Wednesday, 10 June 2009

Philippine airline firms undaunted by bleak outlook of operators worldwide


MANILA, Philippines - Three local airlines remained confident about their respective outlooks despite global industry trends which indicate that the sector’s losses may double this year.

Philippine Airlines (PAL), reportedly Asia’s first air carrier, said that it would go “back to basics."

The Lucio Tan-led carrier hopes to “adapt and cope with the current market volatility by focusing on product improvement, asset and cost management and business efficiency," PAL president Jaime J. Bautista said.

Part of this initiative is to maintain PAL’s On time Performance, which he claims is "better than industry standards."

“Improving customer service both on ground and in the air, and offering competitive and affordable rates to loyal customers and new passengers will entice them to fly more and patronize Philippine Airlines," he added.

The company also expressed its “cautious optimism" about its three-pronged strategy which will focus on “contribution margin, cost efficiency, and risk management."

The said strategy will help tide the company over “during these difficult times," Bautista said. He added that the airline would continue to look for ways “to improve its operations and control costs without compromising passenger safety and comfort."

Meanwhile, budget carrier Cebu Pacific Airlines expects to meet its goal of transporting nine million passengers this year, the company said.

Cebu Pacific, which flew 23 percent more passengers last year to 6.7 million, is ranked by Airline Business Magazine as the third largest low-cost carrier and 22nd in the world.

The airline’s projection for this year “stays the same" as market conditions during the period “have been anticipated," Candice Iyog, Cebu Pacific Air Inc. vice president for marketing and distribution said.

However, she refused make any comments regarding the company’s financial performance. JG Summit Holdings Inc., Cebu Pacific’s parent, is listed at the Philippine Stock Exchange (PSE).

She issued these remarks on the same day the International Air Transport Association (IATA) announced that losses are seen to double this year.

This year’s losses may reach $9 billion, twice the $4.7 billion estimated in March, IATA, which claims to represent airlines that serve 93 percent of global routes, said.

“There is no modern precedent for today’s economic meltdown," IATA director general and chief executive Giovanni Bisignani said in a statement. “This is the most difficult situation that the industry has faced."

IATA said revenues would drop an “unprecedented" 15 percent to $448 billion in 2009 from last year’s $528 billion.

Meanwhile, a different perspective is offered by Zest Airways.

Established last year after its owners acquired what was then Asian Spirit Airlines, Zest Airways currently serves local routes from Bacolod to Busuanga.

And that exactly is its advantage.

Although it expects to post losses for its first year, the company, like all local carriers, is “least affected in the region," said Alfredo Yao.

“Domestic travel is good. It has increased by 20 percent in the first quarter unlike those in the western side," he said.

These expectations go against the IATA’s global industry forecast.

Passenger demand is expected to decline by 8.03 percent to 2.06 billion travelers compared to 2.24 billion in 2008, the group said.

Meanwhile, air cargo demand is expected to decline by 17 percent.

In 2009, airlines will likely carry 16.96 percent less at 33.3 million tons of freight from 40.1 million tons in 2008, IATA said.

For this year, Asian carriers are seen to post “the biggest loss at $3.3 billion as the region’s largest market, Japan, is in deep recession," IATA said.

Growth markets of China and India are delivering major losses as export-driven demand slows, IATA said. Nevertheless, it added that this is a slightly better performance than the $3.9 billion that the region’s carriers lost in 2008.

To help reverse this bleak outlook, the IATA asked governments around the world to avoid protectionist policies even as they invigorate their economies to curb the global slowdown.

Liberalization is “more critical" since the airline industry is facing the “most difficult" situation that is seen to drag operators’ revenues and incomes, the IATA said.

“Our future depends on a drastic reshaping by partners, governments and industry. We cannot bear the cost of government micro-regulation, crazy taxation and partners abusing their monopoly power," Bisignani said.

He noted it took three years to recover after the Sept. 11, 2001 attacks in the United States.

“Protectionism is the enemy of global prosperity. In the 1930s, it prolonged the recession. And it will not work today. To build a strong global economy, we must fight hard to keep the world trading," he added. - GMANews.TV

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