LCCs dominate PHL domestic market
LOST-COST carriers (LCC) are now dominating the domestic market in the Philippines, an aviation think tank said.
In a report on Thursday, Australia-based Center for Asia Pacific Aviation (CAPA) said in the Philippines, the domestic penetration rate of LCCs reached 64% in 2018 from 45% in 2008.
CAPA said the Philippines has the third highest LCC penetration rate for domestic operations in Asia-Pacific, only trailing behind India with 70% and Thailand with 72%.
For international operations, budget carriers’ penetration rate in the Philippines doubled to 32% from 15% during the same 10-year period. The Philippines is also among the top 10 for international LCC penetration, tied with Thailand.
“LCC capacity in Asia Pacific has more than quadrupled over the past decade: LCCs flew nearly 600 million seats within Asia Pacific in 2018, compared to approximately 130 million seats in 2008,” CAPA said.
It also noted that Cebu Pacific — one of the two pioneering LCCs in Asia Pacific when it launched in 1996 — has now grown to be the largest airline in the Philippines.
“Despite the relatively late start of the Asian LCC sector, the LCC penetration rate in Asia Pacific is now almost as high as the global LCC penetration rate. In 2018, LCCs globally accounted for 33% of domestic seat capacity and 13% of international seat capacity,” CAPA said.
With the current performance of LCCs in Asia Pacific, CAPA expects budget carriers to sustain its growth momentum in the succeeding years.
“There is clearly still ample space for LCCs to grow in Asia Pacific as the sector enters its third decade,” it said.
Aside from Cebu Pacific, AirAsia Philippines and Philippine Airlines’ PAL Express are the other LCCs in the Philippines.
AirAsia Philippines President Dexter M. Comendador has previously said the performance of LCCs in the country should be an indicator of the need to come up with a terminal dedicated for such airlines.
“It would be nice to have one or two airports that are lavish or five-star. But in general, since LCCs carry a large portion of the passengers, I think we should look at low-cost carrier terminals,” he said at an Air Transport Forum with the Philippine Competition Commission in September. —