no bilateral issues. But Bahrain is the smallest market with only about 60,000 Filipinos so it is unclear if there is enough demand to support a potential LCC.

PAL codeshare partner Gulf Air currently operates one daily flight from Manila. Gulf Air’s network and schedules are now going through major changes as the struggling flag carrier restructures.

More Middle East destinations in 2014

Ultimately Cebu Pacific could end up serving all five Middle East countries once it reaches its planned fleet of eight A330s. With one aircraft expected to be allocated to the regional market, the carrier should be able to operate seven long-haul routes or more if some of the routes are served less than daily. One daily flight to the Middle East requires almost exactly one aircraft as flights between the Middle East and Manila take between eight and 10 hours – the latter also being at the end of the range of the A330-300 in high density configuration.

Mr Reyes said the carrier expects to add at least two more long-haul destinations in 1Q2014 as the third and fourth A330-300 which Cebu Pacific has already committed to leasing are delivered. More long-haul destinations could also be added later in 2014, depending on delivery slots for Cebu Pacific’s third batch of aircraft. Cebu Pacific is still talking to Airbus and leasing companies about the final four aircraft in the eight-aircraft plan but the carrier prefers to build up its fleet and reach the economy of scale that eight aircraft provides as early as possible.

For now only eight aircraft is in the fleet plan of Cebu Pacific’s long-haul unit. “We tend not to over order aircraft and then find a place for them,” Mr Reyes explained. “We take a more conservative approach to fleet planning.”

Australia traffic rights

While the Middle East market is the main focus, other network options are being looked at for the eight aircraft fleet including Australia and the US. But for Australia, Cebu Pacific flights are contingent on the Australia-Philippines bilateral being extended while for the US they are contingent on the Philippines being upgraded to Category 1 status.

Mr Reyes said the current Australia-Philippines bilateral, which is based on seat capacity rather than frequencies, only has enough room to support a daily A320 flight. Cebu Pacific is only willing to launch a route to Australia if it has the flexibility to operate a daily A330 flight. To enter a market with two or three weekly A330 flights and potentially be stuck at a limited schedule if there is no change in the bilateral makes the route not worthwhile pursuing given the high initial costs involved with starting a long-haul route.

Cebu Pacific is hoping Filipino authorities can engage Australian authorities and extend the bilateral. If the bilateral is extended significantly, Cebu Pacific sees sufficient demand to potentially serve both Melbourne and Sydney with daily A330 flights. There are currently almost 400,000 Filipinos living in Australia, making it the sixth largest overseas Filipino community in the world.

The Australia-Philippines market is now served daily by PAL and four times weekly by Qantas. PAL splits its service between Sydney and Melbourne with four weekly frequencies allocated to Sydney and three to Melbourne. Qantas only serves the Sydney-Manila route.

Entering US market with wet-leased aircraft

The US has the biggest overseas Filipino community at over 3.4 million. The US is also the biggest and has traditionally been the most lucrative long-haul market for PAL, which serves Los Angeles, San Francisco, Honolulu and Guam. But PAL for several years has been unable to expand in the US and more recently has been unable to switch existing US flights to its new fleet of 777-300ERs because the Philippines is stuck in Category 2.

Philippine aviation authorities have been working on trying to regain Category 1 status for the last couple of years. While there is some hope an upgrade could occur this year, it is uncertain when this will occur as prior expectations of a near-term upgrade failed to materialise.

Cebu Pacific has been interested in the US market for several years, particularly Guam as Manila-Guam can be served with its existing A320 fleet. But its interest in the US market has increased with the launch of its long-haul division.

Mr Reyes said that Cebu Pacific is now studying entering the US market with wet-leased aircraft, which would be allowed as long as the wet-lease operator is from a Category 1 country. He says the study includes looking at the cost and feasibility of wet leasing an A320 for Guam as well as wet-leasing a widebody for Hawaii. The idea would be to get a head start in operating to the US with wet-leased aircraft and then switch to Cebu Pacific aircraft once Category 1 status is secured.

Cebu Pacific was recently authorised by the US DOT to serve the US with wet-leased aircraft. The carrier automatically became entitled to serve all US points listed in the Philippines-US bilateral including Guam, Saipan, Honolulu, Los Angeles and San Francisco.

