Air travel soars on back of budget airlines’ growth

Low-cost carriers (LCCs) were behind nearly all of the growth in the Philippine air travel sector over the last five years, Gokongwei-led Cebu Pacific said on Thursday.

At the Brunei Darussalam-Indonesia-Malaysia-Philippines East Asean Growth Area (BIMP-EAGA) Summit held in Davao last week, Cebu Pacific vice president for marketing and distribution Candice Iyog said 96 percent of the industry’s growth could be traced to the expansion of low-cost carriers.

Full-service carriers like Philippine Airlines (PAL), meanwhile, contributed just 4 percent to the sector’s growth.

“This is mainly driven by the low fares offered by LCCs such as Cebu Pacific. By unbundling services such as baggage and meals, customers are given the choice to buy only the services they want to pay for,” Iyog said.

“Full-service or legacy carriers continue to bundle all their services into the fare, something new air travelers have rejected. Cebu Pacific continues to remain focused on stimulating travel demand in the Philippines. We’ve seen this in every market we operate,” she said.

Despite rising fuel costs, Iyog claimed that airline tickets are now 30 percent cheaper, on average, than they were 10 years ago.

Citing government data, she said one out of every two domestic passengers flew on LCCs in 2006. In 2011, LCCs dominated the domestic market with 76-percent market share, or three out of every four domestic passengers.

She said the effect of LCCs on airline routes can be seen in destinations like Hong Kong, which Cebu Pacific first flew to in 2005. Back then, less than two million passengers were flying between the Philippines and the Chinese special administrative region.

Six years later, 2.75 million passengers were recorded for all airlines, indicating a growth rate of 38 percent.—Paolo G. Montecillo