Tourism liftoff seen as Duterte, China clear air in trade ties

Commercial air travel between the Philippines and China is a potential winning sector given warming ties between the two nations, a move initiated by President Duterte’s pivot toward the Philippines’ second-largest trading partner, according to think tank Capa-Center for Aviation.

During Mr. Duterte’s state visit in China this week, his Chinese counterpart, Xi Jinping, agreed to lift the travel advisories imposed on the Philippines in the wake of a territorial dispute over parts of the South China Sea.

“This will likely stimulate large air service growth between China and the Philippines,” Capa said in a report released Oct. 21.

The shift to China was seen as a gambit opening on the part of the President amid sovereign rights the Philippines holds over the contested islands.

“Travel warnings from China carry more weight than in other markets since state-owned/linked travel agencies essentially stop selling the impacted market. Diplomatic rows have resulted in drastic reductions in outbound passenger flows from China,” Capa said.

It said there was plenty of room for growth in the travel sector, considering the Philippines remained Asia’s smallest market for mainland Chinese tourists. It added the Philippines lured just 491,000 visitors from China, compared with comparatively smaller neighbors like Laos and Cambodia, which drew 511,000 and 695,000 visitors, respectively.

Capa noted that between 2013 and 2015, Chinese visitors to the Philippines grew 15 percent.

“Political tension reduced demand and would have been a factor in state-owned airlines growing to the Philippines, or Filipino airlines seeking slots in China,” Capa noted.

Manila’s Ninoy Aquino International Airport (Naia) accounted for six of the nine routes between China and the Philippines. Cebu has two routes (Chengdu and Xiamen) while Kalibo has one (from Beijing), the report said.

A big beneficiary to improving ties is Caticlan Airport near Boracay. The gateway, operated by San Miguel Corp., is finalizing its expansion that would allow it to accommodate larger aircraft.

“Chinese airlines might investigate what partnerships they could form for connections on the Manila-Caticlan route. This could help local airlines alleviate overcapacity,” Capa said.

Challenges to expansion still remain given congestion at Naia. The country’s busiest gateway handled 36.7 million passengers last year, well beyond its designed capacity.

“But with an opaque slot environment, there may be arrangements that mean Naia slots are made available to Chinese airlines, while Chinese slots are made available to Filipino airlines,” Capa said.