PAL won’t match Cebu Pacific fare cuts

The country’s flag carrier, Philippine Airlines (PAL), is not inclined to match the considerable price cuts made by competitor Cebu Pacific on its domestic airfare rates under a new marketing campaign.

Rolando Estabillo, PAL senior vice president for corporate communications, said that PAL has no plans to engage in a price war with Cebu Pacific. He said it is Cebu Pacific’s business if they want to do aggressive fare price reductions.

"If they think that’s good for their business, they’re free to do so," Estabillo said.

Despite the escalating price of jet fuel, the country’s number two air carrier Cebu Pacific started offering last Friday domestic air tickets at greatly reduced prices of as much as 50 percent in all their domestic routes.

Under Cebu Pacific’s Go fare program, their current Manila to Cebu ticket price tag of P2,569 – already about 10 percent lower than competition – will go down to as low as P999 exclusive of the add-on fees such as insurance, fuel surcharges and the 10 percent value added tax.

Its Manila to Davao route ticket price will go as low as P1,499 from the current P3,239; the Manila to Zamboanga flight will be offered at P1,499; Manila to Roxas P699 from P2,149; Manila to Bacolod and Manila to Iloilo P999 from P2,449; Manila to Butuan P1,299 from P3,239; Manila to Cagayan P1299 from P3,239; Manila to Tagbilaran P1,299 from P3,239; Manila to Dumaguete P1,299 from P2569; Manila to Cebu, Manila to Tacloban, Manila to Puerto Princesa, and Manila to Kalibo will be offered at P999 from P2,569; Cebu to Zamboanga and Davao to Zamboanga P999 from the current P2,319; Cebu to Davao P999 from P2,249; and Cebu to Iloilo P699 from P1,759.

"This is all about getting people to think about flying. For those who fly today, we would like to enourage them to fly more frequently, and for those who haven’t flown before, we want to welcome them on board and introduce them to air travel," Lance Gokongwei, Cebu Pacific president and chief executive officer, said of their Go fare program.

However, the catch for passengers who want to avail of the "Go" fare tickets - one would have to book a flight early since it is offered under a pre-selling concept.

Cebu Pacific pioneered low fares in the country when it started operations in March 1996, forcing other airlines to also lower their fares. It was also the first to introduce on-time service, e-ticketing, fun games on flights, and flight booking through text or short message sending.

Under their on-time flights credo, Cebu Pacific now boasts of a world class reliability record of flying 93 percent of its flights within 15 minutes of schedule as of February 2005.

Starting with a humble 24 flights daily to and from three destinations, Cebu Pacific now has almost 80 flights daily to 14 domestic destinations, with a fleet of two Airbus A320s, two Airbus A319s, 10 DC9-32 McConnel Douglas and two Boeing 757 aircrafts in its fleet. It will take delivery of two more A319s next month with eight more due for delivery next year until February 2007 under its re-fleeting program started last year.

Cebu Pacific enjoys 36 percent market share in the routes that it serves as of December 2004 and flies from its Manila and Cebu hubs to serve its 14 domestic destinations, Hong Kong, and South Korea.

On the other hand, PAL has been growing by leaps and bounds in the past few years under the stewardship of beer and tobacco magnate Lucio Tan, having relaunched just the other day its Manila to Beijing flight route after a 16 year hiatus.