The low-cost carrier (LCC) penetration rate in the Philippine domestic aviation market is about to reach 80%, and could reach 85% before long. This is higher than anywhere else in the world and the global president, according to CAPA, has been driven by the aggressive expansion of Cebu Pacific and AirPhil Express in the domestic market and the simultaneous cutbacks by flag carrier Philippine Air (PAL).
The position of these carriers in the domestic market looks set in stone, but international routes are about to get highly competitive with the imminent launch of AirAsia Philippines and the proposed Tiger Airways-SEAir joint venture.
Foreign owned carriers will struggle to secure access to domestic markets given regulations in place. CAPA expects to see two or three LCCs operating on domestic routes and up to five LCCs operating internationally to the Philippines.
Cebu Pacific and AirPhil are confident they will emerge as the big domestic winners, with AirPhil targeting a 30% to 35% share of the domestic market. Cebu Pacific is positioned to remain the market leader with an approximate share 50% while full-service carrier PAL is likely to see its share erode to about 15%.