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Southeast Asian Airlines, operating as SEAir, is an airline based at Ninoy Aquino International Airport, Manila, with a secondary hub at Godofredo P Ramos Airport, Malay. SEAir is the smallest carrier in the Filipino domestic market and has expanded into the international market, with services to Hong Kong and Singapore.
In Jun-2012, Tiger Airways' wholly owned subsidiary, Roar Aviation Pte. Ltd., acquired a 40% share of SEAir for USD7 million, prompting a business model change, to use Tiger's fiercely low cost model.
Location of SEAir main hub (Manila Ninoy Aquino International Airport)
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider SEAir fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
174 total articles
20 total articles
Tiger Airways has narrowed its losses in the year to 31-Mar-2013 and extended its operating profit to a second consecutive quarter while forecasting a positive operating result by mid-Jul-2013 after the sale of 60% of Tiger Australia to Virgin Australia is completed.
The carrier also plans to add frequencies to high demand routes between Singapore and Malaysia and expects to take delivery of 10 A320 during the financial year, half of which will be allocated to the Singapore operation and the remainder between Tiger Australia and two associated airlines, Mandala and SEAir.
Tiger Singapore will use the aircraft to increase capacity by about 25% by the end of FY2014 and taking advantage of expanded bilateral rights between Singapore and Indonesia which will also boost Mandala. However, the group still faces significant challenges as it strives to nurture three affiliated carriers in Australia, Malaysia and the Philippines to profitability.
The outlook for Philippine Airlines (PAL) remains relatively bleak following a strategy shift which has resulted in the group exiting the budget end of the market. Transitioning low-cost sister carrier AirPhil Express into full-service regional carrier PAL Express may succeed at improving the group’s short-term financials but at the expense of growth and market share. The PAL Group will likely see its share of the Philippines domestic passenger market slip to less than 35% in 2013, compared to 42% in 2012.
The shift in strategy, which leaves PAL focusing entirely on the much smaller but less competitive top end of the Philippine market, follows the Apr-2012 ownership change at PAL and AirPhil. The new majority owner of both carriers, the San Miguel Group, has brought new life into the group, providing a badly needed recapitalisation which is being used to pursue fleet renewal and growth of its long-haul network.
But in the domestic and short-haul international markets PAL is suffering and the prospects are not bright given some of the decisions made by San Miguel during its first year running the PAL Group.
This is the second part of a series of articles looking at the outlook for Philippine carriers. The first part, published on 19-Mar-2013, analysed the strong position of market leader Cebu Pacific.
Part 2 looks at the recent tie up between AirAsia Philippines and Zest Air, which along with new Tiger Airways affiliate SEAir are looking to improve their relatively weak positioning in the highly competitive Philippine market. Part 3 will look at flag carrier Philippine Airlines and the recent rebranding and strategy shift at PAL Express, previously known as AirPhil Express.
AirAsia Philippines and privately owned Zest Air unveiled a strategic partnership on 11-Mar-2013 which included an equity swap, with AirAsia Philippines taking a 49% stake in Zest in exchange for a 15% stake in AirAsia Philippines. The partnership is expected to result in the AirAsia brand entering the Manila market, using the slots and traffic rights held by Zest. AirAsia currently only serves Manila's alternative airport, Clark.
Cebu Pacific is planning more double-digit capacity expansion in 2013 as the Philippine LCC launches widebody services and expands its limited Japanese network. Cebu Pacific expects to expand seat capacity by 11% in 2013 and grow its fleet by 17% to 48 aircraft. The expansion, which includes the launch of its new long-haul operation, should allow the carrier to extend its already leading share of the Philippine market.
Cebu Pacific recorded 11% growth in passenger traffic in 2012 and a 7% operating profit margin despite intense competition, particularly in the domestic market. The carrier’s load factor and net profit dropped slightly. But Cebu Pacific’s outlook for 2013 is brighter given the recent rationalisation and consolidation in the Philippine domestic market and the new opportunities for international expansion created as a result of Philippine authorities passing an ICAO safety audit in Feb-2013.
Tiger Airways enters 2013 more upbeat after ending a string of seven consecutive quarters of losses and returning to profitability in the last three months of 2012. But the Singapore-based low-cost carrier group still faces a challenging 2013 as it tries to reverse the losses at its subsidiaries or affiliates in Australia, Indonesia and the Philippines.
Tiger’s original Singapore operation has recorded an encouraging improvement to its bottom line after going through a rough patch in late 2011 and early 2012, when over-capacity led to a decline in yields and load factors. The outlook for Tiger Singapore remains relatively bright, particularly as the carrier starts to see benefits from its new connection product.
But LCC competition in Singapore is intense, making it challenging for Tiger and rival Jetstar Asia to post high profit margins. Market conditions in Tiger’s other three home markets are even more challenging, with profits in the short-term unlikely although the group remains optimistic about its long-term prospects in Australia, Indonesia and the Philippines.
The Philippine Airlines (PAL) Group is implementing a misguided new strategy that involves its budget airline subsidiary pulling off several domestic trunk routes. AirPhil Express, which is planning to be soon re-branded as PAL Express, has redeployed capacity from trunk to leisure and secondary routes, which it has taken over from PAL following a surprising decision by the Group that the two brands should remove nearly all overlap in their route networks.
The move, implemented on 28-Oct-2012, goes against the grain of typical two-brand strategy at Asian airline groups, which have discovered that they can successfully use their LCCs to operate alongside their full service brand. As Philippine Airlines and AirPhil Express (soon PAL Express) brands cater to different sectors of the market, the two should be able to co-exist on trunk routes with minimal cannibalisation. Most crucially, PAL Group needs the second budget brand on domestic trunk routes to compete with rival LCCs. The Philippines has a crowded and intensely competitive LCC sector and it will be the Philippines’ four other LCCs that stand to gain the most as the PAL Group removes its budget brand from several of the country’s largest domestic markets.
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