Despite China tension, Cebu Pacific sees 20% revenue hike

Manila, Philippines -  Gokongwei-led budget carrier Cebu Pacific (CEB) said it expects its revenues to rise 10 to 20 percent this year despite the cancellation of travel tours from China to the Philippines.

In May, several Chinese travel agencies indefinitely suspended its trips to the Philippines amid escalating tensions between the two countries over the disputed Panatag (Scarborough) Shoal in the West Philippine Sea, which is believed to be rich in mineral resources, natural gas and oil.

Lance Gokongwei, president of CEB parent JG Summit Holdings Corp., said while the cancellations have slightly affected the airline’s second quarter results, he is confident its other international markets like Hong Kong, Singapore, Korea and Japan would take up the slack.

“The second quarter is good but in general, it will be below last year’s level. However, we expect revenues to grow by 10 to 20 percent by yearend.

In 2011, CEB registered revenues of P11.9 billion.

Gokongwei pointed out that China contributes only two to three percent to CEB’s total revenues. The airline, however, remains commited to serving the Chinese market despite a lower load factor.

Earlier reports said mainland China is the fourth largest source of tourists for the Philippines. In the first quarter this year, more than 95,000 mainland Chinese tourists flew to the Philippines, accounting for 8.4 percent of total visitor arrivals.

Gokongwei said he expects the airline industry to continue to face a bumpy road ahead due to the protracted global financial crisis and rising fuel prices. He noted that fuel accounts for half of the company’s total expenses.

“We anticipate 2012 to be another challenging year for us and the entire airline industry as fuel prices have not abated since last year. From an average of $122.987 per barrel in December 2011, jet fuel was already trading at $136.18 per barrel level as of March,” he said.

Nevertheless, Gokongwei said CEB remains keen on long haul flights to serve the growing number of overseas Filipino workers. It will focus on servicing Australia and the Middle East.

The airline is also considering flying to India, Pakistan, New Zealand, Hawaii and Russia.

Gokongwei said around 25 Airbus A320s are expected to come online from 2012 to 2016.