Philippines AirAsia is temporarily suspending several local and international flights as it diverts resources to unit Zest Airways, after a surprise multi-day suspension of Zest in August resulted in the latter taking a “significant” hit, both in terms of finances and reputation, a top official said.
Philippines AirAsia CEO Marianne Hontiveros said in an interview Thursday that the airline, which operates out of Clark International Airport, would suspend its Kalibo and Davao flights effective Oct. 9 and Hong Kong and Taipei by early November. She said the international routes would be resumed in time for the Christmas season.
The plans are part of broader efforts by the company, the domestic unit of Malaysia’s AirAsia Bhd, to “rationalize” its routes, meaning cutting back or halting flights with “low” passenger loads, Hontiveros said.
The decision was made during a board meeting last Tuesday, she said.
But these efforts have been complicated by the financial impact on Zest following the airline’s suspension by the Civil Aviation Authority of the Philippines on the evening of Aug. 16 until Aug 19.
The suspension caused at least P300 million in expenses and foregone revenues during the four-day period, in addition to penalties slapped by authorities in China, a source with knowledge of the matter said previously.
The airline’s reputation also took a hit, as thousands of passengers were stranded and had to be refunded or rebooked. Passenger volume has dipped since the incident, Hontiveros said.
“We’re investors in Zest and we need to concentrate resources here until things stabilize,” Hontiveros said, citing the need to stay “cash positive.” AirAsia Inc. (Philippines), which is a unit of AirAsia Berhad, has a 49 percent stake in Zest.
“The financial losses directly out of the [CAAP] grounding were very substantial,” Hontiveros said.
Zest chair and CEO Alfredo Yao, in a separate interview, said the company continued to receive support from the AirAsia Group but he denied that Zest was in trouble.