PHILIPPINES MARKET ROLLS THE DICE ON BOOM IN PASSENGERS MAKING OVERCAPACITY A REAL POSSIBILITY IN THE SHORT TERM

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By TESTCustomwebLP TESTCustomwebLP January 21, 2011 08:32

PHILIPPINES MARKET ROLLS THE DICE ON BOOM IN PASSENGERS MAKING OVERCAPACITY A REAL POSSIBILITY IN THE SHORT TERM

Domestic air traffic in the Philippines is expected to more than double to over 40 million passengers in less than 10 years, one of the country’s major airlines said today.

The rise of low-cost carriers such as Cebu Pacific Air has already seen domestic air traffic jump sharply to more than 17 million passengers in 2010.

Philippine fleets will increase to 67 single aisle aircraft this year compared with 47 in 2008. Rival budget carrier AirAsia, a Malaysian-based airline, has also announced plans to set up Philippine operations this year.

Southeast Asian Airlines earlier this week announced that it was adding more domestic and international destinations during 2011. The company said it would lease more aircraft from Singapore’s Tiger Airways this year, despite accusations that the deal violates a Constitutional restriction on the participation of foreigners in vital industries such as transportation. In addition we also have the re-emergence of PAL.

All this will lead to more pressure for lower fares, which could drive passenger traffic even higher but in the short term we will be looking at overcapacity within the Philippine domestic market mirroring the Indian market of 2007.   Indeed we should also think about the infrastructure investments that will be required which will rival India in size and scope. Things will get worse before they get better.

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By TESTCustomwebLP TESTCustomwebLP January 21, 2011 08:32
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