MANILA Philippines — Philippine carriers are gearing up for heated competition beginning next year as local and regional tourism numbers begin to brighten.
Over the last few months four major airlines have been trying to outdo each other by announcing expansion plans — primarily plane acquisitions and new domestic and international routes — lower fares and other marketing gimmicks.
The expansion by the local air carriers dovetails with the Department of Tourism’s feverish marketing campaigns in Japan Korea Russia and China. Joseph “Ace” Durano secretary of the Department of Tourism said he is targeting arrivals to reach five million by 2010. Next year alone he said about three million tourists are projected to arrive in the Philippines up from the two-and-a-half million estimated arrivals this year.
Pioneering flag carrier Philippine Airlines which has the most international routes among local airlines recently signed agreements to purchase and/or lease six Boeing 777-300 extended range (ER) aircraft. “The acquisition of the B777-300ER allows Philippines Airlines to expand direct services between the Philippines and the United States ” Jaime J. Bautista president of Philippines Airlines said.
The purchase of two aircraft alone will cost the carrier $500 million $75 million of which will come from the Philippines Airline’s coffers while the rest will be borrowed from the U.S. Export-Import Bank he said. The airline intends to add Seattle and New York to its U.S. destinations and plans to revive services to Europe and the Middle East he said.
Philippines Airlines is owned by Lucio C. Tan chairman; who was named by Forbes Asia magazine as the second richest Filipino with an estimated net worth of $2.3 billion.
Cebu Pacific Airways is owned by JG Summit Holdings Inc. a food and beverage conglomerate and John Gokongwei founder of JG Summit Holdings. It acquired 12 brand new Airbuses in a $670-million refleeting program. It has the newest aircraft among local airlines with most planes less than 10 months old. From Nov. 29 to Dec. 5 the airline marketed its “biggest seat sale” offering one-way fares of 99 pesos ($1.98) only to its 20 local destinations and 999 pesos ($19.98) to its Asian destinations — Hong Kong Singapore Bangkok and Jakarta the latter route to be launched next year. The fares are exclusive of government taxes and insurance surcharges and covers departures from Jan. 1 to March 31 2007. In a press statement Candice Iyog the carrier’s marketing director said: “The airline has allotted more than 200 000 seats for the promo.”
Southeast Asian Airlines which has been offering “exotic” Philippine destinations to local and international tourists since 1995 recently announced a partnership with budget carrier Tiger Airways a subsidiary of Singapore Airlines. Southeast Asian Airlines also brought out of retirement Avelino L. Zapanta former president of Philippines Airlines hiring him as president and chief executive officer.
The partnership will allow Southeast Asian Airlines to lease two Airbus A320’s from Tiger Air and fly the latter’s routes from Clark Pampanga. “Initially we’re planning to operate (the A320’s) from Clark to Singapore Macau Cebu and Davao. Then we’re looking at other points in the region for eventual expansion: Inchon or Busan in Korea Okinawa (Japan) Kaoshiung in Taiwan ” he told the Journal. As Philippines Airlines president Zapanta was instrumental in the flag carrier’s return to Guam in 2002. Southeast Asian Airlines is owned by Iren Dornier grandson of German aircraft designer Claude Dornier (the first to develop all-metal aircraft and seaplanes); Nikos Gitsis; and Tomas B. Lopez.
Unable to compete with the low fares offered by the bigger airlines Asian Spirit is now training its sights on the lucrative international tourist market. It hopes to expand its services in Micronesia outside of its current flights to Palau and will soon launch flights to Macau and South Korea. With most of its revenues derived from its Manila to Caticlan route “we have just introduced a 30-minute jet service to Caticlan ” Jack L. Po executive vice president; said. Caticlan is the gateway to the internationally-renown white sand beach of Boracay Island. The carrier is using its recently purchased British Aerospace 146-100 “reconfigured to seat 60 people from the usual 80 seats” to allow it to land in the short Caticlan runway. Asian Spirit is owned by its employees’ cooperative a number of them formerly from PAL.
According to the Philippines’ National Economic and Development Authority the air transport sector contributed 5.3% or 287.3 billion pesos ($5.75 billion) to the overall gross domestic product of the country last year amounting to 5.42 trillion pesos ($108.4 billion).
Worldwide tourist arrivals are projected to grow by 4% in 2007 according to the World Tourism Organization buoyed by a “stronger global economy and more favorable exchange rates” for European and Asian travelers. “Asia and the Pacific was the world’s second fastest-growing region in the first eight months of 2006 ” at 8.3% and is seen continuing this rapid pace of tourist arrivals in 2007. MBJ
