No fare cut for airlines

By: Aileen Garcia-Yap, Vanessa Lucero February 18,2016 - 10:24 PM

Flag carriers Philippine Airlines (PAL) and Cebu Pacific Air are not reducing fares despite the decline in oil prices.

Cebu Pacific, however, said fuel surcharges from all domestic and international routes had been removed since January 2015, making their rates more affordable.

“We continuously aim to pass on these savings to our customers, as we launch seat sales more frequently now than five years ago,” Paterno Mantaring Jr., vice president for corporate affairs, said in a statement.

PAL, for its part, said it’s still using stock fuel.

“Right now, fuel inventory is based on stock bought at previous levels. As such, we maintain the status quo. But if the downtrend in fuel prices continue, there will be an impact in pricing. That is, if there is no volatility in selling price of fuel in the world market,” PAL’s external communications head Cielo Villaluna told Cebu Daily News.

Two domestic shipping companies, Lite Shipping Corp. and Metro Ferry  Inc., have reduced their rates. More are expected  to follow suit after  their meeting Thursday night.

TOURISM

The lower fares are seen to encourage more people to travel by sea and boost tourism in the islands.

“This is a breath of fresh air. We are composed of islands that are connected via sea travel. This will definitely usher in more tourists, both local and international,” said Edilberto Mendoza Jr., president of the Cebu Association of Tour Operators (CATO).

Cenelyn Maguilimotan, former president of the Hotels, Resorts and Restaurants Association of Cebu, said it’s a major bonus to the industry.

“The more accessible and affordable traveling by sea becomes, the better it will be for our industry,” she said.

Marget Villarica, former CATO president, hopes the fast ferries serving Bohol and neighboring islands, which are popular among tourists, would also lower their rates.

But she said the lower fares should be complemented by improved ports and more efficient terminal processing.

Traders were not as optimistic.

TRADE

Gordon Alan Joseph, Cebu Business Club president, said the lower passenger fares may not necessarily translate to reduced prices of goods because of supply chain inefficiencies such as traffic, port congestion and red tape.

“In theory, it (lower prices) should mean a reduction in the prices of goods. But in practice, prices are rarely flexible downwards unless it is an issue of supply and demand,” he said in a text message.

Lito Maderazo, former president of the Cebu Chamber of Commerce and Industry, agreed.

“The shipping cost is only one component of the cost of products, goods and services,” he said.

Donato Busa, president of the Mandaue Chamber of Commerce and Industry, was hopeful that domestic cargo rates would also be reduced.

“If that really happens and I hope it will, it will help us very greatly,” he said.

Busa said it costs P30,000 to P32,000 to ship a 24-foot container van from Manila to Cebu. From Hong Kong, a similar shipment costs only P5,000 to P6,000.

He also said shipping companies would have to be ready for an influx of passengers, especially between mainland Cebu and Mactan Island. Safety, convenience and quality should also be ensured, he added.

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TAGS: cato, Cebu Association of Tour Operators, Gordon Alan Joseph, Lite Shipping Corp, Metro Ferry Inc

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