Air Asia Zest brand to be phased out

MANILA, Philippines - Think tank Center for Asia Pacific Aviation (CAPA) sees low cost carrier Philippines AirAsia entering a new phase next year as unit AirAsia Zest, is set to retire by the end of the year.

CAPA said the carrier’s operation would be profitable next year paving the way for an initial public offering (IPO).

The AirAsia Zest brand will be phased out by the end of the year and will integrate with Philippines AirAsia in order to maximize fleet utilization between both carriers and slot allocations in Manila.

“AirAsia has already completed the transition to a single operating certificate in the Philippines, following a complicated and costly two years of maintaining two separate affiliates,” the report said.

Furthermore, the network is also set to expand and include several new routes from secondary hubs, in line with the new strategy of the AirAsia Group to open new unique point-to-point routes from secondary hubs throughout the Southeast Asian region.

Since its launching in March 2012, Philippines AirAsia’s operation has been in an almost constant state of restructuring, CAPA said. Its operation consists of only 12 active aircraft, which are used to serve seven domestic and seven international destinations.

“AirAsia’s operation in the Philippines has been consistently unprofitable, posting unsustainably high negative margins,” it said.

Operating losses narrowed by 62 percent to P1.08 billion in the first half but is still a dismal performance as the revenue base was only P4.425 billion and the traffic base was only 1.82 million passengers.

CAPA said the outlook for Philippines AirAsia is starting to brighten as load factor improves. The load factor of the carrier’s operation improved to 78 percent in the first semester of the year compared to only 67 percent in the same period last year.

Moreover, a brand campaign is already on the works and is expected to be rolled out in the coming months throughout the country aimed at cementing the Philippines AirAsia brand.