Wet-leasing aircraft is an unusual step for a LCC as it is costly. Cebu Pacific will only enter the US market with a wet-lease operation if it believes it can offer a fare that is low enough to stimulate demand and not simply take market share away from existing carriers.

Once Cebu Pacific fully studies the costs and benefits of the possible wet-lease operation, it could elect not to go forward with US services until Category 1 is secured. Regardless, Cebu Pacific is ultimately interested in serving Guam with its A320s and Hawaii with its A330s.

Mainland US markets such as Los Angeles and San Francisco could only be served if Cebu Pacific acquires a new type of widebody aircraft. The carrier is talking to Airbus and Boeing about A350s and 787s but these aircraft would not be delivered in the near to medium-term and once delivered Cebu Pacific may elect to keep them on shorter long-haul routes. So far long-haul LCCs have discovered very long routes such as Asia-Europe and Asia-North America are challenging given the high cost of fuel.

High density single class A330 configuration

Cebu Pacific’s long-haul unit for now is focusing on its A330 fleet and routes of under 10 hours. The carrier is committed to operating A330s through at least the middle of next decade as its initial leases are for 12 years.

Mr Reyes said Cebu Pacific has decided on a single-class configuration for its A330-300s with 436 economy class seats in a 3-3-3 layout. This is only four seats below the maximum 440 seats that the A340-300 was certified for.

To save weight, Cebu Pacific has opted against installing in-flight entertainment systems (IFE), believing its passengers will come with pre-loaded iPads and laptops (the carrier will consider renting iPads for a fee). It is not planning to follow Scoot in offering wireless IFE but has signed up for wifi capability from OnAir.

Full-service carriers typically configure their A330s with an eight abreast 2-4-2 layout but the tight nine-abreast 3-3-3 layout is common with budget carriers. AirAsia X, for example, configures its A330s with 365 economy seats in 3-3-3 configuration and 12 seats in business class. (Jetstar has kept its A330-200s in 2-4-2 configuration but the LCC inherited these aircraft from Qantas and decided against investing in a reconfiguration as the aircraft are due to go back to Qantas over the next couple of years as Jetstar takes new 787-8s.)

Unlike AirAsia X, Jetstar and Scoot, Cebu Pacific has elected not to go with a premium cabin on its long-haul aircraft. The Philippine market is seen as different given it is almost entirely a budget conscious VFR market consisting of overseas Filipinos heading home for holidays.

10% transit passengers on long haul traffic

Cebu Pacific also expects a larger point-to-point market than that seen by AirAsia X to and from its Kuala Lumpur hub and what Scoot and Jetstar see from their Singapore hub (Jetstar also bases its A330s in Australia). As a result, Cebu Pacific will not rely on transit traffic as much as AirAsia X, Jetstar or Scoot.

AirAsia X works closely with its short-haul sister carrier while Jetstar’s long-haul division promotes connections with Jetstar short-haul as well as parent Qantas and some foreign carriers. Scoot already interlines with Tiger Airways, Singapore Airlines and SilkAir and is now looking for partners outside the SIA Group as the point-to-point market alone in Singapore can only support a handful of long-haul LCC routes.

Cebu Pacific’s new long-haul division will offer connections to domestic flights operated with its fleet of A320 family aircraft and ATR 72s. Cebu Pacific has timed its Dubai flights, which will take off from Manila at 16.40 and arrive back in Manila at 11.40, to connect in both directions with at least 15 domestic routes.
Cebu Pacific domestic connections for new Dubai flight

But Cebu Pacific's long-haul unit at this point is not looking at interlining with other carriers. Cebu Pacific sees interlines – even budget-minded light interlines – as too expensive and complex to justify, especially given the huge size of the point-to-point markets catering to the huge population of overseas Filipinos. Cebu Pacific currently has only one interline arrangement: a niche one-way deal with Hawaiian Airlines that gives Hawaiian access to one domestic route, Manila-Laoag, an area in the north Philippines where most Hawaiian Filipinos are from.

