How AirAsia Philippines is tackling recovery challenges

By Ashley Erika O. Jose, Reporter

AIRASIA PHILIPPINES is focusing on expanding domestic routes and tackling key industry challenges as part of its recovery strategy, its chief executive officer (CEO) said.

“Now five years in AirAsia, it has been a very good balance between the challenging pandemic years and the years of recovery,” AirAsia Philippines CEO Ricardo P. Isla said in an interview with ����ý.

Before joining AirAsia Philippines in 2019, Mr. Isla spent nearly 20 years in the telecommunications industry, where he led the international retail sales and distribution for one of the country’s major telecom companies.

PATH TO RECOVERY
“First of all, the pandemic presented a very challenging situation for us. We had to be very resourceful and resilient. Actually, we are still on the path to full recovery,” he said.

Mr. Isla said that AirAsia Philippines’ domestic routes have fully recovered, but its international network will only fully recover by the second half of the year.

“It is because of China. It used to account for 30% of our international capacity. Right now, it is not really delivering, and we just have to catch up,” Mr. Isla said.

As a result, AirAsia Philippines will focus on maximizing its domestic destinations, particularly in areas where the airline has a strong presence.

“For 2025, we are maximizing our domestic [network], especially in leisure destinations. We’ll stay focused and further strengthen our strong territories. We expect to boost our capacity by about 10-15% in these very popular destinations,” he said.

He added that the low-cost carrier plans to concentrate on its strong territories such as Boracay, Kalibo, Palawan, and other leisure destinations.

“However, for international, we would still like to focus on our positioning as a low-cost carrier. We have to go back to basics, meaning rebuild the trust and confidence of our passengers,” he said.

Mr. Isla noted that the airline is banking on its parent company’s plans, as AirAsia Philippines stands to benefit heavily from the consolidation of AirAsia X and AirAsia Aviation Group (AAGL).

Earlier in January, AirAsia X Berhad (AAX) announced a mutual agreement with Capital A Berhad (Capital A) to extend the timeline for the completion of the proposed acquisition of the group’s aviation business.

Last year, Capital A Berhad disclosed that it had entered into a non-binding agreement with its unit, AirAsia X, for the sale of its aviation businesses — AirAsia Berhad and AirAsia Aviation Group Ltd.

“Let us also consider the status of our parent company with regard to the proposed regularization plan,” Mr. Isla said, adding that the transaction is expected to be completed soon.

According to Mr. Isla, this will be followed by its parent company’s order for over 600 more aircraft.

“We havean orderbook of around 647 aircraft, with a good spread of Airbus A320s and mostly Airbus A321NEOs. This will serve all countries, including Philippines AirAsia, Malaysia, Indonesia AirAsia, Thailand AirAsia, and Cambodia AirAsia,” he said.

REVIVAL OF ROUTES
The low-cost carrier is confident about the recovery of air travel, and AirAsia Philippines aims to capture that momentum, Mr. Isla said, adding that the company will assess which of its pandemic-affected routes to revive.

“We must be willing to sail through the uncharted waters of the travel industry. By that, we want to further widen our network. And at the same time, when we widen our network, we want to go back to where we used to fly during the early parts of 2019,” he said.

For AirAsia Philippines, the challenges in the aviation industry remain, Mr. Isla said, identifying these as manpower, supply chain issues, and the need to catch up with infrastructure.

“There are many challenges, but three key elements—people, availability of parts and resources—are particularly pressing, and now we are running out of MROs (maintenance, repair, and overhaul) facilities,” he said.

Many Middle Eastern companies are after Filipino talent, Mr. Isla noted, adding that AirAsia Philippines is further strengthening the perks it offers its employees.

He added that supply chain disruption continues to be a major challenge in the aviation industry.

“We are actively mitigating this. We are an ASEAN company, and all the other airlines within the AirAsia group. So we have the muscle when it comes to procurement of parts,” he said.

Additionally, Mr. Isla said that due to the limitations of MROs, the company has launched Asian Digital Engineering.

“This is our MRO prioritizing the Philippines. So, we’ve addressed that. These are the resources we need to maintain, namely the resources and parts,” he added.