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Wednesday, June 6, 2012

Cebu Pacific: New CAB Rules Will Stop Piso Fares etc.

MANILA, Philippines - Budget airline Cebu Pacific on Tuesday said airlines will raise fares and stop offering promo fares, such as the popular "piso fare," as a result of the recent resolutions issued by the Civil Aeronautics Board (CAB).

In a statement, Cebu Pacific said it will file a motion asking the CAB to reconsider resolutions 28 and 29 on rebooking, refunds, and overbooking because of its "far-reaching consequences."

"The current CAB resolutions will increase the cost of airline operations, forcing airlines to raise their fares and stop offering the piso and other value fares. Piso fares are the aviation industry’s 'unli' version, where additional restrictions apply in return for price advantage," the airline said, referring to the popular "unlimited" call and text services offered by telecommunications companies. Cebu Pacific is known for offering "piso fares," where passengers pay only P1 for the base fare for domestic and international destinations.

CAB has suspended local airlines' practice of "overbooking" for domestic flights and its policies of "no refunds" and "no rebooking", due to a rising number of complaints from passengers. However, the Gokongwei-led airline defended the industry's practice of overbooking. It compared an airline ticket to a concert ticket, saying it has "zero value after the flight date."

"Airlines overbook certain flights based on historical data. It accepts a few additional reservations for a flight in an attempt to fill seats left empty by passengers who don't show up for their flight or don't cancel prior to the flight's departure. Trains, ships and hotels and every other airline worldwide also overbook," it said.

On the CAB resolution on rebooking and refunds, Cebu Pacific said its passengers can already rebook and cancel flights up to 4 hours before a flight. "If this option will be available after the flight to a passenger who did not wake up on time or went to the airport late, CEB will raise average fares by at least 10% to recover losses. These are globally accepted airline practices. The CAB resolutions only apply to domestic flights, precisely because international airlines would never accept such restrictions," the airline said.

With the higher airfares, Cebu Pacific said travellers will opt to take buses, boats or trains. This will result in slower passenger growth, if not a decline, which will negatively affect the tourism and airline industry. "Tourism will stand still, putting at risk growth in the countryside and job creation. A great economic promise will be lost," it said.

"The airline industry itself will be set back 20 years. Low fares, a social equalizer and the growth catalyst that has seen millions of people fly for the first time – and keeps them flying – will be history. A competitive and dynamic airline industry will be forced to take the slow lane and flying will once again become the privilege of the few."

If the CAB resolutions are not amended, Cebu Pacific warned there will be "less choices for the passenger, no piso sales and higher fares for all." Earlier, CAB executive director Carmelo Arcilla said the CAB resolutions will take effect starting June 15. He said these are only provisional, pending a CAB review.

Source & Image Credit: ABS-CBN News & http://everythinginbudget.blogspot.com/


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