• AirAsia Philippines has three days to avoid a shutdown order after CAAP issued a cease-and-desist directive over P271.94 million in unpaid obligations.
• The carrier cut its debt from P833.7 million to P271.94 million, but regulators say the remaining balance remains unsettled.
• Cebu Pacific and Philippine Airlines may step in with rescue flights if AirAsia is forced to suspend operations at affected airports.
AirAsia Philippines, the domestic carrier backed by Malaysian tycoon Tony Fernandes, has three days to avoid a potential shutdown of its operations after missing a May 29 payment deadline, prompting the aviation regulator to issue a cease-and-desist order against the carrier.
The June 2 order, addressed to airline president Anna Lu, would bar the budget airline from operating at airports controlled and administered by the Civil Aviation Authority of the Philippines (CAAP) if its remaining obligations remain unpaid.
The June 2 order said AirAsia still owed P271.94 million as of May 20, despite months of payments that sharply reduced liabilities from the P833.7 million cited in CAAP’s final demand letter.
"As of the date of this order, [CAAP] has not received any payment, acceptable settlement proposal, or other satisfactory arrangement that would warrant the deferment of enforcement measures. Consequently, the operator remains in default of its financial obligations to the government," a portion of the letter showed.
AirAsia Philippines’ debts covered unpaid air navigation charges, landing and parking fees, passenger service charges and other airport-related assessments.
The airline had earlier signaled its intention to pay the remaining balance within the week.
What happened before?
InsiderPH previously reported that authorities were weighing sanctions and preparing contingency measures involving other airlines to assist affected passengers after the deadline lapsed.
Last March 23, CAAP issued a final demand letter to AirAsia Philippines over obligations that had ballooned to about P833.7 million, also first reported by InsiderPH. The report was initially downplayed by AirAsia.
On Wednesday, Politiko reported that CAAP had issued the cease-and-desist order.
What AirAsia Philippines is saying?
In a statement on Wednesday, AirAsia Philippines did not directly address the issue on financial obligations claimed by CAAP but said it's business as usual so far.
"AirAsia Philippines assures the travelling public that it remains fully operational, with flights and services continuing as scheduled across its network, subject to normal operational considerations such as weather and other standard factors affecting airline operations, " the carrier said.
Passenger contingency plans
CAAP and airline industry officials have also been discussing contingency measures to minimize disruption if the order takes effect.
An insider said there were initial talks between other domestic airlines and CAAP to step in should AirAsia be forced to suspend operations at affected airports.
Initial talks have included asking larger carriers such as Cebu Pacific and Philippine Airlines to accommodate stranded AirAsia passengers through rescue flights.
Such arrangements are commonly used when airlines suspend operations on short notice, allowing affected travelers to be rebooked on alternative carriers.
When AirAsia temporarily suspended its Davao route in 2024, Cebu Pacific offered affected passengers discounted fares of P1,000 for same-day bookings.
Shutdown threat
An insider said AirAsia Philippines has until Saturday to clear its debts and prevent the shutdown order from being implemented on Monday.
The enforcement would be carried out in phases, starting with gateways such as Davao, Bacolod and Iloilo.
Over time, this would expand to the rest of the CAAP-operated airports where AirAsia conducts operations.
Not included in the order are privately operated facilities such as Ninoy Aquino International Airport and Mactan-Cebu International Airport, among others.
Under the order, AirAsia would lose access to airport facilities, services, clearances and operational privileges under CAAP’s jurisdiction once the directive takes effect.
Airport managers, security units and air navigation personnel were instructed to enforce the order across the agency’s airport network.
Editor's note: Story updated to reflect AirAsia Philippines' statement.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
