Troubling Consolidation

Bleak Future For Air Asia in the Philippines
The worlds best low cost airline is in danger of extinction in the Philippines as it reduces flights.

30 August 2014

Malaysia’s AirAsia Berhad is extending another $18 million (P788 million) capital infusion to its Philippine unit in a bid to boost its affiliate after registering dismal performance of its subsidiary which continue to post losses of $3.9 million down from $7 million last year.

Zest AirAsia said the money is needed to support the airline's operation to the next fiscal year.

AirAsia owner Tony Fernandes said the Philippine subsidiary's return to profit would come sooner than expected.

The subsidiary is expected to post a profit by the second half of 2014 following reductions of its domestic flights.

“We are investing a lot on marketing our brand locally and internationally to ensure we push passenger demand into the Philippines,” he said. “We have revised our network and I believe this will push fares even higher in the second half of 2014. I am very optimistic the worse is over as our turnaround plan has been put into place.” says Fernandes.

AirAsia is cutting four daily frequencies between Manila-Cebu route from the present seven, while Manila-Tagbilaran will be further reduce from the present four to three times daily.

International destinations from Kalibo - Seoul routes were also reduced from twice to one times a day, while Manila-Macau flights was clipped from daily to four times a week.

The airline has been badly hit by the competion with both Philippine Airlines (PAL) and Cebu Pacific (CEB) eroding its market share in Cebu, Tagbilaran and its hub in Kalibo.

AirAsia in the Philippines operate a fleet of 18 aircraft flying domestic points from Manila to Cebu, Puerto Princesa, Tagbilaran, Kalibo, and Tacloban. It flies international points to China, Korea, with international destinations in China and Korea from Manila, Cebu and Kalibo.

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