Home' Asian Aviation : AAV February 2011 Contents Airlines
ai Air ways' plan to start ai Tiger was aimed
at avoiding further loss of revenue on domestic and
regional routes to ai AirAsia. Since the latter
started operations in 2005, ai Air ways' share in
the domestic market has plunged from 82 percent to
about 40 percent now.
ai Air ways will hold 51 percent stake in ai
Tiger, while Tiger Air ways will hold the remaining
49 percent. Ampon said ai Tiger will provide more
opportunities for ailand's ag carrier, and paves the
way for it to be more competitive in the region. ai
Tiger, which will be country's fourth LCC, will have
start-up capital of US$6.7 million.
In August, AirAsia's new AirAsia Philippines (AAP)
joint venture will start operations, initially using two
Airbus A320s. e owners have yet to decide whether
the venture will be based at Subic International
Airport or Diosdado Macapagal International
Airport in Clark, two former US military bases.
AirAsia will hold 40 percent of the new airline,
while three Filipino businessmen -- Antonio
Ongsiako Cojuangco (a cousin of Philippines
President Benigno Aquino III), Michael L
Romero and Marianne B Hontiveros -- will
hold 20 percent each. AAP will have start-up
capital of US$25 million. While no details of
the carrier's route network have been revealed
to date, AirAsia group Chief Executive O cer
Tony Fernandes has said, without elaborating,
that the proposed routes are already being
served by other AirAsia companies.
An industry source in Manila told Asian
Aviation that AAP would initially operate on
the lucrative Clark-Singapore and Clark-Seoul
routes, tapping the booming labour-tra c
market to Singapore and growing leisure-travel
demand from Korea to the Philippines.
According to Romero, AAP plans to expand
its eet to 15 A320s by 2015, operating to Korea,
Taiwan, China and Hong Kong. The airline is
planning to carry as many as 5 million passengers over
the next ve years.
Philippines-based LCCs Cebu Paci c Air and Air
Philippines Express -- a wholly-owned subsidiary of
Philippine Airlines (PAL) -- are already bracing for
the new competition. Cebu Paci c Marketing Vice-
President Candice Iyog said the carrier is ready to take
"Cebu Paci c is a lean-and-mean carrier with a
young eet and we will face whatever competition
that is to come," Iyog said. She added she is con dent
that Cebu Paci c, with its rm foothold in Asia's low-
fare market, will continue to grow.
Philippine Airlines (PAL) president Jaime Bautista
said there was no need for another LCC in the region,
as the market is already crowded with ve such
carriers operating. e other three players are: Zest
Air, Spirit of Manila Airlines and South East Asian
"Overcapacity will only lead to a price war and
this could lead to problems for the smaller players,"
Bautista pointed out.
Shukor said it may be tough for AAP to compete with
Cebu Paci c, which has established itself rmly in the
market and is embarking on a massive expansion plan.
"Having a partner linked to the administration does
not guarantee AAP a lucrative share of the market,"
the analyst noted.
Cebu Paci c Air has ordered 22 Airbus A320s,
three of which were delivered in December. ree
more will be handed over in 2011, four in 2012,
seven in 2013 and the remaining ve in 2014. Once
deliveries are completed, the carrier will have a eet
of 51 aircra .
e new jetliners will be utilised to expand Cebu
Paci c's international network and increase frequencies
on existing routes. e airline now operates to 33
domestic and 16 international destinations.
SEAIR, which to date has ser ved mostly domestic
destinations, started ying two A320s leased from
Tiger Air ways on 16 December and plans to
operate the jetliners to Hong Kong and Taipei.
e entry of new LCCs into the market
has been smoothed by the continued
liberalisation of the civil aviation market by
the Association of Southeast Asian Nations
(ASEAN) -- the 10-nation bloc comprising
Thailand, Singapore, Indonesia, Vietnam,
Myanmar, Laos, Philippines, Malaysia, Brunei
ASEAN's Open Skies policy began to be
implemented in December 2009 and further
liberalisation will continue through to 2015.
e policy is aimed at stimulating air travel
in the region. n
Firefly is hoping to challenge the dominance of
Kuala Lumpur-based low-cost carrier AirAsia.
The carrier is also expanding turboprop
operations out of Subang airport.
32 AsianAviation | FEBRUARY 2011
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