Cebu Pacific raises the stakes in the APAC region low cost war, while an interesting development in India could well lead to a serious recovery for a troubled airline…and watch that Euro

Victoria
By Victoria April 30, 2012 12:28

Cebu Pacific raises the stakes in the APAC region low cost war, while an interesting development in India could well lead to a serious recovery for a troubled airline…and watch that Euro

As we already know, Air India has turned down the request of travel agents to defer the implementation of weekly remittance plans and accept credit card bookings. But there is a more significant side to this very important story as Air India moves to reduce the three percent commission it pays to agents on sales to cut down on its distribution costs. Travel agents anticipate Jet Airways will also reduce commission too. “If Air India reduces commission, we may follow suit,” a Jet Airways source said.
This is a huge story as in India 80% of all airline tickets are sold through offline travel agencies. We are already aware that Kingfisher has been held above the waterline by the travel agencies pushing business to them, now Kingfisher could well have a very significant edge on its main rivals. If Air India and Jet go through with this reduction in the commission rate then expect Kingfisher to gain ground rapidly. At that point Kingfisher might be scouting around for a short-term aircraft lease…….That will be interesting.
This could be the week that Francois Hollande gets the chance to tell Berlin what it can do with its fiscal pact. In fact hedge funds have already begun shorting French, German and Dutch bonds on what they see is a sure bet. The fact that the Dutch and now maybe now the French electorate are saying no to Berlin and the ECB, which is a mystery to Germans on the main seeing as the French have yet to do anything with regard to sorting out their economy. Hollande will come out (if he wins) and say that he has been negotiating with other Eurozone nations to spend their way out of trouble not cut, this could leave Germany isolated and will leave Spain to fall through the floor. Indeed the Euro is gaining against the US dollar as people look to interest rates. The UK may well have to increase interest rates and sterling is rising too but the UK banks may not be able to cope with a collapse of the housing market at home given that their exposure is extensive (60% market share in the case of Lloyds). All this means that airlines which are based within the UK or the Eurozone are already feeling the effects of currency gains on their cost base and it is likely that this will get worse during 2012.

Meanwhile, CEBU Air Inc., operator of Cebu Pacific, has applied for additional seat entitlements for flights bound to South Korea. “We asked for almost 4,000 seats, following the successful talks held by the air panels of South Korea and the Philippines early this month,” said the airline’s vice president for marketing and distribution Candice Iyog.
At present, the carrier operates the Manila-Incheon route twice daily, daily flights for Cebu-Incheon, four weekly flights for Manila-Busan route and another four-weekly flight for Cebu-Busan route. The total flights for South Korea destinations are 29 times weekly. The additional seats are equivalent to 21 flights a week or an additional three daily flights.
Earlier this month, the Philippines and South Korea agreed to amend their existing air pact by expanding the number of entitlements of designated carriers of each country by half or an additional 9,500-weekly seats.
From 19,000 weekly seat entitlements being utilised by carriers on both sides this was increased by half for a total of 28,500 seats per week for each country, said Civil Aeronautics Board (CAB) Executive Director Carmelo Arcilla.
“Now both sides can mount as much as 28,500 seats per week. These seats can be used at any points in the country and the CAB will allot [these] depending on the requirement of an airline who files an application with us because we are the sole authority that grants entitlements,” said Arcilla.
South Korea is the largest tourist market for the Philippines. Last year there were about 925,000 Korean arrivals in the country and that figure is expected to increase above 1 million in 2012.

Victoria
By Victoria April 30, 2012 12:28
Write a comment

No Comments

No Comments Yet!

Let me tell You a sad story ! There are no comments yet, but You can be first one to comment this article.

Write a comment

Only <a href="http://www.aviationnews-online.com/wp-login.php?redirect_to=http%3A%2F%2Fwww.aviationnews-online.com%2Fairline%2Fcebu-pacific-raises-the-stakes-in-the-apac-region-low-cost-war-while-an-interesting-development-in-india-could-well-lead-to-a-serious-recovery-for-a-troubled-airlineand-watch-that-euro%2F"> registered </a> users can comment.