MANILA — The growing number of tourists in Manila from Guam assures carriers flying the route of a steady stream of traffic but perhaps not enough to increase the number of flights or attract more carriers to service it.
Meanwhile traffic from Manila to Saipan or from Manila to Palau or vice versa is still too small. Only one U.S. carrier has been plying the said routes regularly.
At present Philippine Airlines and Continental Micronesia affiliate of US-based Continental Airlines flies the Manila-Guam route. Another Philippine flag carrier Cebu Pacific told the Journal flights to Guam are on the drawing board.
PAL uses an Airbus A320 aircraft which seats 12 in Business Class and 128 in economy according to Rolando Estabillo vice president for corporate communications for the airline. It flies the route four times weekly and round-trip airfare costs about $324 per person (inclusive of taxes). The route was relaunched in June 2002. PAL is owned by Guam ambassador-at-large Filipino-Chinese tycoon Lucio Tan.
Estabillo said the inbound traffic from Guam “is much better” than the outbound from Manila. The inbound traffic “is made up basically of three streams: Filipino-American residents of Guam visiting their friends and relatives (dubbed balikbayans loosely translated as returnees to the country) Guamanians visiting Manila for medical reasons and Guamanians visiting Manila for shopping and leisure.
Still he says the visitors’ traffic is highly seasonal “with pronounced peaks during the months of June (summer for U.S. citizens) and December (Christmas).”
Estabillo calls the outbound Manila to Guam traffic “tough” with most traditional market segments having contracted or facing growth obstacles.
“The U.S. military-personnel traffic which flourished during the heyday of the [military] bases at Clark and Subic declined drastically when those bases closed in 1992. Another important traffic stream — nurses taking the CFGNS [Commission on Foreign Graduates of Nursing Students] tests — likewise dissipated when the exams were offered in Hong Kong …where it is much cheaper in terms of airfare and hotel accommodation and they do not need a visa ” he told the Journal.
The need for a U.S. visa he stressed is perhaps the major reason why the Manila-Guam traffic has not grown especially for the leisure segment. “With an application of $100 (5 635 pesos) for a single-entry visitor’s visa — with no assurance of getting approved — a typical family of four will spend $400 (22 540 pesos) upfront just for U.S. visas. In other words the prospective Filipino tourist to Guam is already saddled with a substantial expense even before he departs the country.”
Continental has been serving the Micronesia-Philippine market “uninterrupted ” for over 24 years said Walter B. Dias staff vice president for sales and marketing. The Manila-Guam flight started in 1982 with four flights per week with a Boeing 727 aircraft. The carrier now uses a “new generation” Boeing 737-800 aircraft which seats 155 for its current frequencies of 8-10 per week. A round-trip airfare originating from Manila costs anywhere from $425 per person to $540 per person according to the carrier’s Web site although special fares are offered at various times.
Like PAL Continental’s passengers for the route are largely made up of Guam residents flying in to the Philippines. “Most of these customers travel to Manila to visit friends and family or for business ” Dias told the Journal. “A smaller portion travels to Manila for short vacation getaways. A new emerging trend that we have seen over the past few years is Guam customers traveling to Manila for medical purposes. We expect this to continue to grow.”
Cebu Pacific has “plans” to fly to Guam but cannot say exactly when according to Roland Nunez vice president for marketing and sales. “The plan is to go to Guam as a major route. But the plan depends on the (growth of the) economy ” he said. Cebu Pacific is owned by another Filipino-Chinese taipan John Gokongwei who made his fortune in snack food and retail. He now owns malls a telecommunication firm and a savings bank.
Only Continental flies the Manila to Saipan and Manila to Palau routes with Cebu Pacific only offering charter services.
Continental also uses the Boeing 737-800s to fly the Saipan and Palau routes to and from Manila. Dias says Saipan frequencies are two to three a week and two flights a week on the Palau route. For all its Manila flights Dias said “The frequencies vary seasonally based on demand.” Flights to Saipan cost $640 per person round-trip while flights to Koror Palau cost $1 400 as much as a round-trip flight to the U.S. mainland.
“The Saipan routes also include customers that are from the Philippines traveling to work in Saipan and nurses going to take the NCLEX test [National Council Licensure Examination] which is offered in Saipan. The Manila-Palau flight also carries European visitors to Palau and Yap. Most of these visitors travel to Manila to connect to the Continental Micronesia flight to Palau ” Dias said.
Cebu Pacific flew a charter service from Manila to Koror in 2004 but the flight carried Japanese travelers instead of Filipinos. The carrier used a 110-seater DC-9 to bring the Japanese tourists to Koror. “They took the Northwest flight from Tokyo to Manila then took our flight to Koror. That time ” Nunez said “It was cheaper to fly via Manila — because it was peak season — than straight from Tokyo to Koror.” He declined to reveal how much Cebu Pacific charged for the charter service.
