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MANILA : Record-high oil prices are forcing Cebu Pacific to cut down on flights to destinations in Asia.
But the Philippine budget carrier said it is not giving up on its expansion plans, and targets to fly more passengers. Currently, Cebu Pacific flies to 24 domestic destinations and 16 countries.
It is a fresh start for Cebu Pacific as it sets up base at the new airport terminal in Manila.
To meet rising fuel costs, the largest budget carrier in the Philippines is cutting the frequency of its flights to regional cities like Shanghai, Guangzhou, Taipei, Hong Kong, Xiamen and Macau. It has also temporarily suspended services to Hanoi.
Lance Gokongwei, President and CEO, Cebu Pacific, said: "When 50 per cent of your cost doubles in price over the last year, then it creates real cost pressure for any airline business today, and so we have to address this in many ways."
The airline is also looking at how best to fly its planes. Mr Gokongwei said: "We are flying our planes about one to two per cent slower because that means a 2 to 3 per cent savings in terms of fuel utilisation. So all these steps are necessary now."
Despite the challenges, Cebu Pacific said it is not giving up on its growth plans.
In May, Airline Business magazine named Cebu Pacific as the Philippines' fastest growing airline.
Last year, Cebu Pacific carried a total of 5.5 million passengers, a 58 per cent increase from 2006. This year, the airline expects to fly 7 million passengers, as it takes delivery of new planes and expands its service both domestically and internationally.
Cebu Pacific has set aside US$670 million to beef up its fleet, unveiling what it claims to be Asia's youngest fleet, as it expands its network across the region.
Mr Gokongwei said: "We are taking 10 more Airbus between 2010 and 2012 and eight more ATRs are coming in the next year, so our fleet will grow up to 31 aircraft by 2012 and 41 in 2014."
The carrier is hoping to draw in the passengers by also offering tour packages, hotel bookings and car rentals through its website.
Mr Gokongwei said: "We are also looking at building up our auxiliary revenues. Right now, if you go to cebupacificair.com, you see that we are now offering tour packages, we are offering hotel bookings, car bookings, and insurance bookings.
"We are confident that our business model is the right one and that we will continue to grow at a more rapid pace than the market, that the market will continue to grow at a very quick clip."
To ease the fuel price burden, the airline said it will beef up its supplementary revenues. It has also shifted to an "all-in" pricing format to make it easier for travellers. - CNA/ms
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