Tuesday, February 15, 2011
THESE days, I've been getting notices on promotional
fares from Philippine budget airline Cebu Pacific almost every week. I
am subscribed to the carrier's promo service, which informs me by email
of 50% discounts on air tickets, reduced fares, and even seats that
sell for only one peso (a little over 3 Bruneian cents), excluding
taxes. I used to get one of these advisories every two months. But
since December, the frequency of the promotional fares has reached a
rate that has just been boggling my mind. Every event has become an
excuse to slash air fares including Valentine's Day and Chinese New
Year, which is not a public holiday in the Philippines. I am almost
certain that in a few days, a promotional fare notice celebrating school
graduation will find its way to my inbox.
Tough competition
I suppose that a lot of the aggressive marketing has to do with increased competition. AirAsia, the region's biggest budget carrier, has announced plans to put up a Philippine subsidiary through a joint venture with Filipino businessman Antonio Cojuangco. The Malaysian airline, which is comfortably ensconced on the top spot in the ranking for budget carriers in the region, has grown, and fast. With Tony Fernandes bringing the dog fight to Cebu Pacific's turf, the Philippine flag carrier has to respond to the challenge.
On the home front, Cebu Pacific has also been facing rising competition from legacy airline and fellow flag carrier Philippine Airlines which started Air Philippines specifically to regain a share of the low-cost market and Zest Air, which has recently announced plans to field international flights.
It's easy to see the draw of the Philippines to budget carriers.
Lucrative market
With over one million Filipinos leaving the country every year to work abroad, airlines have a captive market.
Cebu Pacific alone flew 10.5 million passengers from January to December 2010, driven by a 38 per cent increase in international passengers. The carrier, which flew 2.23 million passengers to and from international destinations last year, disclosed that its Hong Kong and Singapore markets grew by 15 per cent and 45 per cent respectively. There are 140,000 Filipinos working in Hong Kong, and 150,000 in Singapore.
Add to this the Filipinos in the United States, Europe, the Middle East, Brunei and really, everywhere else in the world who make it a point to visit the country at least once a year, and airlines that service the route have an even bigger market.
International tourism
And let's not forget the holiday-makers of the archipelago that 90 million people call home, or the foreign tourists, 3.52 million of whom stepped on Philippine shores last year.
I rub my palms together in glee at the cut-throat competition among airlines that results in a cheaper way to travel. While I enjoy the comforts of travelling in a legacy carrier as much as the next commuter, I find that for short trips, at least, I can dispense with movies on demand, the in-flight blanket, and yes, the much-maligned plane food if it means being able to save on air fare, which, in theory, redounds to being able to travel more frequently.
Looming fuel surcharge
I do not know how long the price-slashing exercise of airlines would last. Turbulence looms constantly over the horizon AirAsia has said that it would apply a fuel surcharge on air fares if oil hits US$100 per barrel in the world market. That level has been hit, although not sustained. If oil continues to rise, Cebu Pacific, which tacks on the surcharge to its fares, may also be hard put to keep fares at current levels.
Volatile economy
There is also the matter of the economy, which can still go either north or south, particularly with inflation once again rearing its insidious head and giving state policymakers cause for concern. For the aviation industry, economic downturns mean companies and individuals cutting back on leisure and business travels.
Moreover, a competitive environment adheres to the principle of survival of the fittest.
And as weaker airlines fall by the wayside and stronger ones are left unchallenged, air fares may rise again.
But while the rates are low, I should be booking tickets for my trips this year. So excuse me while I open my email and read through that latest promotional fare advisory again.
Destinations are a-waving.
The views of the author are her own and do not necessarily reflect those of The Brunei Times.
The Brunei Times
Tough competition
I suppose that a lot of the aggressive marketing has to do with increased competition. AirAsia, the region's biggest budget carrier, has announced plans to put up a Philippine subsidiary through a joint venture with Filipino businessman Antonio Cojuangco. The Malaysian airline, which is comfortably ensconced on the top spot in the ranking for budget carriers in the region, has grown, and fast. With Tony Fernandes bringing the dog fight to Cebu Pacific's turf, the Philippine flag carrier has to respond to the challenge.
On the home front, Cebu Pacific has also been facing rising competition from legacy airline and fellow flag carrier Philippine Airlines which started Air Philippines specifically to regain a share of the low-cost market and Zest Air, which has recently announced plans to field international flights.
It's easy to see the draw of the Philippines to budget carriers.
Lucrative market
With over one million Filipinos leaving the country every year to work abroad, airlines have a captive market.
Cebu Pacific alone flew 10.5 million passengers from January to December 2010, driven by a 38 per cent increase in international passengers. The carrier, which flew 2.23 million passengers to and from international destinations last year, disclosed that its Hong Kong and Singapore markets grew by 15 per cent and 45 per cent respectively. There are 140,000 Filipinos working in Hong Kong, and 150,000 in Singapore.
Add to this the Filipinos in the United States, Europe, the Middle East, Brunei and really, everywhere else in the world who make it a point to visit the country at least once a year, and airlines that service the route have an even bigger market.
International tourism
And let's not forget the holiday-makers of the archipelago that 90 million people call home, or the foreign tourists, 3.52 million of whom stepped on Philippine shores last year.
I rub my palms together in glee at the cut-throat competition among airlines that results in a cheaper way to travel. While I enjoy the comforts of travelling in a legacy carrier as much as the next commuter, I find that for short trips, at least, I can dispense with movies on demand, the in-flight blanket, and yes, the much-maligned plane food if it means being able to save on air fare, which, in theory, redounds to being able to travel more frequently.
Looming fuel surcharge
I do not know how long the price-slashing exercise of airlines would last. Turbulence looms constantly over the horizon AirAsia has said that it would apply a fuel surcharge on air fares if oil hits US$100 per barrel in the world market. That level has been hit, although not sustained. If oil continues to rise, Cebu Pacific, which tacks on the surcharge to its fares, may also be hard put to keep fares at current levels.
Volatile economy
There is also the matter of the economy, which can still go either north or south, particularly with inflation once again rearing its insidious head and giving state policymakers cause for concern. For the aviation industry, economic downturns mean companies and individuals cutting back on leisure and business travels.
Moreover, a competitive environment adheres to the principle of survival of the fittest.
And as weaker airlines fall by the wayside and stronger ones are left unchallenged, air fares may rise again.
But while the rates are low, I should be booking tickets for my trips this year. So excuse me while I open my email and read through that latest promotional fare advisory again.
Destinations are a-waving.
The views of the author are her own and do not necessarily reflect those of The Brunei Times.
The Brunei Times
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