CAPA sees direct PHL-India services by 2018


BusinessWorld Online

PHILIPPINE CARRIERS are likely to mount direct flights to India by 2018, the Center for Asia Pacific Aviation (CAPA) said in a report, citing the growing market and fleet expansion which could improve prospects for Indian routes.

The aviation think tank said in a March 31 report that flag carriers Cebu Pacific Air, Philippine Airlines (PAL) and Philippines AirAsia are all seeking traffic rights to serve India and are keen to serve its capital, New Delhi.

“The local Philippines-India market has grown significantly making a nonstop route attractive again. The total number of passengers flying between the two countries has (broadly) doubled in size since 2011, driven primarily by growth in Indian visitor traffic to the Philippines,” CAPA said in its report.

It noted that India is the largest “unserved market” from the Philippines, included among the top 12 source market for the country’s tourism that does not currently have any nonstop services.

The report noted that Indian-resident visitor numbers to the Philippines have more than doubled from 43,000 in 2011 to 91,000 in 2016 posting “double digit growth” in five out of the past six years, increasing “more rapidly than the total visitor numbers to the Philippines. Indian visitor growth to the Philippines also exceeded 20% in both 2015 and 2016, making it the second fastest-growing of the top 12 source markets, after China.

In the same way, the aviation think tank said Manila is also one of the largest unserved markets from India. There are relatively small numbers of Filipino visitors to India “but in Asia-Pacific the Philippines is India’s biggest source market that lacks any nonstop flights.”

“There are currently approximately 200,000 annual return passengers between India and the Philippines. Airlines from Southeast Asia and Hong Kong carry more than 90% of these passengers, with one stop products via Singapore, Bangkok, Hong Kong and Kuala Lumpur. Singapore Airlines is the largest airline group in the Philippines-India market,” CAPA said.

Back in 2011 India accounted for 1.1% of total visitor numbers to the Philippines. In 2016, India accounted for 1.5%. While the market is still not huge, CAPA said “it is now of sufficient size to support nonstop flights” and -- more importantly -- the market is growing fast.

Citing latest available data, the aviation think tank said in Jan. 2017, Indian visitor numbers to the country were up 32%, surpassing Malaysia and Hong Kong to become the 10th largest source for the Philippines. It accounted for 1.7% of total visitor arrivals to the Philippines in January.

Nonetheless, CAPA said direct flights to India could commence by 2018 as local airlines await the delivery of wide-body aircraft that could possibly serve this route.

“Cebu Pacific plans to take its first two A321 Neos in 2016, followed by another 13 aircraft in 2017. It was initially planning to take three A321 Neos in Q4 2016 followed by 12 in 2017 but recently confirmed a delay from Airbus, pushing one delivery from late 2016 to 2017. Cebu Pacific is now evaluating several potential new medium haul routes for its A321 Neo fleet. India is high on the list,” its report said.

It noted however that Cebu Pacific plans to use its initial two A321 Neos on existing A320 Neo routes and it is “sensible, initially, to deploy the new type on existing shorter routes before using the range to launch new longer routes.”

“Therefore, Cebu Pacific is not expected to launch New Delhi -- or any other new medium haul international route -- until at least 2018,” CAPA said.

For its part, the think tank said PAL, which has 21 A321 Neo aircraft on order, has been considering using its initial batch to launch nonstop services to Brisbane, as well as adding a second daily flight to Sydney and resuming services to Delhi. It will not be able to pursue all of these at once, but could pursue one in late 2017 followed by the other two in the first half of 2018.

Philippines AirAsia meanwhile applied for the same set of seven weekly frequencies, but has “only applied to serve New Delhi as a one stop service from Manila via Bangkok,” CAPA said.

“Despite all the growth over the past five years, nonstop flights between the Philippines and India would still not likely be viable without the advent of new generation narrowbody technology. The market is still likely too thin -- and too fragmented -- to support widebody aircraft. New longer range narrowbody aircraft are ideal as they provide the right capacity size, and the right economics, to make the Manila-Delhi route potentially viable,” its report said.

All three main Philippine carriers -- Cebu Pacific, Philippine Airlines and Philippines AirAsia -- operate aircraft from the A320 family. Cebu Pacific and PAL both have large orders for the A321 Neo. The AirAsia Group has orders for both A320 Neos and A321 Neos, although it has not yet allocated any of these aircraft to its Philippine subsidiary.

CAPA said for Philippine carriers, New Delhi “is the only sensible” Indian destination based on its market size.

“Any Philippines-India route other than Manila-New Delhi would need to rely heavily on domestic connections beyond the Indian gateway. Indian airlines would have an advantage with this kind of model but have not shown interest in the Philippines market,” the aviation think tank report further said.

Meanwhile, CAPA said “the fairest solution” is for authorities to split the rights and reallocate three or four weekly frequencies to Cebu Pacific, while keeping three or four for Philippine Airlines to give both airlines an opportunity to launch services to India that would cater to both ends of the market.

Under the Philippines-India bilateral agreement, any of the Indian metropolitan areas can be served. However, there is a cap of seven flights a week -- with no limits on aircraft type except the A380 -- for the entire market.

“An increase in the number of traffic rights is warranted, given the size of the market and the recent growth. Should the current seven frequencies be split up, additional rights, if later secured, would enable both Cebu Pacific and PAL to add flights and serve India daily.”

The India-Philippines market has not had nonstop services since 2011, when Philippine Airlines briefly operated fights from Manila to New Delhi. PAL suspended nonstop service to Delhi 2011, and one-stop services via Bangkok in 2013. The Manila-Delhi market quickly proved to be too small back in 2011 to support nonstop services.

CAPA said the market at the time was “far too small to support nonstop widebody flights.” -- Imee Charlee C. Delavin