AirAsia Philippines gears up for 2016 re-fleeting
Malaysia’s budget airline AirAsia Group (AAG) is gearing up for a re-fleeting program in 2016, hedging on the potential of the Philippine market.
AAG chairman Tony Fernandes said he is optimistic about the “jewel” growth potential of AirAsia Philippines, which is 40% owned by the Malaysian low cost carrier.
“I am really optimistic that we got a little jewel here. The more and more time I spend in the Philippines, I begin to see that there is so much potential on various things that we haven’t thought about,” Fernandes said.
But he added that the performance of its Philippine unit is still not at par with others in the region.
“It won’t be easy but I am beginning to see that the pain that we have gone through is worth it. It has been a rough ride I am not going to pretend that it has been a walk in the park,” he added.
Fernandes said the group would maxmize AirAsia Philippines’ existing fleet of 16 aircraft before it starts its re-fleeting program with the airline possibly returning to Clark International Airport (CIA) after the NLEX-SLEX connector road is completed.
AirAsia Group is currently standardizing the fleet of AirAsia Philippines and ZestAir.
Airline challenges
AirAsia Philippines and ZestAir, owned by former Ambassador Alfredo Yao, formed a strategic alliance in March 2013 rebranding both airlines as AirAsia Zest. With this partnership, AirAsia Philippines acquired 85% economic interest, around 49% voting rights and 100% interest in Yao’s Asiawide Airways Inc
Yao’s Zest Air, in exchange, got US $16 million and 13% interest in AirAsia Philippines. The proposed complete takeover of ZestAir was also approved by the House of Representatives.
The partnership allowed AirAsia Philippines to fly out of the Ninoy Aquino International Airport (NAIA) instead of the CIA in Pampanga.
Fernandes admitted that the airline’s operation in Clark did not work as planned.
“It has been hard because Clark did not work and we thought Clark would be easier but the market was not prepared to go that far. We have to acquire ZestAir and an acquisition is something that I have never done before,” he added.
‘Bullish prospects’
Fernandes said he was bullish about the prospects of AirAsia Philippines, especially with the rationalization of the country’s airline industry into 3 major players – flag carrier Philippine Airlines (PAL), low cost carrier Cebu Pacific, and AirAsia Philippines.
With the decision of the US Federal Aviation Administration (US-FAA) to upgrade the Philippines’ aviation safety back to Category 1, allowing the country’s carriers to expand more flights to the US, Fernandes said the airline is looking to mount flights across South East Asia, China, Japan, And South Korea.
“You are in the doorsteps of three larger economies – China, Japan, and Korea – so we want to exploit those with our strong brand. We want to grow into the size of short haul fleets of Cebu Pacific and PAL but our expertise is international and developing new markets using our brand, which I think is a really strong brand around the world,” he said.
AirAsia Zest currently flies to local destinations Kalibo, Puerto Princesa, Cebu, Davao, Tacloban, Tagbilaran, and Cagayan De Oro, and to international destinations in China and South Korea.
Paying it forward
The airline group also announced on Friday, May 23, that it raised P97 million (US $2.17 million) from its ‘To Philippines with Love’ campaign (#toPHwithlove) to aid rehabilitation and reconstruction efforts in Typhoon Haiyan (Yolanda) ravaged areas.
The donations were comprised of public-giving, a matching component by the AirAsia group and contributions by AirAsia partner companies. The amount collected were distributed to 4 development partners to fulfil the airline’s pledge to support the rebuilding of homes and livelihoods for typhoon survivors.
The Philippine Red Cross, the airline’s main recipient, will build 345 homes in Panay with public contributions of around P46 million (or US $1.04 million). Habitat for Humanity Philippines will also be receiving P37.4 million (US $850,000) for the construction of 187 permanent homes - designed to withstand an Intensity 8 earthquake and 250 kph windspeed - in Tacloban.
“We express our deepest gratitude to guests who contributed generously to this fund-raising effort which exceeded all our expectations. We started this campaign as an expression of ASEAN unity for survivors who lost so much and we are incredibly touched to find that the campaign received donations from people in 75 countries all over the world. AirAsia is proud to match this donation and ensure that every cent goes to rebuilding lives,” Fernandes added.
The rebuilding effort is the second phase of the airline’s post-Yolanda relief and reconstruction campaign. AirAsia was one of the first commercial carriers to operate humanitarian flights to Tacloban, Cebu and Kalibo in the aftermath of Yolanda. The airline carried around 5,000 relief workers and survivors in addition to 250,000 free seats given for people to travel in search for their missing family members.
Credit Suisse, Tune Insurance, Queens Park Rangers Football Club, CIMB Group and EQ8 were among the contributing partners to AirAsia’s campaign
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