Clark said to be no substitute for Naia

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11:40 PM June 21st, 2013

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June 21st, 2013 11:40 PM

Clark International Airport can not be considered a viable gateway to Manila, at least not in the near future, according to Standard Chartered Bank.

In a research paper, the British bank said that, despite its strong potential, available land for expansion and concrete development plans, Clark International Airport (CIA) may not be a feasible substitute for Ninoy Aquino International Airport in the medium term due to the lack of efficient transportation connectivity.

“We do not think the minimum three- to four-hour drive from CIA to Manila city center is acceptable to the majority of travelers, and building a high-speed rail system to link the two is financially demanding and clearly not on the government’s radar,” Standard Chartered said.

As the main gateway, Naia is expected to remain congested, and dominant players Cebu Air and Philippine Airlines may gain higher airport slot shares, said the Standard Chartered study dated June 21 titled “Philippines Aviation: Infrastructure constraints support incumbents.”

Cebu Air of the Gokongwei group is expected to “outperform” all other carriers and may become “the largest beneficiary of industry consolidation and infrastructure constraints in the Philippines aviation market,” the British bank said.

Regulators from the European Union and the United States are mulling over the lifting this year of safety bans constraining Philippine carriers, and this development will benefit Cebu Air while PAL—the only long-haul carrier in the Philippines—may reserve more capacity for building its international network and reduce operations in the domestic market.

“In the scenario that the ban is lifted, it would make sense for PAL to place more capacity for its international network and build a feeder network for its long-haul business. However, this could be at the expense of its domestic market, which would allow Cebu Air to gain more market share,” the research said.

The study also said that as regulators have indicated that incumbent carriers won’t lose their rights to routes indefinitely unless they are proven to be under-utilizing the routes, the incumbent carriers in the congested Naia would benefit.

The study noted that 2012 was a very challenging period for airlines in the Philippines as capacity growth outpaced passenger growth for a second consecutive year, resulting in bouts of irrational competition and overcapacity in the domestic market.

But the study said conditions had begun to improve by the end of 2012, as year-on-year domestic seat growth was just 9 percent in the fourth quarter of 2012, compared with 18 percent through the first three quarters of 2012, the British bank said, citing data from the Centre for Aviation.

An equity research team from Standard Chartered visited the Philippines recently and spoke to the regulators in charge of aviation security and route approval, as well as officials of Naia and ClA airports. Doris C. Dumlao

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