Low cost carriers rule domestic travel market

Low cost airlines continue to soar high as they bolstered their reign over the Philippine market last year, aviation think tank CAPA Centre for Aviation said.

In its latest report, CAPA said the Philippines posted the third highest domestic low cost carrier (LCC) penetration rate in Asia Pacific last year at 64 percent.

This means that LCCs accounted for 64 percent of seat capacity in the Philippine domestic market.

Only Thailand and India recorded higher domestic LCC penetration rates at 72 percent and 70 percent, respectively.

Meanwhile, LCCs captured a 32-percent share of international seat capacity in the Philippines, tied with Thailand as the fifth strongest in the region.

Despite the relatively late start of the Asian LCC sector, CAPA said the LCC penetration rate in Asia Pacific is now almost as high as the global LCC penetration rate.

Last year, it reported that LCCs globally accounted for 33 percent of domestic seat capacity and 13 percent of international seat capacity.

LCC penetration rate in Asia Pacific, however, varied significantly, with some markets now having among the highest LCC penetration rates in the world.

CAPA said there were only two LCCs operating in Asia Pacific 20 years ago – Cebu Pacific and Freedom Air from New Zealand.

Cebu Pacific launched operations in 1996 and has now emerged as the largest airline in the Philippines.

“There is clearly still ample space for LCCs to grow in Asia Pacific as the sector enters its third decade,” the CAPA said.

“While in some countries market share gains will become smaller given that LCCs already account for a majority of short haul capacity the overall market is growing rapidly. There are also several markets that should continue experiencing large increases in the LCC penetration rate, resulting in further penetration rate gains for the Asia Pacific region as a whole,” it added.