AIR passenger traffic is expected to pick up in the fourth quarter (Q4) as the peak travel season begins, although geopolitical conflicts and high jet fuel prices remain risks to growth, according to Aboitiz InfraCapital (AIC).
AIC operates the Mactan-Cebu International Airport, the Bohol-Panglao International Airport, the Laguindingan International Airport in Misamis Oriental.
AIC president and CEO Cosette Canilao said passenger traffic typically starts rising in November and remains strong through March.
“That is the peak season,” she noted.
She added that travel demand remains strong despite consumers cutting back on other expenses, as airlines open more flights to some destinations.
Passenger traffic is currently in its lean season due to the southwest monsoon (habagat), which Canilao expects to last until October. Even so, passenger volumes have exceeded AIC’s projections.
She said traffic could have been stronger if not for the US-Iran war, which disrupted the momentum seen in Q1.
The conflict in the Middle East has also driven up jet fuel prices and created uncertainty for airlines. Canilao said fuel prices have since stabilized somewhat, adding that predictability is more important for airlines than the absolute price because volatility makes costs more difficult to manage.
AIC airports are expecting new routes for the winter season, but Canilao said an escalation of the Middle East conflict could affect airline plans.
While passenger load factors remain high, some airlines have consolidated operations and cancelled flights. Carriers have also become more cautious about experimenting with new destinations because of higher operating costs.
Canilao cited San Vicente in Palawan as one destination that could have gained additional air access if airlines had continued expanding experimental routes.
“It’s a loss because we would have been able to access San Vicente, Palawan, by now, but hopefully, it will come back,” she said.
Higher jet fuel prices could also translate into more expensive airfares and weaken domestic tourism demand, Canilao said.
She stressed the need to promote domestic tourism and develop additional sources of passenger traffic.
AIC is looking at concert tourism and is working with national and local governments, airlines and hotel operators to make the Philippines more attractive to travelers attending major entertainment events.
The company is also targeting other Asian markets, where proximity and visa-free entry for some travelers could support demand.
