How Steeper Rates in a Cost-Driven Market Allowed This Domestic Airline to Succeed
Air Juan is successfully tapping a market that prefers convenience over price when it comes to local travel
With budget airlines and airfare promos allowing more people to travel, it might seem counterintuitive to present an option that costs twice as much as what a regular return ticket would. However, Air Juan sees the value in bucking what’s popular.
In the five years that the airline company has been in operation, it has established its identity as the largest seaplane operator, not just in the Philippines but in the Southeast Asian region as well, with four Cessna Grand Caravans in its fleet. “We are also the only commercial seaplane operator in the country,” Air Juan CEO John Gutierrez adds.
With three hubs nationwide—Manila, Cebu, and Puerto Princesa—the airline company offers both seaplane and landplane flights, with most of them taking less than an hour. In addition, their carriers don’t go as high up in the altitude as those from bigger airlines. “That makes all of our flights very scenic and enjoyable, aside from the convenience of the passengers getting to their destination quickly and hassle-free.”
TIME WELL SPENT
According to the Civil Aviation Authority of the Philippines (CAAP), the maximum allowed passenger capacity for a Cessna Grand Caravan is nine. Given the limited seating, an Air Juan seaplane flight from Manila to Boracay costs double the ticket price from another airline. “Could everybody afford it? To be honest, no,” Gutierrez admits. “We offer the most expensive [airline] services, in fact.”
“Our pricing for our flight tickets isn’t intended to be unaffordable,” Air Juan marketing head Paolo Misa says. “We don’t intend our services to be exclusive. But compared with other aviation outfits, we operate on a smaller scale. We can’t load hundreds of people into our aircrafts unlike [others] do, and so the cost of our operational requirements tends to go up.”
The payoff for the steeper fees is the premium that Air Juan puts on its services. “We fly you directly to your destination,” says Gutierrez. He illustrates the length of time it would take for a traveler to get from the city to the Two Seasons Resort in Coron, Palawan: about 45 minutes to an hour from Manila to the Puerto Princesa Airport, a one-hour van ride to the town proper, then an hour-and-a-half boat ride to the Malaroyroy Peninsula in Bulalacao Island, where the resort is. “Those who are time-sensitive, who think that a nearly four-hour trip to paradise is ridiculous, who’d rather spend their vacation time with family and friends enjoying the destination or catching up with work—that is the market we cater to,” Gutierrez says. “And we’d like to think that our market isn’t just foreign tourists but local travelers too. There’s a small but growing percentage of Filipinos who think like we do, who believe that time is gold.”
COMPLEMENTARY YET INNOVATING
With its very specific services, Air Juan is obviously not seeking to compete with bigger commercial airlines. Currently, it holds the monopoly on providing direct flights, mostly to destinations that don’t have the proper infrastructure yet to receive tourists on a big scale. “In a way, that’s good, but it also means that a lot is expected from us,” Gutierrez says. “We do expect competition in the future, but I’d like to think that the three-year headstart has given us a big advantage.”
Air Juan’s capability to provide flights to places with no airports or airstrips yet has also helped the company establish connections with some untapped municipalities. According to Gutierrez, it could take as long as 10 years for an airport to be built, from the budget appropriation to the actual completion of the infrastructure. “If a municipality doesn’t have a strong tourism market in the first place, they probably won’t get the budget [for the construction of an airport or an airstrip] from the national government in the first place. But how do you build a tourist market there when tourists can’t even get to the place?” With Air Juan able to transport people from one location to another, even to those with no infrastructure yet, the company is able to help jumpstart the development of a tourism market in its more remote or less popular destinations.
Marinduque is an example. Located in the southwestern Tagalog region, the island province’s profile as a tourist destination has gradually risen through the years, though the place doesn’t have much yet in terms of tourism services. “It was one of the places that Air Juan took a chance on, and we actually lost money in the first six months of servicing Marinduque. Now, though, we’re breaking even.” Local government units have even started approaching the airline to inquire about the possibility of providing flights into and out of their provinces; it helps that Air Juan is the only aviation outfit that is accredited by the Department of Tourism to transport tourists.
A 30-minute flight connecting El Nido and Coron is a recent addition to Air Juan’s aviation services, and Gutierrez says there are always plans for further expansion. “Like any other company, we strive to become the best and the biggest, but out-of-country flights would go way, way down the road. We want to establish first our identity as the premier—if not the only—seaplane operator in the country.”
The decision to expand into another destination, he says, takes into consideration not just the fact that Air Juan could provide something different from what other airlines offer but also the aviation needs in smaller provinces that may not even be dependent on tourism. “It’s our way of giving back. We think, ‘We can do business here, and at the same time help this municipality develop itself.’ How will investors get attracted to a province’s fine sand beaches if they can’t get to them? How do you develop an area that investors shy away from because it takes six, eight, 10 hours to get there?”
Not all expansions have worked out, of course. According to Gutierrez, they take a chance on a new destination for a few months first after working with its local government unit and getting their blessing. “We say their blessing and not permission, because as an airline company, we are under CAAP’s jurisdiction. That’s an important distinction. So if it’s a good welcome from the LGU, we go ahead. Kung walang sumasakay, we take a hit for a few months then we pull out.”
“How will investors get attracted to a province’s fine sand beaches if they can’t get to them? How do you develop an area that investors shy away from because it takes six, eight, 10 hours to get there?” says John Gutierrez.
One of their success stories is Cuyo, an island smack in the middle of Puerto Princesa and Iloilo. Cuyo only has an airstrip and travel by ferry boat from the island to either Puerto Princesa or Iloilo takes seven or eight hours. “It is a third-class municipality with a population of 20,000. There’s some tourism in the place, but we fly there [to and from Boracay, Iloilo, and Puerto Princesa] every single day of the week. And the flights are not just for the tourists who go to Cuyo to kite board; they are also for the residents who can and will pay our rate to avoid taking the long route by ferry to the nearby bigger provinces, especially for medical emergencies. Plain transportation—that’s also what our services are about.”
Luxury travel has been presented conventionally by international airline companies as the sensation of utmost comfort during the long flight process, from waiting to board a plane until landing in one’s destination. It is often about getting secluded from the airport crowd in a well-outfitted lounge, priority boarding privileges, and everything from soft-as-butter leather seats with more than sufficient legroom to complimentary champagne.
At Air Juan’s, though, luxury travel gets a different twist. It’s about the luxury of a passenger having more time to spend enjoying a destination, and also the luxury of their discovering a place yet to be bum-rushed by tourists. “What luxury travel means on our end is the provision of something that cannot be found with any other airline,” concludes Gutierrez.