Monday, 13 December 2010 00:00
The Manila Times
BY DARWIN G. AMOJELAR SENIOR REPORTER
PHILIPPINE Airlines (PAL) warned that the entry of Air Asia would create overcapacity in the local market.
Jaime Bautista, PAL president and chief operating officer, said he is concerned about the “overcapacity” in the market that would lead to a “price war.”
”It [price war] may lead to huge losses for everybody,” he said.
He however insists that PAL is open to competition.
PAL has no operation in Clark, but the flag-carrier may look to the alternative airport in the future, Bautista said.
PAL held a 43 percent share in the domestic market in the fiscal year ending March this year and 30.8 percent for Asia and Australia. Work stoppages however loom at Asia’s oldest airline, as the majority of the airline’s workforce voted to hold a strike.
To protect its market share, “We have to offer competitive fares,” particularly AirphilExpress, Bautista said, referring to PAL’s budget unit.
In October, AirPhilExpress began flights to Singapore using Airbus A320 aircraft.
AirphilExpress will spend $250 million to acquire 18-brand new A320s for a period of two and a half years.
At present, AirphilExpress has three A320s and is expecting three more units by yearend.
For next year and 2012, AirphilExpress expects another 12 A320s for delivery.
The low-cost carrier (LCC) plans to fly to Iloilo, Davao, Puerto Princesa, Baguio, Marinduque, Zamboanga, Legazpi, Tagbilaran for domestic routes, and to South Korea and Bangkok for international flights.
Last week, Air Asia announced that it partnered with Antonio Cojuangco, a former chairman of Philippine Long Distance Telephone Co. (PLDT) and cousin of President Benigno Aquino 3rd, to form a budget airline that will operate in Clark, Pampanga.
Air Asia flies to Kuala Lumpur and Kota Kinabalu from Clark.
Porvenir Porciuncula, deputy executive director of the Civil Aeronautics Board (CAB), said Tony Fernandes,
Air Asia’s chief executive, and Cojuangco recently met with officials of the Department of Transportation and Communications (DOTC) to present their planned airline operation in Clark.
Porciuncula said that Air Asia would take a 40 percent stake, while Cojuangco would assume the remaining 60 percent.
The CAB official said Air Asia plans to start domestic and regional operations from Clark next year.
”They are planning to fly from Clark, but they can go to other do mestic destinations other than Clark. It will give a better access in the market of Air Asia,” Porciuncula said.
Air Asia had launched similar budget subsidiaries in Thailand, Indonesia, with a joint venture in Vietnam also in the works.
Air Asia operates within home-base Malaysia, as well as in China, Southeast Asia and the Asian subcontinent.
Data from Centre for Asia Pacific Aviation showed that Air Asia’s fleet stood at 152 A320s as of March this year.
Of this total, 48 are in service and 104 are on order.
Besides Air Asia, Tiger Airways Holdings Ltd. will also operate in the Philippines under a marketing arrangement with local carrier Southeast Asian Airlines (Seair).
The budget unit of Singapore Airlines, Tiger will also lease two A320s to Seair that will be used to expand its regional operation.
Other budget carriers that operate from Clark are Cebu Pacific and Asian Airlines.
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