Philippines-Aust air passenger traffic to rise further
MANILA - The Philippines-Australia market is seeing rapid growth in air passenger traffic, but questions over domestic carriers’ capacity to address the demand hangs, according to consulting company Capa-Centre for Aviation.
In a report, Capa said the Australia-Philippines market had doubled in five years, from 228,000 nonstop passengers in 2010 to 466,000 last year, and was now facing “overcapacity concerns”.
Last year alone, air passenger traffic between both countries jumped 39 per cent.
A big part of this growth came from budget carrier Cebu Pacific, which launched its Manila-Sydney route in 2014 and as of last year, had cornered 41 per cent of the market.
It was also planning to launch direct flights to Melbourne.
The Philippines-Australia route is also served by flag carrier Philippine Airlines, which had 31.5 per cent of the market, and Australia’s Qantas, which held 27.1 per cent last year.
PAL, which flies to Sydney, Melbourne, Brisbane, Cairns and Darwin, saw its Australia traffic grow 17 per cent last year.
“Additional capacity increases by Philippine competitors could start to impact Qantas.
“However, the bigger question marks are with Cebu Pacific and PAL – and specifically whether they will be able to maintain their Australia capacity,” Capa noted.
Still, there was potential growth here. Low fares could “stimulate new demand” in both inbound and outbound flights.
However, the market was highly seasonal, making it “hard to maintain high year-round load factors”.
The average load factor, a measure of capacity utilisation expressed as a percentage, for Australia-Philippines flights was a “dismal” 60 per cent for PAL and 64 per cent for Cebu Pacific.
Qantas, on the other hand, had a load factor of 91 per cent in 2015.
“The preference would be to grow the local market and stimulate more demand from Filipinos.
“But there is a limit to this growth and the low load factors at Cebu Pacific and PAL are an indication of the challenges that lie ahead,” it said.
Sustainable load factors could be achieved with “significant sixth-freedom traffic beyond Manila”.
Sixth freedom refers to the right of an airline to carry passengers or cargo between two foreign countries while making a stopover in its home country.
“However, given the intense competition in Australia’s international market and the fact PAL and Cebu Pacific are not well known brands outside the Filipino community, any sixth-freedom traffic would be low yielding and likely carried below cost,” it said.