MANILA, Philippines – The post-pandemic revenge travel trend has made 2023 a profitable year for both full service carrier Philippine Airlines (PAL) and low-cost airline Cebu Pacific.

The past year was particularly successful for PAL, which saw its all-time strongest financial performance. The Philippine flag carrier ended 2023 with a record-high $379-million (P21 billion) net income in 2023 – almost double or 92% higher than the $197-million (P11 billion) net income it earned in 2022.

With pandemic restrictions loosened and travel appetite revived, PAL reported a “robust increase in operations and passenger traffic” for both international and domestic flights. In total, PAL operated 105,294 flights in 2023, 36% more than the number of flights it had in 2022.

More flights also meant more passengers, with PAL carrying a total of 14.7 million passengers in 2023 – 58% higher than 2022 figures – at a passenger load factor of 80.8%. As a result, passenger revenues soared to $2.9 billion (P160 billion) in 2023 from $2.1 billion (P114 billion) in 2022, a 37% increase. Total net revenues, which also includes cargo and ancillary revenues, reached $3.2 billion (P181 billion).

PAL president and chief operating officer Stanley Ng acknowledged that the revenge travel trend boosted their revenues.

“Revenge travel, it’s hard to give a percentage. But that definitely helped. It’s still a factor,” Ng told Rappler on Tuesday, April 2. “The demand is still there. It’s still strong.”

Revenue growth aside, another key factor that boosted the airline’s bottom line was the restructuring initiated in 2021, which reduced the airline’s fleet and consequently its overhead costs.

“A big part of it is the surge in demand that was sort of contained because of the pandemic. But I would say also the profit has improved because of the restructuring done by PAL,” Anna Isabel Bengzon, PAL senior vice president and chief financial officer, told reporters on Tuesday.

“The top-line growth, a big part of it is because of revenge travel. But on its own, it may not give you this kind of results because the overhead cost had to come down when we took out the least profitable or losing routes and the heavy cost of having to maintain so much aircraft,” she added.

Overall, revenue growth outpaced costs as operating margins improved to 15% in 2023 from 12% in 2022. Total operating expenses rose to $2.7 billion (P153 billion), with fuel costs being the biggest, eating up 31% of revenues.

The Tan-owned airline said it would use 2023’s record profits to “strengthen its global and local network, upgrade its aircraft fleet, and introduce new and improved products and services.” Earlier in 2023, the flag carrier purchased nine Airbus A350-1000 jetliners capable of long-range flights, which are expected to be delivered in 2025.

“PAL’s corporate transformation continues – we are taking in new aircraft, retrofitting cabins of current aircraft, upgrading airport lounges, and introducing more product innovations to address our strategic, financial, and operational needs across all areas of our operations,” Ng said.

In 2023, PAL operated eight more domestic routes, including Manila to Tuguegarao flights and Cebu to Bicol, General Santos, and Ozamiz flights, among others. It also added several international routes, such as Manila to Perth, Beijing, Shanghai, Xiamen, Jinjiang, and Macau.

New direct US route: PAL to start Manila-Seattle flights on October 2

Cebu Pacific back to profitability

The strong appetite for travel cut across markets too as low-cost carrier Cebu Pacific also reported a return to full-year profitability after remaining in the red in 2022.

The Gokongwei-owned airline recorded a P7.9-billion net income in 2023. This was a remarkable turnaround from the P14-billion net loss it incurred in 2022, which was already an improvement from its P24.9-billion net loss in 2021. (READ: Revenge travel brings Cebu Pacific back to profitability in Q1)

In particular, Cebu Pacific had a strong fourth quarter in 2023 as it raked in P23.7 billion in revenue. That translated to a P2.9-billion net income for the period – a far cry from the P1.9-billion net loss that it suffered in Q4 2022.

Cebu Pacific likewise attributed the steep recovery to its resurgent passenger business, with revenue up 78% to P62.5 billion in 2023. Like PAL, the low-cost carrier also flew more flights and passengers in 2023 than the previous year – 41% and 30% higher, respectively. In total, the airline’s revenue reached P90.6 billion for 2023, 60% higher year-on-year.

Cebu Pacific also received 18 aircraft deliveries throughout 2023 as it prepared to mount more flights and open more routes.

“Moving forward, we are optimistic that Cebu Pacific’s solid 2023 financial results will set the foundation for a stronger financial performance in 2024,” Cebu Pacific chief finance officer Mark Cezar said in a press release.

The optimistic outlook is also shared by travel and experience app Klook. In its latest Travel Pulse study, Klook concluded that revenge travel is “still very much alive,” noting that consumers were not only traveling more but also spending more on their trips. – Rappler.com

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