AirAsia to focus on Philippines-China route

MANILA, Philippines - Low-cost carrier AirAsia is likely to focus on the Philippines-China market as part of its plan to enter a new phase and return to profitability after a consistent struggle since its launching in 2012.

A report from think tank Center for Aviation (CAPA) said AirAsia sees opportunities to add several destinations in China from multiple Philippine gateways including the launch of Guangzhou in 2016 and other mainland cities in China.

“The Philippines is emerging as a popular tourist destination for Chinese residents despite some political tensions between the two countries. China is also a relatively big outbound market as there is a large Filipino Chinese population,” it added.

CAPA noted that the carrrier has ample room to grow in the Chinese market as it currently has only 900 weekly one-way seats to China while China accounts for only about eight percent of AirAsia Philippines’ total international seat capacity.

AirAsia is particularly keen on linking Chinese cities with secondary gateways in the Philippines including additional routes from Kalibo and new routes from Puerto Princesa.

“The routes under consideration are currently not served by any carrier, which makes them particularly appealing to AirAsia,” the report said.

AirAsia has been working on a network expansion plan which focuses on opening new unserved routes from secondary gateways such as Davao, Iloilo, Kalibo and Puerto Princesa.

Moreover, CAPA said the low-cost carrier will continue to pursue expansion at its main base in Manila, including a new flight to Singapore.

AirAsia is now focusing more on the international market as domestic routes are generally lower yielding and in some cases oversupplied,” it added.

AirAsia said it plans to resume its fleet growth next year by adding three Airbus A320 annually.

“The new phase of fleet and network growth is made possible as a long restructuring phase is now nearing completion. Unviable routes have been cut and unit costs have been reduced by streamlining the fleet, transitioning to a single AOC and pursuing other cost saving initiatives,” the report added.

The carrier is also looking into expansion as $50 million new capital has been raised from five existing shareholders, which include four Filipino investors (with 15 percent stakes each) and Malaysia-listed AirAsia Berhad (with 40 percent stake).