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Profitable Airline

Cebu Pacific Air bucks the trend

Luc Citrinot, eTN Staff Writer  Sep 24, 2009

MANILA (eTN) - As international air passenger traffic in the Philippines dips in the 1st half of 2009 due to the slump in world economies, Cebu Pacific Air not only bucks the trend, but remains extremely confident about its future as explained by Candice Alabanza Iyog, Cebu Pacific’s vice president of Marketing and Communication.

According to the Philippines Civil Aeronautics Board (CAB), total international passenger traffic dipped 0.5 percent to 6.26 million during the first half 2009 compared to the same period of last year. Philippine Airlines, Philippines’ flag carrier, saw its international passengers’ traffic declining by 9 percent, Cebu Pacific on the contrary grew by 18.7 percent to almost 800,000 passengers on its international routes.

Candice Alabanza Iyog said: “We expect to carry total of 9 million passengers this year, more than 30 percent over 2008. They are many factors explaining our performance. We have grown capacities as we continued to take delivery this year of five new aircraft. Our fleet has almost doubled since the end of 2007. And the crisis had also a positive effect on us as many passengers suddenly switched from legacy to budget carriers.”

Cebu Pacific is expected to turn a profit this year. For the first half-year, the airline wrote down a profit of US$37.5 million compared to a loss of US$ 322 million for the entire year 2008.

“We continue to be successful as we offer more promotional fares such as our “Go-Lite” fares. Meanwhile, we feel the recession in the sense that we have to be more commercially aggressive to attract people to fly. Consequently, our average yield is down by 20 percent this year,” the airline VP said. According to her, "Go-Lite" fares accounts for 15-20 percent of its total sales.

Cebu Pacific has, however, no choice but to grow as the budget carrier continue to take delivery of new aircraft. The airline will have by the end of the year 41 aircraft, 21 Airbus A319 or A320 and ten ATR72, which are operating mainly on inter-island traffic from Cebu or Davao. Until 2011, Cebu Pacific expects to take another nine aircraft.

More expansion is on the way. “In a year time, we grew our network from 41 to 46 destinations, including 14 international cities. We are now the largest domestic carrier and cover practically all possible destinations in the country. Internationally, we still look at new destinations in Northeast Asia. We look at the new Ibaraki airport near Tokyo. We most likely will inaugurate a new route between Manila and Brunei in the near future,” the VP added.

Additional frequencies have also been added from Manila to Kuala Lumpur, Jakarta and Hong Kong.

The network was however slightly adapted in the provinces where Cebu Pacific felt difficulties to fill international routes out of Cebu and Davao. The airline canceled its Cebu-Bangkok as well as Davao-Hong Kong. In Clark, the airline is slightly reducing its capacities to Bangkok but still sees potential for new flights out of Manila’s future international gateway. Through-fares and through check-in are however already provided with quick connections proposed via Manila or Cebu for other domestic destinations. “We also think of opening in the longer term new bases with more aircraft being added to our fleet,” Iyog said.

What about long-haul routes modeled on AirAsia X? Iyog remains dubitative. “I know that our president has been evocative many times with media the possibility for us to fly long-haul, especially to the United States. However, I do not expect it in a foreseeable future. But you never know what could happen.”

Cebu Pacific Air bucks the trend

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