Cebu Pacific does offer domestic to domestic and domestic to international connections within its own network with through check-in services provided. The model used for these connections, which calculates fares on a sum of fares formula, will be extended to the Dubai route and other long-haul routes as they are launched. But as is the case with its own domestic to domestic and domestic to regional international connections, the portion of long-haul passengers that are transit is expected to be less than 10%. “We got to make money on O&D traffic, not on the connection product,” Mr Reyes said. “If O&D doesn’t work then we are in trouble.”

As the Philippines is a unique market it is not surprising the country’s largest carrier has opted to go with a new twist to the still emerging long-haul low-cost model. The rapid growth over the last several years of Cebu Pacific as well as a few smaller low-cost carriers has seen the Philippines achieve unprecedented levels of LCC penetration. The domestic LCC penetration rate in the Philippines is now about 85%, which is unmatched among the world’s other medium and larger size domestic markets.

Given the size of its population working outside Asia, there are similar huge opportunities for LCCs in the Philippine long-haul market. Cebu Pacific will be the first long-haul LCC to try to tap this market but will almost certainly not be the last as other Filipino carriers as well as foreign long-haul LCCs will be similarly attracted.

By targeting under-served markets such as the Philippines-UAE while also using its small fleet of new widebodies to lower seat costs on some of the world’s busiest international short-haul routes, Cebu Pacific is entering the long-haul low-cost market conservatively and wisely. A larger widebody fleet and network than currently envisioned, and potentially a spin-off of its long-haul unit, are likely outcomes in the medium to long-term.

Lance Gokongwei on Airbus

"If you're happy with your wife, you shouldn't look around anymore," Lance Gokongwei, Cebu Pacific CEO on the choice of Airbus products. 5J will spend $300 million for aircraft acquisition in 2013, two of which is A330-300 joining their fleet in June and the other in September, while 6 other A320's with sharklets will be added to their fleet this year.

SEAIR appoints new CEO

As Tiger Rises!
Tiger Airways Group has appointed leading independent creative agency, The Secret Little Agency (TSLA), as its brand agency in Asia Pacific when it enters a new phase of growth looking at consolidating its brand in the Philippines effective third quarter this year to  build closer connections with its Asia-Pacific customers.

January 19, 2013

Southeast Asian Airlines (SEAIR) has announced the appointment of Olive Ramos as chief executive officer. She will take over the position from Patrick Tan, who has been with the company since February 2005.

Ramos was previously president and managing director of logistics company DHL Supply Chain Philippines from 2006 to 2012, where she was responsible for developing business strategies and organizational capabilities.

“We are pleased to welcome Olive Ramos to the SEAIR team. With her strong logistics and financial background, capabilities in organizational development and operations, and intricate understanding of the Philippine market, we are confident that she will be able to steer our Philippine operations forward,” said SEAIR chairman Koay Peng Yen.

“We thank Patrick Tan for his dedication to SEAIR. He will remain with SEAIR as part of the senior management team, and we look forward to his continued contribution,” added Koay.

SEAIR is a 40 percent-owned associate airline of Tiger Airways Holdings. SEAIR adopts Tiger Airway’s business model and offers value fares to domestic and international destinations within a five-hour flying radius of the Philippines.

5J to launch Dubai, PR to fly Moscow

January 17, 2013

PAL flies Moscow by September, CEB enroute to Dubai by October

Philippine Airlines (PAL) has filed with the Civil Aeronautics Board (CAB) permit to start flight to Moscow's Domodedovo Airport in Russia Capital starting September 2013, using the high-gross variant A330-300 aircraft four times weekly, while Cebu Pacific announces commencement of its first long-haul destination to Dubai in the United Arab Emirates daily beginning October 7, 2013.

Moscow flight leaves Manila on Tuesdays, Thursdays, Fridays, and Sundays, with Turkey flight leaving Monday,Wednesday, and Saturday. It is the second destination in Europe to be flown by PAL after announcing flights to Turkey beginning August 5. Both destinations are outside the European Union. PAL is also slated to fly daily services on the Manila-Kuwait route by April 2013 using A330-300, while four weekly services to Phnom Penh, Darwin and Brisbane are slated to be launch from 31 March 2013 using A320's.

