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By Darwin G. Amojelar Reporter
Bogged down by soaring jet fuel
prices, Air Philippines, the budget airline unit of Philippine
Airlines, yesterday cut some of its flight routes
in Mindanao.
Around the world, carriers have
been shedding routes and reducing frequencies to cope with record
jet fuel costs. In the US, airlines are exploring possible mergers,
while at least one Asian carrier went belly up a few months ago.
In its website, Air Philippines
announced the suspension of its daily flights from Manila to
Zamboanga, Davao and Cagayan de Oro and vice versa.
“Flight suspended July 9, 2008,
until further notice,” the advisory from Air Philippines said,
which was confirmed by an official of the airline. The same official
said the suspended routes will be restored once the prices of crude
oil stabilize.
The airline carrier also
suspended its Manila to Puerto Princesa flights and vice versa,
which started on June 18 and end on October 15.
In its audited 2006 financial
statements, Air Philippines said it posted a net loss of P153.42
million, a reversal from the P55.07-million profit in 2005.
The airline carrier operates in
Bacolod, Cebu, Cagayan de Oro, Caticlan, Davao, Dumaguete, General
Santos, Iloilo, Manila,Ozamis, Puerto Princesa, Tacloban,
Tugue-garao and Zamboanga.
Porvenir Porciuncula, Civil
Aeronautics Board deputy executive director and head of economic
planning, said the industry is expecting the move of Air Philippines
to cut domestic operations, particularly the unprofitable routes, to
reduce costs.
“Another reason, maybe, is the
consolidation of operations [between Air Philippines and PAL
Express],” Porciuncula said.
Earlier, PAL established a budget
unit, PAL Express, to handle the Visayas and Mindanao routes.
Tycoon Lucio Tan owns PAL and Air
Philippines.
PAL is also considering the
option of reducing flights. “In light of the current fuel crisis,
we are back in the drawing boards discussing our options. Most
airlines in Europe and America have instituted drastic measures to
address this concern. They cut back on their capacities and route
network,” said Roland Estabillo, PAL vice president for
communications.
Recently, the flag carrier began
limiting free check-in baggage to 50 pounds per person on its North
American service. PAL Express, however, said it would add five
routes to its Cebu hub starting next month.
Jaime Bautista, PAL president,
earlier said that fuel cost is becoming a very big percentage of the
company’s operations. “We want to target a higher income, but
with the present increasing fuel, we might not be able to reach the
target because we cannot pass on everything to the passengers. But
we will still grow our revenue at least 8 percent to 10 percent,”
Bautista said.
Fuel accounts for about 35
percent to 40 percent of an airline’s operating cost per
passenger, and is the second-highest expense next to labor.
Regulators allow carriers to impose a fuel surcharge, which is a
temporary relief to help airlines recover losses they incur from
higher jet fuel prices.
Candice Iyog, Cebu Pacific’s
vice president for marketing and product, said that it is looking at
reducing unprofitable flights to cope with rising costs.
“We are looking at routes that
are unprofitable or non-performing and see how we can either turn it
around or reduce the frequency or even suspend the flights,” she
said, adding “we need to cut to make sure that our operations are
efficient.” 
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