Royal Air Philippines has become the first carrier of 2026 to formally cease trading, ending a turbulent four‑year stretch with an abrupt grounding of its entire network and tipping thousands of business and leisure passengers into a costly scramble for alternatives.

The Manila‑based low‑cost operator, owned by the Cambodia‑registered Lanmei Group, pulled every scheduled commercial service on 4 January and has since been placed into liquidation. Its website now carries only a holding notice promising refunds and floating a vague hope of resuming operations, a prospect industry observers regard as remote given the scale of the financial hole.

Royal Air had built its business on inbound leisure traffic from China and South Korea, feeding holidaymakers into resort hubs such as Boracay and Palawan. That model unwound quickly. International passenger volumes slipped to roughly 51,800 in the first nine months of 2025, while domestic numbers tumbled by more than 60 per cent year on year. It was a sharp reversal from 2023 and 2024, when the carrier was clearing more than 100,000 passengers annually.

Rising regional tensions, a softening Chinese outbound market and aggressive competition from the country’s larger flag and low‑cost carriers left Royal Air increasingly exposed. By the turn of the year, recovery looked implausible.

The airline’s small Airbus A320 and A321 fleet has been grounded while liquidators begin work.

What it means for travellers

The collapse lands at an awkward moment for UK corporates expanding their Asia footprint. Recent industry data shows UK SMEs are pivoting business travel towards Asia and Africa as new global hubs emerge, making thinner regional carriers a more visible part of the trip‑planning conversation than they used to be.

For travellers holding Royal Air tickets, the picture is unforgiving:

  • All flights are cancelled, with no rebooking offered.
  • Refunds are likely to be slow and uncertain while the liquidation runs its course.
  • Replacement seats on overlapping routes are already firming up in price as displaced passengers compete for inventory.
  • Niche leisure connections, notably the Taipei to Boracay route Royal Air had carved out, have lost direct service, forcing travellers onto longer, multi‑stop itineraries via Manila or Cebu.

The shape of the failure echoes other recent groundings across the sector. Earlier this year, ex‑Spirit Airlines pilots were hired to ferry the carrier’s grounded Airbus fleet into long‑term US desert storage after that airline’s own collapse, a reminder that 2026 is shaping up as a difficult year for thinly capitalised operators.

What affected passengers should do now

Travel managers and individual bookers are being urged to act quickly. Where a refund fails to materialise, passengers paying by credit card should pursue a chargeback through their issuer. Those with corporate or personal travel insurance should check whether their policy includes airline insolvency cover, which is not standard across all UK products. Rebooking sooner rather than later is sensible: demand on parallel Manila and Cebu routings is already lifting fares.

For organisations weighing risk in volatile markets, the broader counsel, set out in our earlier guidance that Brits should choose ‘stable destinations’ as flight disruption headlines rise, applies with renewed force.

Royal Air’s failure is the first airline bankruptcy of 2026 and a reminder that the regional Asia‑Pacific market remains uneven. As reported by The Mirror, the collapse has left thousands of passengers stranded mid‑itinerary, while corporate filings cited by industry observers suggest liabilities running to several billion pesos against assets a fraction of that size. Background on the carrier’s history and route network is maintained on its Wikipedia entry.

For travel buyers, the practical lesson is familiar: scrutinise the financial health of any niche carrier carrying material chunks of your itinerary, diversify routings into the Philippines’ main hubs, and confirm that travel insurance written into corporate policies actually covers insolvency rather than only delay and cancellation.