Rules on budget airlines seen to end ‘piso’ fares

Recent government restrictions on the business practices of airlines will spell the end of “piso” fares and other aggressive promo offers that benefit millions of travellers yearly, the country’s budget airlines warned.

In a statement, Gokongwei-led Cebu Pacific said recent resolutions that instituted mandatory ticket refunds and imposed a ban on overbooking of flights were unreasonable. The new rules, it said, would force millions of Filipinos to go back to travelling by buses or ships, which are less convenient and statistically less safe than airlines.

“Piso” fares are the aviation industry’s version of the telecom sector’s “unli” offering, Cebu Pacific said.

The company said airlines were only able to offer cheap promo fares because of the lower costs in other parts of their businesses.

The new rules on overbooking and mandatory refunds were outlined in Civil Aeronautics Board (CAB) resolutions 28 and 29.

The first order banned airlines from overbooking flights—a well-established industry practice in which airlines sell more tickets than there are seats on a plane to account for the expected number of “no-shows.”

Under previous rules, passengers that are bumped off from their flights—in the event that there are fewer “no-shows” than an airline expected—are given refunds and extra compensation.

CAB resolution 29, meanwhile, takes this a step further by forcing airlines to give passengers that do not show up for their flights full refunds.

Cebu Pacific said overbooking and refusal of refunds for errant passengers were “globally accepted airline practices.”

“The CAB resolutions only apply to domestic flights, precisely because international airlines would never accept such restrictions,” Cebu Pacific said.