Budget carriers lose some love from stuck patrons in Q1
Cebu Air Inc. posts a 16.5% dive on passengers in the first quarter, while the local unit of Malaysia-based AirAsia recorded a 9% dip.
Rudy Santos

Budget carriers lose some love from stuck patrons in Q1

Ian Nicolas Cigaral (Philstar.com) - April 29, 2020 - 6:36pm

MANILA, Philippines — Local budget airlines reported Wednesday a drop in passenger traffic in the first quarter in one of the clearest signs of massive damage on the aviation industry brought by the lingering coronavirus pandemic.

In a statement sent to reporters, AirAsia Philippines, the local unit of the Malaysia-based airline, said it flew 1.8 million passengers to and from the Philippines from January to March, 9% lower than the 1.97 million the company carried same period a year ago.

Gokongwei-led Cebu Air Inc. reported bigger losses in clients, with passenger traffic dropping 16.5% annually to 4.4 million, copies of financial statements obtained by Philstar.com showed.

Earlier this month, the two low-cost carriers, joined by the bigger flag carrier Philippine Airlines, wrote regulators to ask for financial rescue as global travel was put to a halt by lockdowns imposed to put the virus’ spread under control, causing a direct blow on the airline business. 

But even before the pandemic, Charo Lagamon, corporate communications director at Cebu Pacific, said the sector already took some beating from cancelled trips as a result of the Taal Volcano eruption early January.

Since then, refunds and rebooking costs that followed travel restrictions in China imposed in February as well as some parts of South Korea also dented finances, just before the entire Luzon was sealed off last March 17.

Listed Cebu Pacific’s financial statements showed travel restrictions lowered company revenues by nearly a quarter year-on-year to P15.91 billion, of which those coming from passenger bookings decreased 27.4% to P11.39 billion.

Cargo revenues, meanwhile, plummeted 29.7% to P1.013 billion in the first quarter.

“We are optimistic that the industry will bounce back,” Lagamon said in a message through Facebook Messenger.

For its part, AirAsia said that despite “weak travel demand” in the first three months, on average, 84% of passenger seats on its Philippine flights were still occupied, a performance it characterized as “solid” although was down from 91% same period a year ago.

Due to lower demand, the airline said it was forced to reduce airline capacity initially by 1%, until a full “temporary fleet hibernation” took effect across its various markets, including Manila, in March.

“AirAsia’s priority is to be part of efforts in managing the current public health situation…The resurgence of the travel and tourism industries will depend on the success of such efforts,” said David de Castro, head of communications. 

Both Cebu Pacific and AirAsia signified readiness to resume flights as soon as allowed by aviation authorities. For now, the country’s main Manila airports are closed due to the enhanced community quarantine which will expire May 15, if not extended anew. 

Officials said cargo flights may resume once a more relaxed general community quarantine is enforced.

“While the safety and well-being of passengers and employees remain the highest priority, AirAsia continues to proactively assess the situation and is prepared to gradually resume its flights as soon as possible,” the firm said.

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