Cebu Pacific-Philippine Airlines rivalry to bring down prices

COMPETITION is heating up between legacy carrier Philippine Airlines (PAL) and budget airline Cebu Pacific (CEB), as the latter has filed applications to fly international routes that PAL is already serving or intends to serve.

Records from the Civil Aeronautics Board (CAB) show that CEB wants to fly to India, which PAL already operates with the weekly Manila-New Delhi flight via Bangkok. CEB also plans to mount a four-times-weekly direct Manila-Moscow service, similar to the service PAL intends to start in September.

CEB also has its eye on the 300-seat entitlement to Papua New Guinea previously allocated but left unused by PAL, as well as the reallocation of 1,260 weekly seats to Taiwan PAL has left fallow.

Data from CAB also shows that CEB, PAL, Zest Air and PAL Express have all applied to fly daily to Riyadh, Jeddah and Dammam in Saudi Arabia within the year. Both CEB and PAL also plan to serve Qatar and Kuwait.

As a result of CEB’s aggressive expansion, the carrier has grabbed a 16 per cent share of the Philippine’s international aviation market, compared to PAL (24 per cent) and foreign carriers (55 per cent), according to January-September 2012 statistics from business consultancy firm Innodata.

Domestically, CEB has secured a 45 per cent share versus PAL’s 21 per cent, and PAL Express’ 22 per cent.

Travel consultants agree that the traditional rivalry would likely benefit the travel industry, lowering prices and increasing accessibility to the Philippines.

Francisco Lim, general manager of Adkins Travel Agency, said: “The competition would lead to reduced airfares, which is already taking place. But travellers also go for airlines’ reliability in terms of service quality and punctuality in departure and arrival, something that budget carriers can improve on.”

Allan Sapad, senior travel consultant at Griffin Sierra Travel, added: “More choice in airlines is good for passengers. This can lead to price war not just for PAL and CEB but also for their other competitors.”

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