Philippines-North Asia aviation market: LCCs drive rapid growth


North Asia dominates the Philippines international market. Although the Philippines is part of Southeast Asia, there is nearly three times as much capacity to North Asia than the rest of Southeast Asia.

The popularity of the Philippines as a holiday destination among North Asian residents is the main driver of the Philippines-North Asia market, although there are also significant labour and visiting friends and relatives (VFR) segments. North Asian visitor numbers to the Philippines have been growing rapidly, leading to rapid growth in passenger traffic.

Low cost airlines have particularly been benefitting from the rapid growth in demand for travel between the Philippines and North Asia. LCCs are well placed, particularly outside congested Manila, as all of North Asia is within narrowbody range of the Philippines and most Philippines-North Asia traffic is price sensitive. 

Against this backdrop, the Philippine Tourism and Mactan-Cebu International Airport are ideal hosts for the CAPA LCCs in North Asia Summit on 24/25-Jun-2019.


  • Philippines-North Asia seat capacity has grown by almost 20% over the past year and by almost 70% over the past four years.
  • LCCs have driven the growth, pushing up the LCC penetration rate in the Philippines-North Asia market from 27% in Apr-2015 to 42% currently.
  • LCCs are particularly strong outside Manila, where slot restrictions restrict growth; LCCs currently account for 33% of Manila-North Asia seat capacity, compared with 60% of non-Manila-North Asia seat capacity.
  • There are currently 12 LCCs competing in the Philippines-North Asia market, including nine North Asian LCCs.
  • More rapid LCC expansion is expected as North Asian visitor numbers to the Philippines, which already account for more than half of total visitors, continue to grow.

The rapid growth of LCCs in the Philippines-North Asia market will be discussed at the CAPA LCCs in North Asia Summit in Cebu on 24/25-Jun-2019. For more details on the summit click here

North Asia accounts for 55% of the Philippines’ international seat capacity 

North Asia is a huge market for the Philippines and accounts for more than half of total international seat capacity from the Philippines. There are currently more than 220,000 weekly one-way seats from the Philippines to North Asia, compared to slightly more than 80,000 weekly seats to Southeast Asia, which is the Philippines’ second largest market.

The top three international markets for the Philippines are in North AsiaSouth Korea, Hong Kong and Japan. China and Taiwan are also in the top six. These five markets combined account for 55% of total international seat capacity from the Philippines

Top six international markets from the Philippines ranked by international capacity share (% of seats): week commencing 22-Apr-2019

Overall, North Asia accounts for 57% of total seat capacity from the Philippines. The only other North Asian market served from the Philippines, Macau, accounts for the remaining 2%.

North Asia accounts for 54% of visitor numbers to the Philippines 

Not surprisingly, North Asia accounts for a similar proportion of visitor numbers to the Philippines. North Asia accounted for a 54% share of total visitors to the Philippines in 2018, according to Philippines’ Department of Tourism data. 

Total visitor numbers to the Philippines increased by 7.7% in 2018, to 7.13 million, while North Asian visitor numbers grew by 9.3%, to 3.84 million. 

Visitor growth slowed in 2018 compared to 2015, 2016 and 2017, when an 11% overall increase was achieved. However, the 8% growth for the overall market – and the 9% growth for North Asia – was impressive, given the six-month closure in 2018 of Boracay Island, which is the most popular tourist destination in the Philippines.

South Korea and China are the Philippines' two largest source markets 

Boracay’s closure impacted Korean visitor numbers, which dropped 1% in 2018, to 1.6 million. However, Chinese visitor numbers still increased by 30%, to 968,000, driving most of the overall growth in the North Asian market. 

Chinese growth slowed from the 43% achieved in 2017 and 38% achieved in 2016. Korean visitor numbers also increased by 9% in 2017 and by 10% in 2016 before dropping slightly in 2018. Korea and China are the two largest source markets for the Philippines tourism industry. 

Japan and Taiwan are also among the top six source markets. Japanese visitor numbers increased by 8% in 2018, to 632,000, almost matching the 9% growth achieved in 2017. Taiwanese visitor numbers increased by 2% in 2018, to 241,000, almost matching the 3% growth achieved in 2017.

LCCs drive rapid capacity growth 

Philippines-North Asia capacity has been increasing rapidly, driving fast growth for the overall Philippine international market. 

Capacity has increased by nearly 20% over the past year and by nearly 70% over the past four years, according to CAPA and OAG data. LCCs have driven most of this growth.

Philippines-North total weekly one-way seat capacity: Sep-2011 to Sep-2019

LCC capacity in the Philippines-North Asia market has more than doubled over the past four years, from approximately 35,000 one-way seats in Apr-2014 to 93,000 seats currently. Over the past year LCC capacity has increased by nearly 40%, from approximately 67,000 seats in Apr-2018. 

The LCC penetration rate has increased from only 27% in Apr-2015 to approximately 37% in Apr-2018 and 42% in Apr-2019. 

A dozen LCCs currently serve the Philippines-North Asia market 

There are currently nine North Asian LCCs serving the Philippines. Six of these have entered the market within the past four years: China’s Lucky Air, Jetstar Japan, Tigerair Taiwan and three from South KoreaAir Seoul, Easter Jet and T’way. The three pre-existing LCC competitors are also from South KoreaAir Busan Jin Air, Jeju Air – and have been expanding.

The two Philippine LCCs serving North AsiaPhilippines AirAsia and Cebu Pacific – have also expanded rapidly.

Cebu Pacific is now the market leader, accounting for 47% of LCC seats in the Philippines-North Asia market and 20% of total seats. Philippines AirAsia accounts for 26% of LCC seats and 11% of total seats.

