Philippines AirAsia could set up second hub following Zest alliance

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Philippines AirAsia (PAA) could set up a second hub at Manila's Ninoy Aquino International Airport (NAIA), as a result of its strategic partnership with Zest Air, AirAsia said in its annual report.

Details are scant, but the carrier attributes this likelihood to its proposed acquisition of a 49% stake in Zest.

"Internally, the management has set targets for 2013. It is keen to establish a presence in Metro Manila via a strategic alliance with Zest," it adds.

In March, PAA signed an agreement to take a 49% stake in Zest and 100% of Asiawide Airways, which owns Zest's aircraft. In turn, Zest's majority shareholder Alfredo Yao will take an unspecified stake in PAA.

PAA had also said that it will inject funds into Zest to support its working capital and that the two airlines will continue to operate separately. The alliance, however, is subject to various regulatory approvals, which is expected to come soon.

Zest has also set up a Facebook page called AirAsia Zest, and since 10 May, all bookings on its website have been diverted to AirAsia's website.

While PAA operates out of Manila's secondary airport Clark International, Zest operates out of NAIA. It is understood that Zest's mix of domestic and international services out of its hub at NAIA is expected to complement PAA's operations from Clark.

Congestion however is a major issue at NAIA, which has reached its saturation point with little room for expansion. The government had previously said that it could sell NAIA to help pay for a new international gateway at Clark International Airport.

Zest operates mainly domestic services within the Philippines and to China and South Korea with its fleet of 10 Airbus A320s, one A319 and three Xian MA60s. PAA, which has two A320s, operates domestic services within the Philippines and has connections to Hong Kong, Malaysia, Singapore and Taiwan.