He said there are no plans at this time for regular flights to Koror “due to the limited resources as most planes are already used for regular flights or routes. … It’s hard [to sell the route] because the primary market is Japanese and we have no sales office in Japan.”
Nunez said while there is some demand from Manila-based customers to fly to Koror — businessmen and overseas Filipino workers — “it is not big to justify a regular flight.” The carrier is looking to the Palau market as a “midnight express” but still on a charter basis. He said it will be more feasible for Cebu Pacific to fly to Guam given the increasing number of Guam travelers to Manila.
“Right now our priority is Asia for the existing number of fleet. Assuming there is additional fleet the next targets will be the U.S. (including Guam) and Australia.”
The carrier recently announced an 8-billion-peso $142-million refleeting program and plans to acquire four new aircraft in 2005 that will serve China and Japan. Another 12 new aircraft will be bought at a cost of about $650 million in 2006. The re-fleeting program aims to replace the carrier’s fleet of DC-9s which are expensive to maintain.
As for PAL Estabillo said there are no plans to fly to Saipan or Palau. “PAL does have traffic rights to fly to Saipan and Palau from Guam but the leisure market to these places is too thin.”
Eventually the key to keeping the airlines’ service in these routes may be marketing. While there is no problem getting the travelers to Manila getting Filipinos to travel to Guam Saipan or Palau appears to be difficult.
Only Guam for example has seen fit to re-establish its own visitors bureau in Manila. According to Herbert Arabelo president of Guam Visitors Bureau Philippines the bureau aims to attract the “affluent” segments in Philippine society who would want to shop scuba dive and tour facilities in what is a territory of the US. But even these attractions don’t appear to be enough to bring the Filipinos in droves.
From 2000 to 2004 Manila visitors to Guam ranged from 5 600 to 7 000 the latter attained in 2004. Beginning this year GVB aims to bring 7 517 Manila residents to Guam with a 5% increase in arrivals projected every year until 2009. However next year only 5 288 Filipinos are expected to visit Guam. The drop Arabelo said is due to the decrease in nurses taking board exams and the low cost airfares and tour packages offered by other hotel destinations.
Like PAL Arabelo says the need for a visa is an obstacle to flying in more tourists from Manila to Guam. The U.S. Embassy in Manila has started giving “Guam-only” visas to Filipino performers but it is too soon to tell whether the same privilege will be accorded Filipino tourists.
Another factor discouraging potential visitors from flying PAL for example to Guam is the U.S. government’s restrictions limiting connecting flights to U.S. mainland destinations due to cabotage law. “PAL is barred from flying between two U.S. points say Guam and Honolulu. If PAL is allowed to fly this particular route it would be much easier to market Guam/Honolulu as a holiday package to Filipino tourists ” Estabillo said.
“As it is a Filipino tourist wishing to fly on PAL will simply be confined to Guam and he can easily tour the island in a day or two. There would be no incentive for him to be a repeat visitor. On top of this is an important psychological factor — Guam’s beach landscape and tropical climate is exactly the same as the Philippines’. Those seeking a ‘foreign holiday’ experience will certainly not consider Guam ” he said.
For the inbound Manila sector PAL claims that it’s market share vis-à-vis Continental has “increased tremendously from 5% to 35% ” since flights were resumed in June 2002. For the outbound-Manila sector “market share is below expectations” due to the reasons already cited Estabillo said. “In any case while Continental is the leader in the overall Manila-Guam/Manila market PAL is employing an aggressive tack in its sales and marketing promotions efforts geared towards capturing market share.”
He said the marketing plan for outbound-Guam is “to promote Philippine domestic points and international points beyond Manila using PAL’s integrated hub at the Ninoy Aquino International Airport Centennial Terminal 2 which highlights our advantage over other airlines in terms of ease of connections.” This means that a balikbayan visitor from Guam for example can easily go home to his province via Manila or perhaps even take his family for a visit to Hong Kong or any other international destination without incurring higher traveling costs.
As for Continental Dias said the carrier works “very hard with our Guam Visitors Bureau Marianas Visitors Authority and Palau Visitors Authority counterparts to market our region to potential customers in Manila for leisure trips.”
Continental has been more successful in bringing in tourists from Manila because unlike PAL it has connecting flights to Hawaii and the U.S. mainland.
Dias said “We do have customers in Manila that use our flights to travel to Hawaii and the U.S. mainland as we offer very good connecting times both in Guam and Hawaii to our Manila flights. We also have customers from the U.S. mainland and Hawaii that use the same connecting flights to get to Manila. These customers include both travelers going home to visit friends and families as well as U.S. tourists and businessmen going to Manila. This is an example of the power of Continental and Continental Micronesia’s extensive global network helping Guam compete against the other Asia mega-hubs like Tokyo Osaka Hong Kong and Seoul to carry mainland customers to Asia or people from Asia to the U.S. mainland.” MBJ
