LOW-COST carrier operator Cebu Air Inc. saw its profits increase by almost two-thirds in 2014, stepping into the positive growth territory after a steady decline in the past two years.
Cebu Air’s net income stood at P853.50 million in 2014, a 66.7-percent increase from P511.95 million the year prior, as revenues increased by 26.8 percent to P52 billion, from P41 billion in 2013.
Passenger revenues grew by 26.9 percent to P40.19 billion, making it the major contributor to the Gocongwei Group’s earnings. The increase was attibuted to the 17.5-percent growth in passenger volume to 16.9 million in 2014, from 14.4 million in 2013.
Cargo revenues also surged by 20.6 percent to P3.15 billion in 2014, while ancillary revenues increased by 28.7 percent to P8.67 billion.
Expenses, meanwhile, increased by 23.9 percent to P47.84 billion, from P38.6 billion, due to the expansion of the airline’s long-haul operations and the overall acquisition of new aircraft.
The pace of the company’s growth last year was faster than the decline in 2013, when foreign-exchange losses weighed on Cebu Air’s bottom line to P512 million, from P3.57 billion in 2012. The year 2014’s net income, however, was relatively lower than the P3.62-billion net profit in 2011.
Competition in the airline industry, both here and abroad, has been heating up in the last couple of years due to the proliferation of more budget carriers. So far, there are three local low-cost carriers in the Philippines: Cebu Pacific, Tigerair Philippines and AirAsia Zest.
Budget carriers will likely dominate the aviation market in Asia Pacific, including in the Philippines, this year, according to think tank Centre for Asia Pacific Aviation.
Low-cost carriers, the research agency said, are also rapidly making inroads in the medium-haul market, which will inevitably put further pressure on the legacy operators.
Cebu Pacific, the country’s leading budget carrier, has been aggressively expanding its route network to include several long- and medium-haul destinations.
The airline business of tycoon John L. Gokongwei has been gaining a foothold in the Philippine market, as it continues to expand its fleet to include larger Airbus A330s.
The Gokongwei-led airline company operates an extensive route network, serving 57 domestic routes and 37 international routes, with a total of 2,652 scheduled weekly flights. It operates from seven hubs, including the Ninoy Aquino International Airport Terminals 3 and 4; Mactan-Cebu International Airport; Diosdado Macapagal International Airport in Clark, Pampanga; Davao International Airport; Iloilo International Airport; and Kalibo International Airport in Aklan.
The airline’s 52-strong fleet is comprised of 10 Airbus A319, 29 Airbus A320, five Airbus A330 and eight ATR-72 500 aircraft. Between 2015 and 2021, Cebu Pacific will take delivery of nine more brand-new Airbus A320, 30 Airbus A321neo, and one Airbus A330 aircraft.