Meanwhile, Cebu Pacific is also adding Riyadh in December 2013. 

Pagadian Airport Risk Closure

For Failure to Pay Landowners

January 14, 2013

Pagadian Airport (RPMP) risked commercial traffic closure after the Regional Trial Court of Pagadian City awarded the land which stradles airport runway back to its original landowners after the government failed to pay her Eight (8) Million Pesos as compensation for the expropriated property now used by Department of Transportation and Communications (DOTC) in the expansion of Pagadian City Airport.

"We have no choice but to close Pagadian Airport and follow court orders" says Airport Manager Jose Budiongan.

The heirs of Datu Lucas Taug Boto, now represented by Seminal Taug owns some three (3) hectares of land of what is now part of the airport's runway which was expropriated by the government in 1997 as part of the Third ADB Pagadian Airport Development Project. No payment was made to the landowners until the case was filed in 1999.

It took 13 years for Judge Edelberto Absin of RTC Branch 18 to decide ownership in favor of the heirs of Boto. The court said DOTC never acquired ownership of the land because it failed to pay its landowners, and therefore have no right to prevent them from exercising act of ownership, such as excluding the airport from using the landowners property as runway. The court also awarded damages exceeding 25 million pesos for manifest bad faith on the part of the government.

Airphil Express and Cebu Pacific uses the airport for flights to Cebu and Manila.

PAL Secures Code-Share Deals to Dubai

Emirates Airlines commences Third daily flight

January 5, 2013
Flag carrier Philippine Airlines (PAL) and Emirates Airlines (UAE) has amended its PAL-UAE Confidential Memorandum Of Understanding (CMOU), more known as code sharing agreements, as it decides to continue the joint venture adding third daily flight between Manila and Dubai starting next week after both airlines found common terms.

The third daily flight will be staged in the morning and code-shared with Philippine airlines also using Boeing 777-300ER as equipment.

EK337 leaves Manila at 0845 arriving Dubai at 1350 while EK336 leaves Dubai at 1830 and arrives Manila 0630 the following day.

CAB executive director Carmelo Arcilla, said the deal was approved  last week paving the way for additional 7 weekly flights from both Emirates Airlines and Philippine Airlines under code-share bringing its total to 21 this year.

Previously, Abu Dhabi has 7 entitlements being used by flag carrier Etihad Airways, and Dubai has 7 entitlements used by flag carrier Emirates to Manila, while the other 14 entitlements was solely held by flag carrier Philippine Airlines (PAL). Both airlines have code-share relationship with PAL since 1998 allowing them to fly a total of 28 flights a week to Manila using Boeing 777-300ER planes.

The amended PAL-UAE Confidential Memorandum Of Understanding (CMOU) provides for a maximum entitlement of 21 weekly frequencies for UAE as the exclusive designated UAE carrier under Category 1 Route 1 to Dubai, while Category 1 Route 2 covering Abu Dhabi-Manila sector is also granted 21 weekly frequencies between PAL and Etihad Airways.

Negotiations between the two airlines almost failed after Emirates refused to code-share the third flight saying that it doesn't owned the additional frequencies granted to the Philippines. PAL owns seven frequencies to Dubai while UAE owns seven frequencies to Manila which they jointly served using Emirates Aircraft effective until 2014.

Controversy arose when the Civil Aeronautics Board (CAB) concluded new Air Service Agreement (ASA) with the United Arab Emirates providing additional 14 flights to the Emirate Kingdom. It granted additional seven rights to Dubai and seven more to Abu Dhabi for points in Manila.

CAB awarded last week the 14 new flight entitlements to United Arab Emirates (UAE) equally between Cebu Pacific and Airphil Express both of which have pending Airbus 330-300 orders. Airphil Express is a low cost subsidiary of PAL. None was awarded to Zest Air while PAL held on to 14 entitlements for Dubai and Abu Dhabi. PAL codeshared the routes to Dubai and Abu Dhabi via airline partners UAE and Etihad Airways (ETD) for a total of 28 flights between the two countries.

The grant of rights to Cebu Pacific also dissolves anti-trust concerns which PAL had with the Board requiring it to service the routes to the UAE.

