What is next for SEAIR?

As it turns 15 and 3 million passengers more

By Daxim Lucas

April 3, 2010

What should a company do when bread and butter business is encroached upon by larger rivals with more money to burn?

Specifically, what should an airline do when the lucrative route that it specializes in is invaded by rivals that can deploy more flights with larger aircraft that can carry more passengers?

For niche carrier Southeast Asian Airlines, the answer is simple: find new markets and new routes to develop, while retaining as its core business, its dominance in the Manila-Boracay air service.

“What we’re doing is developing other tourist routes to areas that are either underserved or those that have been ignored altogether,” says Seair co-founder and co-owner Nikos Gitsis.

“At the same time, we continue to focus on Boracay which is really our most important market at this time,” he adds.

Helping tourism

Gitsis cites the airline’s flights to Basco, Batanes—the northernmost province of the Philippines—which has long been neglected by other carriers, but is now slowly coming back to life as a tourist destination with Seair’s help.

“We do serve a critical service to the Philippines which is to provide service to these smaller, niche destinations,” he says. “That’s where we continue to use our strength.”

Gitsis—a Greek national who founded Seair 15 years ago with German Iren Dornier and a group of Filipino investors led by Tomas Lopez Jr.—conceded that the airline’s business model is not a cheap one to operate, often involving a significant amount of capital and energy to develop new routes.

“We have to spend money [to create interest in new destinations],” he says. “And when we do break open the market, everyone comes in. That’s our advantage and disadvantage as a niche carrier.”

According to Dornier, the case of Basco is a prime example of a Seair-style operation that is simultaneously an important business proposition and a vital part of the overall tourism development program of the country.

“We are working with various stakeholders here, from the national government, the local government, as well as the private businesses in the locality,” he says.

No smooth sailing

Nonetheless, things haven’t been smooth sailing for Seair in the recent year, just like all other players, as the airline industry struggled with the high cost of fuel and the decline in air travel brought about by the global financial crisis.

“We’re happy that we got past the last couple of years which were very difficult for all airlines,” Gitsis says. “Now we’re the second oldest airline in the Philippines. We’ve turned 15.”

According to the company, it posted record-breaking ticket sales from January to February of 2010, more than 40 percent than what it generated for the same period in 2009. The growth was attributed to an enhanced online ticketing system, the longest continuous—and more importantly, reliable—direct flight to Caticlan, improved passenger services such as complimentary transfers, and the development of new destinations.

“It looks very promising now,” he says. “The last few months have been very promising for Seair. Moving ahead, we’re looking forward to maintaining that strength and maintaining what we’ve achieved.”

Boracay still strong

Despite the “encroachment” of larger carriers into its lucrative main route, the airline’s founders believe that the Manila-Caticlan service will remain its main revenue driver for the foreseeable future.

“Boracay is the heart of our operation so we serve it with zeal,” Gitsis says. “For other airlines, it’s just another route. They have many others. They provide a mass market approach while we provide specialized service.”

From its humble beginnings as a company ferrying passengers and cargo on two nine-seater aircraft to Boracay and Palawan in 1995, it now operates four Dornier 328 turboprop aircraft and six LET 410s, while maintaining two hangars at the Clark Special Economic Zone.

Seair flies to 12 local destinations and, to date, has flown almost three million passengers -- a big number for a small airline flying to “small” destinations.

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