Low-cost carriers keep local air travel upbeat

CEBU, Philippines - The entry of low-cost carriers (LCCs) has brought about a lively domestic air travel growth in the Philippines in the last five years, despite the fast upward movement of fuel costs.

According to Cebu Pacific Air (CEB) vice president for marketing and distribution Candice Iyog, average fares are now 30 percent less than 10 years ago because of LCCs.

At present, LCCs in the Philippines contributed to approximately 96 percent of total domestic air travel growth from 2006 to 2011.

“Philippine LCCs contributed about 96% of total domestic air travel market growth from 2006 to 2011. Full-service carriers on the other hand contributed four percent growth in that six-year period,” Iyog said.

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

In 2006, one out of every two domestic passengers flew on LCCs. In 2011, LCCs dominated the domestic market with 76 percent market share, or three out of every four domestic passengers, indicating how many have benefit from the entry of LCCs in the market.

She emphasized that the Cebu Pacific Effect can also be seen in international destinations, especially those with a dense population of global Filipinos.

CEB first flew to Hong Kong in 2005 when the Philippines-Hong Kong passenger count was at 1.99 million. Six years later, 2.75 million passengers were recorded for all airlines, indicating a growth rate of 38 percent.

The same is true for Singapore, where passenger traffic jumped by 175 percent after CEB’s entry into the market. Similar patterns can be seen in Jakarta, Kuala Lumpur and Kota Kinabalu, routes that CEB currently operates to via Manila. In Kuala Lumpur, Filipino tourist arrivals to Malaysia more than doubled within 5 years of Cebu Pacific’s entry. — (FREEMAN)