Philippines domestic market: airport constraints restrict growth

The Philippines has had one of the fastest growing economies in Asia over the past few years. Demand for air travel has naturally increased, but domestic traffic has increased at a rate slightly slower than GDP.

Slot restrictions at Manila make it difficult to keep up with rising demand: domestic traffic at Manila increased by only 2% in 2017, whereas the total domestic market increased by 6%.

Two of the three main domestic competitors in the Philippines, AirAsia and Philippine Airlines, have been focusing expansion at secondary airports such as Cebu and Clark. Market leader Cebu Pacific has paused its domestic expansion in the past two years, resulting in market share declines, but is re-accelerating growth in 2018 as it takes seven high density A321s.