Zest Airways to hike prices, cites fuel concerns

Zest Airways, the airline of juice magnate Alfred Yao, is increasing ticket prices for flights between Manila and points in South Korea, the largest source of tourists for the Philippines, to cover the cost of fuel.

Documents from the Civil Aeronautics Board (CAB) showed Zest Airways, which earlier signed a strategic partnership with Malaysia’s AirAsia Group, would increase its fuel surcharge for flights to South Korea by almost half.

If approved, Zest said it would impose a fuel surcharge of $66 per passenger for flights between Pusan and Incheon in South Korea, and Manila.

Zest Airways’ current rate stands at $45 per passenger.

Fuel surcharges are paid by passengers on top of basic ticket prices.

Data from the International Air Transportation Association (IATA) showed the price of jet fuel averaged $127.2 a barrel as of March 15, lower by 8 percent from that of the previous year.

In the first two months of 2013, most of the tourists who visited came from South Korea, data from the Tourism department showed.

Tourists from South Korea totaled 106,122 in January and February—up 18.23 percent year-on-year.

Last month, Zest signed a “strategic alliance” with the local unit of Malaysia’s AirAsia group, AirAsia Philippines.

Under the alliance, the two groups agreed to a share swap with AirAsia Philippines getting a 49-percent stake in Zest Airways.

In exchange, Yao will get a 15-percent interest in AirAsia Philippines.

Yao’s stake will come from AirAsia Philippines’ existing Filipino shareholders, namely, the company’s CEO Marianne Hontiveros, vice chair Michael Romero and chair Antonio “Tonyboy” Cojuangco.

Each of the original shareholders will give up 5 percent of their current 20 percent to Yao.

Once the transaction has been completed, all four Filipino shareholders will own 15 percent of AirAsia Philippines, while the remaining 40 percent will stay with Malaysia’s AirAsia Berhad.

AirAsia Philippines operates flights exclusively out of Clark. Acquiring a stake in Zest gives AirAsia a foothold in Manila.  Paolo G. Montecillo