SMC may launch own airline – CAPA

MANILA, Philippines -  San Miguel Corp. (SMC) may launch its own airline operations to cater to international routes as well as domestic points from Caticlan Airport near Boracay, according to think tank Center for Aviation (CAPA).

In a report, CAPA said SMC is considering the possibility of establishing its own airline and acquiring aircraft which are capable of operating longer international routes.

?“The new airline would be based in Caticlan and focus on international routes of up to four or five hours. The new airline could also potentially compete in the domestic market,” CAPA said. 

CAPA said SMC has been in talks with Boeing for the 737 MAX 7. 

It said Embraer would likely promote the use of the E190, and the C Series for Bombardier, to be used by SMC. 

 “Any of these aircraft would give San Miguel’s new airline subsidiary a competitive advantage, since they are capable of operating routes from Caticlan to several potentially viable destinations in East Asia that could not be reached with the A320,” CAPA said. 

However, CAPA said the Philippine government would have to study the proposed airline operations, citing conflict of interest as SMC operates the Caticlan Airport. 

After SMC sold its stake in flag carrier Philippine Airlines (PAL)  to the group of Lucio Tan in 2014, it has since focused on potential airport projects. 

SMC has earlier proposed to build a new international airport in Bulacan which could replace the congested Ninoy Aquino International Airport in Manila. 

CAPA also said it expects capacity at the Caticlan Airport, one of the two airports serving tourist spot Boracay Island, to reach or even exceed 40,000 weekly seats in the coming months from just 18,000 weekly seats a year ago, following the opening of the runway extension in November last year. 

The opening of the runway extension which is part of the upgrades undertaken by SMC, allows the airport to accommodate bigger aircraft.

By next year, SMC also intends to open a new terminal capable of handling international flights at the airport. 

With the opening of the runway extension, CAPA said carriers PAL and Cebu Pacific have transitioned their flights to Caticlan. 

Philippines AirAsia Inc. is also set to launch flights to Caticlan beginning next month. 

While there is growth in capacity seen in Caticlan, CAPA said such does not represent new growth for the overall Philippine market as the airlines have been reducing their operations at nearby Kalibo Airport.

CAPA said total domestic capacity at Kalibo is seen to drop to approximately 33,000 weekly seats in May of this year, a 15 percent reduction compared to the same month last year. 

“With Caticlan opening up to jets and supporting more capacity, demand for Kalibo has naturally waned. It takes over two hours to travel from Kalibo to Boracay via a road ferry combination, whereas a short ferry connects Caticlan Airport with Boracay directly,” CAPA said.