Zest Air sells 40% stake to Hainan Air

MANILA, Philippines - Yao led Zest Air has sold 40 percent of its share to Chinese airline Hainan Air in an attempt to increase the Philippine budget carrier’s competitiveness in flights to many parts of China.

At the same time, Zesto Group chairman Alfred Yao said he would be purchasing nine new aircrafts for Zest Air next year. Yao estimated that a new plane would cost $40 million, putting the total budget for the new aircrafts at $360 million.

Yao signed the memorandum of understanding with Hainan Air during the state visit of President Aquino in China. It was signed independently and was not part of the mass signing of investment MOUs.

The plan is to increase Chinese tourists in the Philippines by providing each Chinese province with direct flights to the Philippines.

Under the Philippine law, foreigners are allowed to own a maximum of 40-percent stake in airlines. “Under the law, they are allowed up to 40 percent stake. They are still doing due diligence that will take time,” he said.

The joint venture will allow Zest Air to fly direct to Hainan province because any province in China has enough volume to fill up every flight to the Philippines.

By yearend, Zest Air is expected to have six Airbuses and four Modern Ark 60s for a total fleet of 10. By next year, the company would have a total of 19 aircraft.

The company plans to add more flights for Kalibo-China, Cebu-China and Manila-Singapore routes. It also plans to mount flights to Taipei, Palau, Singapore, Bahrain and Dammam. Zest Air flies to Incheon and Pusan, South Korea, from Kalibo and Cebu.

Domestically, the budget carrier flies to Boracay via Kalibo, Bacolod, Busuanga, Calbayog, Catarman, Cebu, Davao, Iloilo, Legazpi, Marinduque, Masbate, Puerto Princesa, San Fernando, San Jose, Tablas, Tacloban, Tagbilaran and Virac.

The carrier is eyeing 2.5 million passengers this year from 1.5 million in 2010. It expects to boost revenues to P7- P8 billion this year as a result of the expanded local and regional routes.