Air travel within the Philippines is the third fastest growing market in the world, after India and Mexico, industry data revealed.
India’s domestic market grew by 33 percent, followed by Mexico at 27 percent, Philippines at 23 percent, and China at 16 percent last year.
The Philippines domestic air travel market grew with almost 10.4 million travelers in 2007 compared with almost 8.5 million passengers in 2006.
Gokongwei-owned Cebu Pacific (CEB) set the pace in the domestic market with a growth rate of 47 percent in terms of passengers carried in 2007, or from 3.034 million in 2006 to 4.46 million in 2007.
Philippine Airlines (PAL) experienced a six percent increase, from 3.81 million to 4.033 million, while traffic for Air Philippines grew 21 percent, or from 653,175 in 2006 to 726,616 last year.
Candice Iyog, CEB spokesperson, said domestic travel started booming when CEB introduced year-round low fares in 2005, forcing other local airlines to follow suit to be able to compete.
“Our rapid domestic network expansion, aggressive pricing, year-round low fares, and new and growing fleet stimulated the market and introduced air travel to many first-time flyers,” she said.
Iyog said CEB expects the growth trend to continue this year and beyond as the airline takes delivery of more new aircraft, which will be used to serve new domestic and international destinations.
“The arrival of brand new Airbus and ATR aircraft will open up the Philippines and hopefully generate economic growth largely through tourism and trade in the process,” she said.
Now in its 12th year, CEB has the youngest fleet in the Philippines.
It flies to 12 and soon to be 15 international destinations with the addition of Hanoi, Ho Chi Minh, and Kaohsiung in the coming months. CEB also flies to 21 domestic destinations with Boracay (Caticlan) starting Feb. 29, 2008.
CEB projects the number of passengers it will carry this year in both its domestic and international operations to exceed seven million, a 27 percent growth compared to the 5.49 million passengers in 2007.
CEB will be leasing this year four Airbus 320-200 and acquiring six ATR 72-500s, bringing the carrier’s total aircraft to 25 by the end of 2008. It also has firm orders for 10 more A320s with option for another 10, as well as firm orders for 10 ATRs and eight options. The six ATRs arriving this year are part of the 10 firm orders for ATRs.
CEB president Lance Gokongwei said the 10 firm orders for A320s will be coming in between 2010 and 2012 while the options may be availed of between 2012 and 2014. In the case of the ATRs, these will be coming in between 2010 and 2011. “By year 2013, CEB will have a fleet of 38 aircraft,” he said.
In 2007, CEB carried a total of 5.49 million passengers, a 58 percent growth from the 3.47 million carried in 2006. Of the 5.49 million, 4.46 million were domestic passengers which is a 47 percent increase from the 3.04 million domestic passengers in 2006.
The growth in the international operations was higher, with 1.032 million passengers carried in 2007 or a 141 percent growth compared to the 428,926 passengers in 2006.
CEB now has the fastest growing domestic and international operations in the country, serving 32 destinations with a total of 44 routes, and with 906 flights a week to both domestic and international destinations.
In 2007, Gokongwei said CEB had a 43 percent share of the domestic market while rival Philippine Airlines had 39 percent and Air Philippines, 11 percent. Last year, CEB had a load factor of 83 percent compared to PAL’s 79 percent and Air Philippines’ 73 percent. CEB also said it had the highest passenger numbers and seat numbers last year. “Our objective is to have an 80 to 85 percent load factor,” Gokongwei said.
He likewise noted that the top seven growth contributors to visitor arrivals in the Philippines from Asia (Malaysia, Singapore, Indonesia, Thailand, China, Hong Kong, and Korea) are destinations where CEB has started or expanded operations over the past two years. “CEB is entering the Vietnam market on June 6 and we expect this market to show substantial growth,” Gokongwei said.
To further expand its reach, CEB also announced that it is setting up its third hub in the country in Davao this June. Its other hubs are in Manila and Cebu. There are also plans to put up another hub in Clark.
Gokongwei also expressed optimism that since the country is only in its early stages of the “low fare” revolution, the market will continue to grow leaps and bounds. “We expect the domestic market to grow 13 to 15 percent a year for the next five years. We anticipate the market to double in the next five years,” he said.