Earlier, Cebu Pacific (CEB) filed a complaint against PAL for forfeiture of its rights  to fly the United Arab Emirates arising from non-use of bilateral air traffic rights. CEB wants to fly to the middle east starting winter season next year but their plans to expand to the region was hampered by lack or inadequate flight entitlements which were all taken by PAL and its codeshare partners. CAB rules that PAL was actively flying the route. Consequently, the government of the Philippines and the Arab Emirates expanded their Air Treaty to cover 28 weekly frequencies between Dubai, Abu Dhabi and Manila.

Previously, PAL in its Opposition letter to Emirates contend that the airline plans to introduce its own-operated flights to the United Arab Emirates by 2012 and 2014, “given the assurance that no more than 28 weekly frequencies are to be operated by each side on the agreed routes between the UAE and Manila.”

PAL codeshared the routes to Dubai and Abu Dhabi via partners Emirates and Etihad Airways (ETD) for a total of 28 flights between the two countries.

CAB Executive Director Carmelo Arcilla said Abu Dhabi has 7 entitlements being used by flag carrier Etihad and Dubai has 7 entitlements used by flag carrier Emirates to Manila, while the other 14 entitlements was solely held by flag carrier Philippine Airlines (PAL). Both airlines have code-share relationship with PAL allowing them to fly a total of 28 flights a week to Manila using Boeing 777-300ERequipments.

Plane Rescue, How Close?

January 4, 2013

Manila International Airport Authority (MIAA) conducts a full-scale airport emergency exercise every two years in compliance with International Civil Aviation Organization’s (ICAO) Suggested and Recommended Practices (SARPS) which is incorporated in Manual of Standards (MOS) issued by the Civil Aviation Authority of the Philippines (CAAP) under Administrative Order 139, specifically Section

The latest MIAA CREX exercise will be conducted this year. It previously held in October 20, 2011 the “2011 Crash and Rescue Exercise (CREX)” outside airport premises free from obstacles, from traffic to accessibility.

Rescue drills test response time, as well as capability and effectiveness of the MIAA’s airport emergency preparedness plan in rescuing passengers in an aircraft accident within land and water vicinities of 5 kilometer radius from the Aerodrome Reference Point (ARP) of the NAIA.  

The ARP is the intersection point of Runway 13/31 and Runway 06/24 however, this does not preclude Airport Crash and Rescue Organization (ACRO) from responding outside the limits indicated above when called upon to assist by the Rescue Coordination Center (RCC).

Almost two months after the exercise, a plane did crash beyond the threshold of Runway 13/31 in Paranaque City on December 10, 2011 hitting a school building and killing 14 people including children.

The drill turned out fine in the real drama, except for the rescue. In the actual event the first to respond was the rescue helicopter which reported in advance the situations on the ground and the location of the crash site. It returned later with a bucket of water to douse flames in the area according to the video source. The ground firefighters arrived 15 minutes later amidst traffic and difficult access to the area unlike the training they have at Macapagal Avenue.

 Clearing and securing the area turns out difficult than rehearsed.

The crash simulation was different in many ways from the actual plane crash scenario which MIAA's Crash and Rescue experienced. Incorporating the lessons learned in that plane crash is desired in the 2013 CREX to fine-tuned response time and test how effective rescue personnels are in rescuing passengers and/or containing property damage in similar aircraft accident outside airport premises. While it remains to be seen whether the drills they have inside the fence turned out to be an invaluable experience gained in actual scenarios.

The Airport Crash and Rescue Organization (ACRO) is established in coordination with the different government and private agencies involved in rescue, fire control, security, medical assistance, care and welfare of the victims of aircraft and on-aircraft accident.

In a similar fashion,  Mactan-Cebu International Airport Authority (MCIAA) also conducts Mactan Crash and Rescue Exercises (Macrex) first started in 2010, which it held recently on June 26, 2012 testing its capability in responding to aircraft accidents within airport premises.

In the MACREX 2012 MCIAA performed drills for Emergency Plan No. 1 or the aircraft accident at airport under Mactan Airport Emergency Plan (Maep).