The largest of the nine North Asian LCCs are Jin Air and Jeju Air, which account for 8% and 6% of LCC seats in the Philippines North Asia market respectively. None of the other North Asian LCCs accounts for more than a 3% share.

Singapore-based Jetstar Asia also serves the Philippines-North Asia market using fifth freedom rights. Jetstar Asia has a slightly more than 1% share of LCC capacity, making it one of the smallest competitors. However as a group, Jetstar has a 5% share, which makes it the fifth largest competitor.

Philippines-North Asia LCC seat capacity ranked by airline: week commencing 22-Apr-2019

Rank Airline IATA Weekly seats  Share of total LCC capacity 
1 Cebu Pacific 5J 87,846 47.4%
2 Philippines AirAsia Z2 48,600 26.2%
3 Jin Air LJ 14,274 7.7%
4 Jeju air 7C 11,340 6.1%
5 Jetstar Japan GK 5,040 2.7%
6 Air Busan BX 4,082 2.2%
7 T'way Air TW 3,348 1.8%
8 Tigerair Taiwan IT 2,880 1.6%
9 Eastar Jet ZE 2,618 1.4%
10 Jetstar Asia 3K 2,520 1.4%
11 Air Seoul RS 1,560 0.8%
12 Lucky Air 8L 1,044 0.6%

LCCs expansion is mainly outside Manila 

LCCs are well suited for the Philippines-North Asia market as it is primarily an inbound leisure market, dominated by tourism. A large portion of the smaller outbound market also consists of price sensitive labour traffic (Filipinos working in North Asia).

While the Philippines is part of Southeast Asia, its proximity to North Asia enables the entire region to be within narrowbody range. This has been a critical component in achieving the high LCC penetration rate because most LCCs do not operate widebody aircraft. Of the 12 LCCs competing in the Philippines-North Asia market, only two (Cebu Pacific and Jin Air) have widebody aircraft.

If it were not for the slot constraints at Manila, LCCs would likely have an even larger share of capacity in the Philippines-North Asia market. Manila accounts for 65% of Philippines-North Asia seat capacity but a smaller 58% of movements. LCCs have only a 33% share of seat capacity in the Manila-Philippines North Asia market, compared to a 60% share of the non-Manila-Philippines market.

Seven Philippine airports have services to North Asia

Seven airports in the Philippines have services to North Asia. Cebu is the second largest gateway, accounting for 19% of Philippines-North Asia seat capacity. The LCC share of Cebu-North Asia capacity is 54%. 

The other Philippine airports that have services to North Asia are Kalibo, Clark, Puerto Princesa, Tagbilaran and Iloilo. LCCs account for two thirds of North Asia seat capacity at these five airports combined, although one of the airports (Tagbilaran) only has international services operated by FSCs. 

Philippine airports ranked by North Asia seat capacity: week commencing 22-Apr-2019

Rank Airport IATA Weekly seats Share of total seats LCC % of seats
Manila Ninoy Aquino International
MNL 286,753 64.8% 33%
Mactan-Cebu International
CEB 85,505 19.4% 54%
KLO 35,637 8.0% 65%
Clark International
CRK 25,456 6% 73%
Puerto Princesa 
PPS 2,926 0.6% 89%
Tagbilaran (Bohol-Panglao)  
TAG 2,520 0.6% 0%
ILO 1,074 0.2% 100%

Manila has 18 destinations in North Asia, including six in China, six in Japan, two in South Korea and two in Taiwan. Hong Kong and Macau account for the remaining two destinations. North Asia accounts for 33% of Manila’s 54 international destinations and 49% of its international seat capacity. 

Mactan-Cebu has 17 destinations in North Asia, including seven in China, three in Japan, four in South Korea and one in Taiwan. Hong Kong and Macau account for the remaining two destinations. North Asia accounts for 81% of Cebu’s 21 international destinations and 84% of its international seat capacity. 

Kalibo has 12 destinations in North Asia, Clark has seven, Davao two, Puerto Princesa two, Iloilo one and Tagbilaran one (based on OAG data for the week commencing 22-Apr-2019). These six secondary airports account for 42% of Philippines-North Asia routes but only 16% of Philippines-North Asia seat capacity, since most routes from the smaller gateways are served less than daily. 

Route expansion has been rapid, led by LCCs 

Of the 60 routes connecting Philippines with North Asia, there is LCC competition on 41.

Over the past year 16 new Philippines-North Asia routes have been launched. LCCs have accounted for 13 of these 16 route launches.

The number of routes connecting the Philippines and North Asia will continue to increase, led by LCCs. Given the congestion in Manila, Cebu and the smaller secondary airports will benefit as LCCs expands. 

Cebu and most of the secondary airports are gateways to popular tourist destinations, making them attractive to leisure focused North Asian LCCs: Kalibo is the gateway to Boracay; Puerto Princesa and Tagbilaran are the gateways to the popular beach islands of Palawan and Panglao respectively. 

More North Asian LCCs will launch services to the Philippines 

More North Asian LCCs will inevitably launch services to the Philippines. While the Philippines is now served by nine North Asian LCCs, there are currently 24 North Asian LCCs and several proposed start-ups are preparing to begin operations.

Chinese LCCs are particularly being targeted by Mactan-Cebu and other Philippine airports. Only one of China’s 11 LCCs serves the Philippines at the moment. The Philippines is particularly an obvious white spot for Spring Airlines, China’s largest and purest LCC. 

See related report: North Asia LCC market's 24 LCCs and active start-ups

The nine North Asian LCCs already serving the Philippines are also keen to expand as the popularity of the Philippines as a destination continues to grow in North Asia. Cebu Pacific and Philippines AirAsia are similarly keen to tap into this growth as they pursue fleet expansion. 

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