More airlines may be better in the Philippines

I hope that there will be an opportunity for Qantas/ Jetstar to make a similar investment to expand in the Philippines like Tiger (with SEAir) and now Air Asia is making with Zest. They will give the much needed resources to offer market competition in the light of the massive investment made by Ramon Ang/ SMC in PAL and Lance Gokongwei’s Cebu Pacific. With a 13% growth in domestic passenger traffic made in the past 6 months, the current growth is not being matched by international traffic if judged by the 7% growth made last year. Maybe more airlines may be the better solution to lifting this growth potential. Let’s not even talk of the need of using all those new airports that the government is opening up for its PPP program.

AirAsia in talks to buy Zest Airways

Alliances in crowded budget carrier sector

By 

Thursday, September 20th, 2012

 

Malaysia’s AirAsia group is making a move to acquire local budget airline Zest Airways in a bid to expand its foothold in the fast-growing Philippine market.

 

Malaysia’s AirAsia group is making a move to acquire local budget airline Zest Airways in a bid to expand the regional giant’s foothold in the fast-growing Philippine market.

Highly placed Inquirer sources said that while nothing has been signed as of yet, negotiations were ongoing between AirAsia and the group of former ambassador and juice-drink magnate Alfred Yao.

In an interview on Wednesday, Yao confirmed that the companywas in talks with several groups on the possible entry of new investors to help the airline compete in the country’s crowded budget carrier sector.

“We have been approached, but nothing is final yet. There are offers,” he told the Inquirer. Yao declined to confirm talks with the AirAsia group, owned by former music industry executive and Malaysian billionaire Tony Fernandes.

He said Zest Airways would make an appropriate announcement once a deal has been signed.

AirAsia already has a presence in the Philippines through local unit AirAsia Inc., a consortium between Fernandes, who owns 40 percent, and Antonio “Tonyboy” Cojuangco Jr., Michael Romero and Marianne Hontiveros, who own 20 percent each.

Constitutional restrictions bar foreigners from owning more than 40 percent of transportation companies. The same limitation applies to other utility firms, which are businesses considered as “imbued” with public interest.

AirAsia in the Philippines operates flights between the Clark Freeport in Pampanga and domestic routes like Davao, Puerto Princesa and Kalibo. The company also has international flights to Hong Kong, Macau and Kuala Lumpur.

AirAsia Malaysia, meanwhile, operates flights between Kuala Lumpur and the Clark International Airport in Pampanga. AirAsia Malaysia also has flights between the former military base and Kota Kinabalu.

Asked if flag carrier Philippine Airlines (PAL) was approached for a possible investment in Zest Airways, president Ramon S. Ang said, “Late tayo” (we were late).

Local AirAsia officials could not be reached for comment.

Data from the Civil Aeronautics Board (CAB) released last week showed the growth in the country’sinternational airline sector slowing to 7.34 percent in the first half, slower than the 11 percent booked last year.

Domestic demand, however, remained robust, with passenger traffic within the country growing 13.33 percent in the same six-month period.

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