PH eyes more air rights to Singapore, M.East

By Lenie Lectura, BusinessMirror

Posted at Jul 02 2012 07:29 AM | Updated as of Jul 02 2012 09:06 PM

MANILA, Philippines - The Philippines will negotiate for additional air rights in Singapore next month and in United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) in September.

Civil Aeronautics Board (CAB) executive director Carmelo Arcilla said in a text message that the Philippine air panel has secured confirmed appointments with counterparts in Singapore on August 15 and 16; with UAE on September 5 and 6; and with KSA on September 24 and 25.

The CAB, an attached agency of the Department of Transportation and Communications (DOTC), is mandated to regulate the economic aspect of air transportation, and has the general supervision, control and jurisdiction over air carriers, general sales agents, cargo sales agents, and air freight forwarders.

The agency forms part of the air panel which negotiates for air entitlements with other countries.

Members of the panel include representatives from the DOTC, departments of Foreign Affairs, Tourism, Trade and Industry, and from airline companies.

Arcilla said domestic airlines, such as Cebu Pacific and Zest Air, are interested to mount flights to the Middle East.

“We wrote to the CAB for the government to hold air talks with UAE and KSA so we can ask for entitlements,” said Cebu Pacific vice president for marketing and distribution Candice Iyog.

The budget airline’s interest to mount flights to the Middle East is part of its plan to launch long-haul flights by the third quarter of 2013.

“The plan is not to fly to the US but in the Middle East and Australia. The key there is not really the [Civil Aviation Authority of the Philippines] but more with the CAB which is the one that negotiates the rights on behalf of Philippine carriers,” said Cebu Pacific president Lance Gokongwei when asked if the airline will put on hold plans to launch budget long-haul flights until the Philippine aviation sector regains its Category 1 status from the United States Federal Aviation Authority.

Cebu Pacific is taking delivery of seven aircraft next year. Payment for the units will be sourced from a combination of export credit agencies and commercial loan. The list price for the seven Airbus units is somewhere between $600 million and $700 million, said Gokongwei.

The airline is targeting to transport 14 million passengers this year from 11.9 it carried in 2011. Load factor is seen to reach 85 percent at end of 2012 from 86.3 percent a year ago.

Also, Cebu Pacific sees a growth of 20 percent in revenues for the year, mainly on account of an increase seen in the company’s ancillary revenues.

”The second quarter is always the best time for any Philippine carrier but oil prices peak at $138 per barrel. I do expect that in general the second quarter will be probably below last year on an operating basis. But if fuel prices continue on a downward trend, I think we are going to recover in the third and fourth quarters,” added Gokongwei.

The drop in jet fuel prices led Cebu Pacific to slash fuel surcharges for domestic routes. Soon, fuel charges for some of Cebu Pacific’s international destinations will also be reduced.

The airline is also feeling the impact of the travel ban on the Philippines imposed by China. Cebu Pacific’s flights to the cities of Beijing, Guangzhou and Shanghai, represent 2 percent to 3 percent of the airline’s total revenues. “It’s not good. Most Chinese tourists come to the Philippines on package tours,” said Gokongwei. As such, Cebu Pacific now utilizes a 150-seater Airbus A319 instead of the 180-seater A320.

At end-March this year, Cebu Pacific’s profit declined by 19.8 percent to P962 million due to high fuel prices.