There is good news for the 700,000 Filipinos residing in the UAE but not for the airlines operating on the UAE-Philippines route.
Due to cut-throat competition between the UAE, Qatar and the Philippines carriers, airfares between the UAE and the Philippines have dropped and even February 2014 fares have been kept low because the route is witnessing overcapacity now – after remaining under-served for years.
According to Centre for Asia-Pacific Aviation (Capa), fares between Manila and Dubai or Abu Dhabi have dropped as the three Philippines carriers – Cebu Pacific, Philippine Airlines (PAL) and PAL Express – have struggled to fill new A330s. Load factors have been sustainable only during peak periods. Losses for all the carriers are likely if current capacity levels are maintained year-round.
The UAE has the fourth-largest Filipino expatriate community in the world. Only the US, Saudi Arabia and Canada have larger Filipino expatriate communities. But Filipino migrant worker traffic to and from the UAE fluctuates significantly and during some months it is extremely unbalanced, with most passengers heading in one direction only.
In January 2013, Cebu Pacific selected Dubai as its first long-haul route and began selling the new daily service nearly nine months ahead of launch with one-way promotional fares starting at PHP6,748 ($166 or Dh609 based on the exchange rate at the time) including taxes and fees.
Capa said Cebu Pacific’s online booking engine reveals it has cut back services to Dubai to five weekly flights for the remainder of January 2014 and all of February 2014. This would be an indication of soft demand and a potential return of the unfavourable conditions that were experienced in October 2013 – although this time potentially even worse as PAL Express is also now competing on the Manila-Dubai route.
Capa said even with the slight reduction in capacity from Cebu Pacific, fares for February 2014 remain extremely low. Cebu Pacific is currently offering a one-way fare of PHP7,549 ($167, Dh613 based on the current exchange rate) including taxes and fees for travel in the second half of February 2014.
PAL’s website is currently offering one-way all-inclusive fares for February 2014 starting at $311 to Abu Dhabi and $341 to Dubai. PAL and PAL Express both offer complimentary meals, drinks and checked baggage while Cebu Pacific charges for these items.
The global think-tank said PAL also offers in-flight entertainment (IFE) across all classes, a business class cabin, premium economy and roomier economy seats. PAL Express does not have any IFE and squeezes 414 seats in its A330-300s, making it only slightly less dense than Cebu’s 436 seat configuration. Cebu Pacific has the world’s densest A330-300 configuration, packing in only four fewer seats than the aircraft’s certified limit. PAL Express and Cebu Pacific both have nine-seat abreast 3-3-3 layouts while PAL uses the more typical eight-seat abreast 2-4-2 layout in economy.
Emirates is now selling on its website return all-inclusive fares starting at $960 for Manila-Dubai and starting at $911 for Clark-Dubai. Etihad’s online fares for Manila-Abu Dhabi are higher, starting at $1,296 for a return ticket. One-way fares online on Emirates and Etihad are significantly more expensive, Capa said in its report.
Cathay Pacific is also extremely competitive, offering on its website Manila-Hong Kong-Dubai return fares that start at only $605 including taxes. Cathay is the largest one-stop carrier in the Philippines-UAE market and has traditionally moved a large volume of migrant workers between Manila and Dubai as well as Abu Dhabi. Manila-Hong Kong-Abu Dhabi is currently priced at $920. The launch of non-stop services to the UAE by Philippine carriers has impacted Cathay, pushing down the carrier’s already low economy yields on the route.
Singapore Airlines also offers a one-stop product between Manila and Dubai but has not generally been a high volume mover in this market. Singapore’s online return fares for Manila-Singapore-Dubai currently start at $992 including taxes. Singapore Airlines no longer serves Abu Dhabi.
While it appears Cebu Pacific is now undercutting PAL/PAL Express and Cathay Pacific by about 50 per cent (and Emirates and Etihad by even bigger margins) this is not an accurate indication of the cheapest fares available in these markets. The full-service carriers serving the Philippines do not rely much on online distribution channels and often provide big discounts to agents, particularly for high volume migrant worker contracts. In fact some one-stop carriers in the market, such as Royal Brunei Airlines, only sell tickets between Manila and Dubai through agents.
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