Local airlines bullish for 2019 as oil prices drop

LOCAL AIRLINES are keeping a positive outlook for 2019, after the industry suffered last year when jet fuel prices soared.

Officials of Philippine Airlines (PAL), Cebu Pacific and Philippines AirAsia said they are bullish this year, as they expect a decrease in the price of aviation fuel and a rise in the number of domestic and international tourists.

PAL Corporate Communications Vice-President Jose E. L. Perez de Tagle told reporters in a Dec. 10 chance interview the company is seeing “continued growth” in 2019.

“We see increasing tourism. China is a big potential. Now that we cover Western Europe and the east coast of North America, that will all add to our being connected and that really helps push growth,” he said.

Since 2017, PAL has recorded losses due to fuel expenses, fleet expansion, increased frequencies and new routes. But Mr. Perez de Tagle is “cautiously watchful and hopeful” the flag carrier will return to profitability soon.

“When the fuel prices went up, it was the number one thing. And it coincided with our investment in all the refleeting and so on. So sana [hopefully] we can overcome all that,” he said.

As of Dec. 28, the International Air Transport Association (IATA) said jet fuel price has gone down 16.3% to $67.49 per barrel versus a year ago. It said the global airline industry is expected to book a net profit of $35.5 billion in 2019.

“We had expected that rising costs would weaken profitability in 2019. But the sharp fall in oil prices and solid GDP growth projections have provided a buffer,” IATA Director General and Chief Executive Officer Alexandre de Juniac said in the statement last month.

Cebu Pacific Vice-President for Commercial Planning Alexander G. Lao said the Gokongwei-led budget carrier is looking to grow the number of passengers in the low teens (below 15%) this year.

“We’re sort of excited because this is the first time in a while that we’re going to grow back to double digits again. So we’re a bit more bullish,” he told reporters on Dec. 10.

Mr. Lao noted the 22-million passenger target in 2018 represents a single-digit growth from in 2017.

For 2019, he said Cebu Pacific is looking at its hub in Clark to fuel its double-digit growth.

“We think Clark has a lot of potential… So far ‘yung nakikita namin sa Clark-Davao, medyo healthy ‘yung load factor which is a good surprise [We’re seeing a healthy load factor in the ClarkDavao route, which is a good surprise]… I think the aviation industry continues to be healthy,” Mr. Lao said, adding Cebu Pacific is expecting to take deliveries of a number of jets in 2019.

Philippines AirAsia President and Chief Executive Officer Dexter M. Comendador said the budget carrier is also expecting an improvement this year.

“Keeping the same price, it would be a lot better. And hopefully not any more major airports will close,” he said.

Of the three airlines, only AirAsia refused to collect a fuel surcharge last year despite initially filing an application to do so with the Civil Aeronautics Board.

Mr. Comendador said the company does not intend to implement a surcharge anytime soon.

“We survived the worst. Pababa naman na ‘yung price ng fuel [The price of jet fuel is going down anyway]… We saw and we tested through our research. If we raise the price by adding fuel surcharge, our loads will drop. Because our market is very price sensitive,” he said.

Mr. Comendador said the company was able to record an average load factor of 83% to 84% as of mid-December.

One of Philippines AirAsia’s plans in 2019 is to conduct an initial public offering and list in the stock exchange.