Philippine Airlines (PAL) announced plans to withdraw its Manila-Riyadh service from 02-Apr-2011, citing losses on the sector for the decision (The Philippine Star/AME Info, 13-Mar-2011). "There are not enough passengers taking this flight to justify its continued operation. Revenues earned are not enough to cover cost of operations," PAL said. The carrier resumed its Riyadh services in Mar-2009 after initially halting operations in Mar-2006.
Philippine Airlines to drop Riyadh route
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Australia-Philippines market faces overcapacity concerns as Cebu Pacific, PAL plan further expansion
Passenger traffic between Australia and the Philippines grew by 39% in 2015, making it Australia’s fastest growing international market. The Australia-Philippines market is poised for more rapid growth driven by expansion at Cebu Pacific Air and Philippine Airlines (PAL).
PAL is planning to use its new A321neo fleet to launch new nonstop flights to Brisbane and potentially add a second frequency to Sydney. Cebu Pacific plans to launch service to Melbourne as it expands its A330-300 fleet.
However, overcapacity is a major concern. Cebu Pacific’s entrance has stimulated demand but impacted load factors and yields. In 2015 the average load factor on Australia-Philippines flights was less than 67%, including a dismal 60% at PAL and only 64% at Cebu Pacific.
Southeast Asia-US market Part 3: new nonstops need to overcome stiff one-stop FSC & LCC competition
Southeast Asian airlines are seeking to capture a larger share of the Southeast Asia-US market over the next few years as they launch new flights to the US. Three of the region’s flag carriers and at least one long haul LCC are planning to launch flights to the US, intensifying competition in an already fiercely competitive market.
Southeast Asian airlines currently account for less than a 20% share of the total Southeast Asia-US market. Philippine Airlines and Singapore Airlines are the only significant players in this market and are aiming to increase their share as they add new nonstop routes. Garuda Indonesia, Thai Airways and Vietnam Airlines are also keen to become significant players as they launch flights to the US, replacing their now limited offline products.
However, market share gains will likely come at the expense of yields and profitability as competition with North Asian airlines – and to some extent US and Gulf carriers – intensifies. North Asian airlines now account for more than 50% of bookings in the Southeast Asia-US market and have increased their reliance on Southeast Asian connections as they have added US capacity, resulting in very competitive fares.