APG Call it Quits for PPS

Axes Macau, but introduces SIN & TPE

October 25, 2012

Air Asia Philippines (APG) is supposed to shake-up the domestic airline industry. Instead, it was the airline shaken by intense competition between low cost airlines in the Philippines.

Air Asia Philippines (APG) has thrown in the towel at Puerto Princesa, Palawan, and call it quits effective December 1 or barely seven months after staring the service in April 20, 2012. The culprit, heavy losses for the route from its hub in Manila-Clark Airport. 

Also axed is its flight to Macau after failing to improve its load factor to the Portuguese colony amidst stiff competition from other low cost carriers Cebu Pacific, and Singapore Airlines subsidiary SouthEast Asia Airlines (SEAIR).

The airline said that passengers who are affected by the flight cancellations will be offered 3 options: a full refund of their flight bookings or a credit shell of the value of their flight bookings which is valid for 3 months or an option to change their flight date without any costs.

Unlike Air Asia Philippines, its Clark competitor flies directly out of Ninoy Aquino International Airport (NAIA) where majority passengers going to Macau and Puerto Princesa originates. AGP cannot fly and has no landing rights in NAIA.

Its CEO however has different story to tell saying that they were just re-aligning flights from Clark International Airport in preparation for two new flights to Singapore and Taipei that they will launch in December and therefore calls for the rationalization of its flight frequencies to some of its domestic destinations.

“With our two new international routes, we would like to draw more tourist to the country,” says AirAsia Philippines CEO Maan Hontiveros.

AirAsia will fly to Singapore on December 1 and to Taipei on December 15. It will also add frequencies to Hong Kong but will reduce flights to Davao and Kalibo from Clark.

While not admitting domestic losses, Hontiveros explained that they need to open profitable routes within an infrastructure that supports low-fare services since they are operating in an industry that is not immune to rising fuel cost and operational challenges.

But Brian Hogan, Zest Air Chief Executive Adviser, said that their carrier is not "making money" in the domestic market because of the very expensive jet fuel, and heightened domestic competitions between low cost carriers. The same sentiments was echoed by then airline President Avelino Zapanta when he still heads SEAIR saying that launching international destinations is the way to go to sustain domestic operations. 
Zest Air maintains 14 Airbus A320's, while SEAIR operates a fleet of 6 A320's. Air Asia on the other hand operates only 2 A320's, contrary to its previous declarations that it would be fielding additional two new aircraft for its expansion before the end of the year.

AGP's expansion fleet might not be forthcoming at least this year with the latest restructuring strategy by the airline, and with only two operating airplanes to fly to, expansion maybe limited and returns bleak for this fledgling airline subsidiary of most successful Malaysia-based AirAsia Berhad.

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