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NEWS UPDATES Asean Affairs                    20  September 2011

Low-cost air consolidation in Philippines

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The consolidation in the Philippines' low-cost carrier market seems "inevitable" be cause of stiff competition in the capital-intensive industry, according to the Centre for Asia Pacific Aviation (CAPA).

In a report, CAPA said new player Spirit of Manila could be the most "vulnerable" because it has not expanded its fleet beyond two aircraft since launching in 2008.

At present, Spirit of Manila flies to Taipei, Bahrain, Bangkok and Macau from Clark, Pampanga.

"But even excluding Spirit of Manila, five low-cost carriers for a market the size of the Philippines could prove to be one or two too many," the CAPA report said.

Other Philippine players in the LCC space are Cebu Pacific, AirPhilExpress, Zest Airways and Southeast Asian Airlines or Seair.

CAPA also said the entry of AirAsia Philippines would likely have an impact on Spirit of Manila and another Clark-based carrier, Seair, which has a tie-up with Singapore Airlines' budget unit, Tiger Airways.

"Clark sits in a free trade zone and has an open skies policy while Manila faces significant bilateral and slot restrictions. As a result rapid capacity growth at Clark will likely be generated as both AirAsia Philippines and SEAir/Tiger expands," CAPA said.

In contrast, AirAsia's entry would have a "minimal" impact on Cebu Pacific and Philippine Airlines, both of which mount most of their flights from the Philippines' main international gateway, the Ninoy Aquino International Airport.

As a new entrant, it will be difficult for AirAsia to get access to the NAIA, the report said. Air Asia Philippines had said it would start operations next month.

AirAsia plans to fly to Singapore, Macau and Hong Kong from Clark's Diosdado Macapagal International Airport using its first Airbus A320.

The second aircraft, which will be delivered next month, will serve Bangkok, Incheon, Kalibo and Puerto Princesa.

Air Asia, through AA International, will hold a40 percent equity in AirAsia Philippines. The remaining 60-percent will be held in equal partnership by Marian Hontiveros, Michael Romero, and Antonio Cojuangco, the former owner of Philippine Long Distance Telephone Co.



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It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

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