OFFICIAL: PH A TOP MARKET FOR LCC
Civil Aeronautics Board Executive Director Carmelo Arcilla says the Philippines has a 64-percent penetration rate for domestic destinations and 32 percent for international destinations
Low-cost carriers (LCCs) in the Philippines continue to earn high revenues.
Carmelo Arcilla, executive director of the Civil Aeronautics Board, said LCCs in the country have the highest penetration in the market.
“The global penetration of LCCs is 31 percent but in the Philippines, in domestic, it’s 64 percent penetration, while for international, it is at 32 percent. The Philippines is only second to India in being the most attractive to the LCC markets,” he said in an interview at the sidelines of the the Routes Asia 2019 conference held in Cebu.
Arcilla said low fare promos are popular among travelers in the country so LCCs have the advantage in luring passengers.
“Filipinos are price-sensitive, so the LCCs are able to stimulate traffic. We have so many firsttime travelers because of LCCs,” he said.
He said LCCs are game changers in the aviation industry, supported by new-generation aircraft that are capable of long and short haul trips and are fuel-efficient.
“LCCs will continue to grow because more and more Filipinos are traveling. Our traffic growth is one of the highest in the world,” he said.
Arcilla stressed that entry to the Philippine market is backed by liberal aviation policies, so it is easy for airlines to operate.
“Entry to the market is open for any qualified airline. In reality, the aviation industry is market-driven, so it’s not about airlines being willing but it’s also the function of the absorptive capacity of the market,” he said.
The three existing major airline companies maintain a healthy competition, he said, compared to the seven companies before.
“This is a phenomenon all over the world that during the advent of the liberalization, many airlines came into being just because they can. But later on, they streamlined. Three airline groups in the Philippines is healthy for the market,” he said.
Philippine Airlines, Cebu Pacific and AirAsia are the major aviation companies in the country.
For the airports to attract airlines to operate flights, Erwin Balane, Department of Tourism’s head of route development, said the battle is on for the incentives the government can give to the airline company.
“The game right now in encouraging the airlines is not only about the numbers that sustained the international passenger traffic, but it’s also about the incentives that the country would provide to the airlines,” he said.
The Mactan Cebu International Airport (MCIA), which welcomed 11.5 million passengers in 2018, is providing discounts for airline companies, Balane said.
“The MCIA offers discounts in fees for landing, take-off, parking and even aviation fees for the airline to operate in Mactan,” he said.
Routes Asia 2019 is attended by over 800 delegates, 100 airline executives, 20 airports representatives and 30 tourism authorities from all over the world.