Holidays won’t bring cheer to airlines

holidays wont bring cheer to airlines - Holidays won’t bring cheer to airlines

By Arjay L. Balinbin, Senior Reporter

LOCAL AIRLINES probably won’t benefit from the usual holiday traffic this year as travelers remain wary amid a coronavirus pandemic, analysts said.

“People are still apprehensive about travel,” Avelino D.L. Zapanta, a Philippine aviation industry expert, said in an e-mailed reply to questions.

“There will be no tourists because tourist spots are closed. Visiting friends and relatives will not happen. Either the visitor brings the virus to friends and relatives or he gets it from such friends or relatives he would visit. They will play it safe and stay home,” he added.

Business travels also would be limited because many companies are cost-cutting if not closed, said Mr. Zapanta, a former chief executive officer at Philippine Airlines (PAL). “I see no miracles happening during the ‘ber’ months.”

The COVID-19 pandemic has brought travel and tourism to a near standstill as governments around the world locked their borders to contain the pandemic.

Airlines expect a 55% decline in 2020 air traffic, according to airline trade group International Air Transport Association (IATA).

The second half would remain challenging for airlines as the virus continues to disrupt the industry, said Japhet Louis O. Tantiangco, a senior research analyst at Philstocks Financial, Inc.

Sales might not exceed first-half figures “as we expect passenger revenues to remain anemic given the limitations in place with travels narrowed to the essentials,” he said in an e-mail.

Investors are also expected to remain bearish about shares of Cebu Air, Inc., which operates low-cost carrier Cebu Pacific, and PAL Holdings, Inc., operator of flag-carrier Philippine Airlines Mr. Tantiangco said.

Cebu Air shares have been falling after peaking at P55 each on June 9. The stock is nearing its March 2020 low of P35 and could fall further to its 52-week low of P31.05 posted on May 26, he said.

PAL shares have also been dropping since last year — even before the coronavirus pandemic — after the company posted dismal financial results, he added.

The stock recently went below its P6 support level — the price that prompts traders to buy the share — and could drop further to its March 19 low of P5 each, Mr. Tantiangco said.

Cebu Pacific’s net loss widened to P9.14 billion in the first half from P7.14 billion a year earlier. PAL’s net loss also worsened to P20.93 billion from P3.33 billion a year earlier.

“I am reminded of what we used to do at PAL at the approach of the holiday peak season,” Mr. Zapanta said. “We suspend all leaves and mobilize even office staff members to serve in the line. In December, we set up a campaign we labeled as the Christmas airlift. No matter how I wanted to convince myself that that would be the case for the coming months, I see no reason to be optimistic.”

PAL operates at 15% of its capacity.

“On the domestic front, there will be a slight increase in flight frequency this September,” PAL spokeswoman Cielo C. Villaluna said in a mobile phone message. “However, more local governments are requiring additional documents as prerequisites to enter their borders.”

Zamboanga, General Santos City, Davao, Iloilo, Bacolod, Puerto Princesa, Laoag, Butuan and Ozamiz require passengers to present negative coronavirus test results, she pointed out.

PAL has regular international flights from Manila to Los Angeles, San Francisco, New York, Toronto, Vancouver, London, Honolulu, Guam, Singapore, Kuala Lumpur, Doha, Riyadh, Dammam, Dubai, Taipei and Hong Kong. It also has flights to Sydney, Jakarta, Seoul and Saigon.

Safe Travel Barometer, a unit of travel industry consulting firm VIDEC has identified the flag carrier as one of the top 10 airlines with the highest safety credentials for travel during the pandemic, Ms. Villaluna said.

Cebu Pacific said it would fly to more domestic and international destinations beginning September.

These include Zamboanga, General Santos, Davao, Iloilo, Bacolod, Puerto Princesa, Laoag, Butuan and Ozamiz, Candice A. Iyog, Cebu Pacific vice-president for marketing and customer service, said in a mobile phone message.

“As the situation remains fluid, we can only keep hoping we will be able to continue boosting our network,” she said. The airlines now operates at 10% capacity, Ms. Iyog said.

While most countries have eased travel restrictions, travelers are put off by strict quarantine rules.

“Governments must look at a coordinated way to lift travel restrictions and find alternatives to quarantine requirements,” IATA said in a statement posted on its website on Aug. 13. “International cooperation to isolate and precisely manage risks is critical to rebuilding confidence in travel.”

While aviation faces a long-haul recovery, continued aid and assistance for the sector is desperately needed, IATA said.

“With a recovery to 2019 levels now slipping to 2024, financial support, in forms which do not further load crippling debts onto the industry, will be necessary if an even sharper contraction in airline capacity and jobs is to be avoided,” it added.

Leave a Reply

Your email address will not be published. Required fields are marked *