Philippines-UAE market suffers from overcapacity, impacting Cebu Pacific, PAL, Emirates and Cathay

Capacity reductions in the Philippines-United Arab Emirates (UAE) market are inevitable after 24 weekly non-stop flights between the two countries were added in 4Q2013. While there is considerable traffic between the Philippines and UAE, yields are generally low and there are large seasonal fluctuations.

Three Philippine carriers entered the market at essentially the same time - Cebu Pacific, Philippine Airlines (PAL) and PAL Express - while Emirates launched services to Manila alternative airport Clark. Emirates already served Manila with three daily flights, having added the third frequency at the beginning of 2013. Etihad also serves Manila with two daily flights.

Fares between Manila and Dubai or Abu Dhabi have dropped as the three Philippine carriers have struggled to fill new A330s. Load factors have been sustainable only during peak periods. Losses for all the carriers are likely if current capacity levels are maintained year-round.