Stanley Ng, Xander Lao and Ricardo Isla —PHOTOS BY EUGENE ARANETA
The aviation sector continues to soar postpandemic lockdown but the supply chain woes and dampened air travel demand to and from China are weighing on its wings.
Philippine Airlines (PAL), Cebu Pacific and AirAsia Philippines have been seeing a healthy recovery as evidenced by the growing passenger volume and heavier flight movements.
For example, PAL president Stanley Ng says the flag carrier is keen on going back to its prepandemic level of operations in the next four to five years as it restores its aircraft fleet.
“Of course, we hope we can do it as soon as possible,” he says during a forum hosted by the Economic Journalists Association of the Philippines.
Prior to the pandemic, PAL flew 16 million passengers in 2019. The carrier saw its passenger volume soar by 58 percent to 14.68 million last year.
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Cebu Pacific president and chief commercial officer Xander Lao, meanwhile, points out that the Philippine economy regaining vibrancy will have a knock-on effect on the aviation sector.
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“This economic growth will lift more of our population into the middle class and increase incomes, which enable our countrymen [to grab] more opportunities whether in business, trade, or leisure,” he explains.
In addition, Lao says the young demographic profile is seen to drive consumption and economic productivity in the country.
Cebu Pacific has benefited from the economic recovery, with passenger volume rising by 12 percent to about 11.5 million in the first half.
Banking on this optimism, the local unit of AirAsia has set sights on making its current operations even bigger.
“As part of the ambitious five-year plan, our global goal is to develop the Philippines into a major global hub,” says Ricardo Isla, AirAsia Philippines CEO.
The airline previously announced its plan of establishing a direct flight from Manila to the United States by 2025. This is part of the multi-hub strategy by the low-cost carrier, which has presence in Malaysia, Indonesia, Philippines and Thailand.
In the first half, AirAsia Philippines saw its passenger volume increase by 9 percent to 3.58 million in total.
Supply chain woes
But it is not all clear skies for these airlines as the global supply chain crunch continues to gnaw on their operations. The International Air Transport Association has previously warned all the carriers because this is seen to affect aircraft availability.
With the lack of aircraft spare parts, the jets under maintenance are being parked for a longer period, prompting flight delays and cancellations at times.
All the airline executives agree this problem may take some time, about two to four years, before it will be resolved.
“They are all seeing the same thing in terms of the delays, production challenges, supply of raw materials and the like. So clearly, this is a multi-year problem,” Lao explains.
In response, these carriers have been acquiring more jets through purchase, leasing and reactivation of aircraft.
PAL is expecting delivery of 13 Airbus 321-231 neo (new engine option) aircraft between 2026 and 2029. It is also set to receive nine Airbus A350-1000 jets between 2025 and 2027.
Cebu Pacific is set to receive 18 additional aircraft this year. It also recently inked a P1.4-trillion deal to acquire up to 152 jets from Airbus.
Flights to China
This year, AirAsia Philippines is targeting to have 25 aircraft, restoring its fleet to prepandemic level.
The aviation sector is also powering through another turbulence: lack of demand to travel in and out of China.
The popular Asian destination, prior to the pandemic or in 2019, welcomed 97.7 million inbound tourists. Last year, it only received 35.5 million despite the easing of COVID-19 restrictions.
“The challenge to us is China, which used to be a huge 30 percent of our total passenger traffic in 2019,” Isla says.
AirAsia Philippines has no direct flights to mainland China anymore. But it still services flights to Hong Kong and Macau.
The budget carrier official says they are focusing now on other countries like Thailand, Malaysia and Japan where demand is perceived to be greater.
Cebu Pacific has also recently expressed reservations with the relaunching of its Manila-Beijing route due to the tempered air travel demand.
This route had been previously offered by Cebu Pacific but the operation was stopped during the pandemic when border restrictions were up. It resumed flights to Guangzhou, Shanghai, Shenzhen and Xiamen last year.
Other destinations
Meanwhile, PAL offers direct flights to Guangzhou, Jinjiang, Beijing, Shanghai and Xiamen.
China, prior to the pandemic, was the country’s top source of tourist arrivals.
While airlines are cautious over their route expansion in China, they look forward to beefing up their operations elsewhere.
“We are very happy to welcome new and restored air routes that will continue to expand the country’s connectivity with our key strategic and opportunity tourist markets,” Department of Tourism (DOT) Undersecretary Verna Buensuceso says.
This fourth quarter, PAL will launch its maiden Manila-Seattle flights, which will be offered thrice weekly.
Cebu Pacific is set to open Cebu-Osaka, Iloilo-Singapore, Iloilo-Hong Kong, Manila-Chiang Mai and Davao-Bangkok routes next month.
AirAsia will introduce Manila-Nagoya flights in October.
Foreign airlines are also ramping up their flight network in the country. United Airlines will launch its San Francisco-Narita-Cebu flights while Qantas Airways will service the Brisbane-Manila route by next month as well.
Meanwhile, the highly anticipated Manila-Paris flights will be operated by Air France starting December.
Multi-airport strategy
With more routes opening up, the airline executives raise the need for additional airports that can service more passengers and jets.
“One thing we all know is we want to decongest them,” Ng says.
The country’s main international gateway is the Ninoy Aquino International Airport, which will undergo a major facelift to expand passenger capacity. Other major airports are Clark International Airport and Mactan-Cebu International Airport. The New Manila International Airport in Bulacan is under construction, and is targeted to be completed by 2028.
For next year, the Department of Transportation (DOTr) has proposed a budget allocation of P12 billion to develop and expand capacity of airports outside Metro Manila.
Bulk of the funding will go to the New Dumaguete Airport Development project (P6.1 billion), Tacloban Airport (P2.3 billion), Busuanga Airport (P1 billion), Laoag International Airport (P750 million) and Iloilo International Airport (P645 million).
The DOTr also set aside funds for Virac Airport (P280 million), Antique Airport (P125 million), New Bohol Airport Construction and Sustainable Environment Protection project (P90 million) and Bukidnon Airport (P50 million).
Its greenfield airport projects such as the New Zamboanga International Airport and Siquijor Airport got a budget of P200 million each.
Other airport projects in the pipeline are those in Masbate, Naga, Pangasinan, Siargao, Itbayat, Maasin and Hilongos.
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“The focus on airport expansion and upgrading primarily hinges on a continued rise in passenger traffic as well as those that exhibit growth potential measured by increased tourism and economic activities,” DOTr Secretary Jaime Bautista says.