Tourism takes an upward surge in Philippines

With its 7,000-plus islands, tourism is a natural focus for the Philippines and will help diversify an economy that is built on agriculture. Already, there are positive signs that the tourism sector is playing an increasingly important role in support of GDP and job creation. Through to October 2015, visitor arrivals and spending both increased, for example.

Visitor spending in the Philippines grew over 8% compared with the same period in 2014 and, in fact, the October spend alone was more than 21% above the same month last year, indicating a longer term upward surge in the spending curve.

Department of Tourism figures reveal visitors from Korea spend the most, followed by visitors from the US, Canada, Japan and Australia. China sits just outside the top five and the expectation is that this giant will soon push higher up the charts.

Manila – the capital of the Philippines – is naturally enough the primary gateway for the country’s visitors and air travel brings the majority of arrivals, highlighting the importance of route development.

In such a varied country, there are many temptations drawing in visitors. Manila has its own attractions too, ensuring the Philippines is far more than just a beach holiday. Two centuries-old landmarks stand out and both are contained in the Intramuros area, the walled city that defines Old Manila.

Fort Santiago was built by Spanish conquistador Miguel Lopez de Legazpi. The stone fort was completed in 1590 and since then, the fort has seen Spanish, British, American and Japanese flags raised above it in a colourful history. Although it sustained heavy damage during the Second World War, it has now been restored as a designated “Shrine of Freedom”.

Not far away, in distance and construction date, is the San Augustin Church. Based on a design by Juan Macias, building was started in 1586 and completed in 1607. The church has survived wars and natural disasters and its spectacular interior and unique architecture continue to pull in visitors.

Away from Manila, there are plenty of tourism staples. A visitor can choose between beaches, coral reefs, rice terraces, waterfalls, volcanoes and even the Chocolate Hills, an incredible geological formation of more than 1,500 hills spread over 20 square miles.

The Department of Tourism’s aim is to create an integrated, sustainable tourism plan for the Philippines. By making it as comprehensive as possible, it should ensure tourism plays a key role in the development of the national economy. And for the plan to succeed, supporting infrastructure must respond to the needs of the market. In this respect, direct international access by air will be crucial.

Home-based carriers Cebu Pacific and Philippine Airlines (PAL) are playing their part. The Cebu Pacific Group operates subsidiary low cost-carriers Cebu Pacific and Cebgo (formally Tigerair Philippines). It offers a network of 90 routes, including Sydney, Dubai, Doha, Bali, and Tokyo (Narita). Late last year, the airline launched three new routes: Manila-Fukuoka, Cebu-Taipei, and Davao-Singapore. It is also slated to launch direct flights from Manila to Guam, its first US destination, on March 15, 2016. The Guam route will operate four times a week and utilise a brand-new Airbus A320.

“Having Guam in our network sets us off on another expansion path across the Pacific,” says Cebu Pacific president and CEO Lance Gokongwei. “With the launch of Guam, we offer fares that are up to 83% lower than other airlines. Fares this low can only mean more tourists to both countries, more Filipinos visiting home, and more opportunities for everyone.”

The group’s 55-strong fleet comprises eight Airbus A319s, 33 Airbus A320s, six Airbus A330s and eight ATR-72 500 aircraft. Between 2016 and 2021, Cebu Pacific’s delivery schedule includes five more brand new Airbus A320s as well as 30 Airbus A321neo, and 16 ATR 72-600 aircraft.

It won’t be difficult to place them. Recently, the Civil Aeronautics Board granted Cebu Pacific permission for international routes from Manila to the United Arab Emirates and key destinations in Russia, and from various points in the Philippines to Taipei and Kaohshiung in Taiwan.

The airline can operate an additional seven flights weekly from Manila to any point in the UAE and can serve Moscow and Vladivostok three times a week. The airline’s request for rights to operate direct flights to Taipei from Caticlan, Clark, Davao, Puerto Princesa, and Tagbilaran, as well as direct flights to Kaohshiung from Caticlan and Cebu, was also granted.

Cebu Pacific has also become an official carrier under the ASEAN Multilateral Agreement on Air Services. As soon as the Philippines completes the ratification of the relevant protocols, the airline will be able to operate unlimited flights between capital cities within the Association of Southeast Asian Nations (ASEAN) region.

“We’ve always maintained that traffic rights are valuable resources that must be rationally allocated to carriers that are willing and able to utilise and operate flights,” says Atty. JR Mantaring, Cebu Pacific’s VP for Corporate Affairs. “We look forward to mounting additional flights to meet the growing travel demand in communities we serve, and opening new routes to stimulate travel in emerging markets.”

Meanwhile, PAL’s network has grown to more than 40 destinations compared with only 25 in January 2013. In 2015, the airline is predicted to have carried around six million passengers, a double-digit increase on 2014 thanks to rapid expansion. The downside of this is that it has been struggling to maintain load factors. Low fuel prices and a more conservative approach going forward should keep the airline on an even keel, however.

The most notable feature of PAL’s expansion has been the move into destinations beyond the Asia-Pacific region. A couple of years back, the airline limited its global exposure to five stops in North America. The network now includes Abu Dhabi, Dammam, Dubai, Jeddah, London, Kuwait and Riyadh.

The US is still a big pull though and in March this year PAL will begin serving Los Angeles from Cebu, its first long-haul route from this airport. A three-times weekly service using an Airbus A340 will supplement the Manila-Los Angeles operation. Building up Cebu is likely to figure strongly in PAL’s thinking due to congestion at Manila. It has already grown its domestic services there, predominantly handled by PAL Express.

Meanwhile, two new Boeing 777-300ERs, arriving later in the year, will facilitate additions to the international network. CAPA also suggests that PAL will order Airbus A350-900s, to upgrade New York services, fly non-stop to Toronto and add another mainland US destination, with San Diego and Las Vegas both possible targets.

PAL has 28 destinations in Asia-Pacific, including eight in Australasia following new routes to Cairns, Auckland and Port Moresby. The airline competes on only one of its existing Australasia routes, Manila-Sydney, which is also served by Cebu Pacific and Qantas.

Australasia is also likely to benefit from PAL’s narrowbody orders, which include 30 A321neo aircraft for delivery from 2017. PAL is reportedly looking at converting some of its A321neo orders to A321LRs, allowing it to launch new non-stops to destinations such as Brisbane and Perth.