October 21, 2007

Travel news: Bye, bye Palau

(I now wish I had pursued our gang's plan to visit Palau again this year. Sad to see the Asian Spirit flight go which was really a very convenient way, not to mention cheaper way, for tourists to to travel to Palau. My report on this development below:)

Asian Spirit drops Koror flights — again — for now
Marianas Business Journal, Oct. 15, 2007

Rainbows are commonplace in Palau. The rock island across my hotel room balcony during my visit to Palau in 2006.

MANILA, Philippines — After relaunching the route in May, Asian Spirit will be dropping its flights from Koror to Cebu, effective Monday, Nov. 5.

In a phone interview, Jack Po, executive vice president of Asian Spirit; told the Journal, “While it saddens me to confirm this, yes, we are suspending our flights because of the realignment in our business plans. There are increasing demands by passengers in the Philippines for flights to our key service areas such as Caticlan, Aklan, which we have to meet. However, we hope to return to Koror soon when conditions are more ideal.”

Asian Spirit, he said, is preparing to “engage in a major battle” with the larger-capitalized airlines in the Philippines, which are going to fly to Caticlan, the gateway to Boracay Island, Aklan. “We want to focus on our turf, which we had developed when no one was flying to the destination yet.” The Manila-Caticlan service is often called the “bread and butter” route of Asian Spirit, which helps subsidize its flights to 15 other destinations. The other destinations are considered vital in terms of public welfare but are typically low revenue earners for the airline because of unstable passenger loads.

The news of the suspension caught most tourism-related companies in Palau by surprise. It was only in September that Asian Spirit hosted a familiarization tour in Cebu for Palau government officials, businessmen and media.

Reacting to the development, Sam Scott, president of Palau Sea Ventures Inc. and Sam’s Tours; said, “This is very sad and unfortunate news that is very disappointing, to say the least. Sam’s Tours has been working very hard with [Asian Spirit] and hosted many [familiarization tours], including the most recent one from Cebu.” On June 16, Sam’s Tours co-hosted a familiarization tour with the airline and other Palau tourism and business groups for about 60 visitors from Cebu, which included dive center owners, travel agents, media, airline staff, business delegates and other dignitaries.

“The repercussions will be enormous and the tourism industry as a whole in Palau will suffer for some time. I can only hope that we will have a chance to see Asian Spirit back in the skies soon,” Scott said. He added that the airline “indicated [the flight’s suspension] was due to maintenance, but I have a hard time believing that when they indicated no start-back-up date.”

Interviewed in Manila, Surangel Samuel Whipps Jr., whose family co-owns Palau Micronesia Air — Asian Spirit’s partner in Koror — told the Journal, “You know, Asian Spirit has been very good to Palau. They’ve been able to provide competition [for other carriers] which is good for Palau because there have been a lot of visitors. Unfortunately, the number of people traveling [the Cebu-Koror route] was not enough. So we’re looking at how to market it. Maybe it was our fault — the marketing was not ready for Cebu. We expected more people, but the tourism connections were not there yet.” The Whipps family’s Surangel & Sons acted as the general service agent for the Philippine carrier.

Palauans welcomed the entry of Asian Spirit in Koror because it helped bring down the cost of airfare to the Philippines, where a number of them have business dealings, go shopping, and receive medical treatment. Roundtrip fare from Koror to Cebu cost $330 per person, the same rate now offered by Continental Air Micronesia, which flies Koror to Manila. When it was the only airline serving the Koror-Manila route, Continental’s airfare reached as high as $600 per person especially during holidays. “I just checked with Continental because we wanted to come here in December and their rate’s already $510,” Whipps said. “It’s interesting what Continental will do now that they have their monopoly back,” he added.

The Palau businessman said for now, there are no plans for PMAir to hook up with other international carriers serving the Pacific, such as Virgin Blue and Pacific Blue, of British tycoon Richard Branson, president of Virgin Blue Holdings Ltd. “We’re always open to other options, but Asian Spirit was willing to take a risk to fly to Palau. They said this was not the end. They just need to refocus and they will be back.”

Sam Scott of Palau Sea Ventures Inc. expresses disappointment over suspension of Asian Spirit's service in Koror. (Photo by Peter Marquez)

Sam’s Tours, together with other members of the Philippine-Micronesia Alliance, had expressed optimism about the three times weekly Koror-Cebu-Koror flights because it would boost the group’s chances of marketing the Philippines and Palau as scuba diving destinations to more Asian markets. The tour agency had barely recovered from the cancellation of the Davao-Koror service of the airline, but Scott said in September, “We are very excited about the Cebu-Palau route of Asian Spirit.... This will definitely be a big winner for us here in Palau.”

Whipps added the Koror-Cebu route had “a lot of potential. Palau was going to tie up with Cebu Doctors Hospital and two other hospitals in Cebu. It’s much closer and with the flight frequencies, it would’ve been better for our patients. Also there were a lot of business opportunities...people are so used to coming to Manila, they don’t think of Cebu. As one Cebu businessman told me, the minute you step out of the plane, you don’t need to go to Manila anymore because you can find everything in Cebu.” Cebu is the second major urban destination in the country after Manila, the capital.

For its part, Asian Spirit is expected to go head-to-head with larger and more profitable airlines to protect its Caticlan route. Air Philippines, the budget carrier of Filipino-Chinese tycoon Lucio Tan, who also owns Philippine Airlines, will be flying to Caticlan by Dec. 15 using three to six Bombardier Q300 50-seater turboprops; Cebu Pacific, owned by JG Summit Holdings Inc., of food and beverage magnate John Gokongwei, will be flying to Caticlan by February 2008 using two Avions de Transport Regional 72-500s turboprops initially, gradually increasing to 14 by 2013.

Asian Spirit plans to bring in two more British Aerospace 146-100s, which are 86-seaters, to increase their jet service to Caticlan to 16 flights a day from the current six. Along with its turboprop service, the flights are expected to rise to as many as 25 a day during the peak seasons of summer and Christmas. MBJ

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