MANILA, Philippines – After earning record-breaking profits in 2023, Philippine Airlines (PAL) saw its first quarter net income in 2024 fall by 25% compared to the same period a year ago in what might be among the first signs that revenge travel is beginning to cool down.

PAL posted a net income of $80.9 million in the first quarter of 2024, down from $108 million in the same quarter last year. But according to a press release by the flag carrier, this “was an expected outcome as global travel patterns normalize following the post-pandemic surge of 2023.”

What led to this slump? It’s not because demand for travel fell, since PAL’s passenger volume went up by 13.58%, according to a quarterly report by PAL Holdings, the airline’s parent company. In fact, PAL’s consolidated revenues grew by 6% and its passenger revenues by 5%.

Instead, it’s because costs went up. Based on PAL Holdings’ quarterly report, consolidated operating expenses rose by 12.64% compared to the same period last year, mainly because of the increase in the number of flights operated. That has led to higher fuel consumption costs and maintenance expenses.

“There are inflationary cost pressures which are impacting us now versus last year, resulting in the 25% decline in net income – but still a very positive result vis-à-vis competition,” a PAL source told Rappler.

In its press release, PAL also pointed to a “continued industry-wide price hike on services covering maintenance, ground handling, airport and passenger service charges.”

Despite the decline in net income, PAL president and chief operating officer Stanley Ng still said the company is “on track” with its fleet growth and route network expansion.

Starting July, PAL will be resuming flights between Clark International Airport and Basco, Batanes. Meanwhile in October, the flag carrier will be launching its direct Manila-Seattle route.

Revenge travel dwindling?

The revenge travel trend boosted PAL to a banner year in 2023, hitting an all-time high in net income for the full year. Ng admitted that revenge travel “definitely helped” and that it was “still a factor.”

With PAL unable to replicate its results from its record year, could this be an indication of post-pandemic pent-up demand drying up? For Sunlight Air chief executive officer Ryna Brito-Garcia, it’s more complicated than that since the pandemic may have completely altered people’s travel habits altogether.

“If we really analyze the trends the past year and a half, there’s been no structured seasons for travel anymore. Domestic travelers have been in and out of the city even during the low season. This may be brought by the effects of the pandemic as well. Concepts of work-life balance and burnout have been amplified, and travel has become one of the biggest outlets for most Filipinos,” the domestic airline CEO told Rappler.

Garcia noted that Sunlight Air, which mainly flies to domestic island destinations, also expects that its bottom line “will go down a bit.”

“That’s also why we forecast these before the year even starts and plan how we can make that up during the travel or summer season,” she told Rappler.

Meanwhile, low-cost carrier AirAsia Philippines has shown that travel demand in Q1 2024 has grown compared to Q1 2023 – albeit by only mid-single digits. In its operating results for the first three months of the year, AirAsia Philippines carried 1,748,916 passengers, 6% higher than the same period last year. AirAsia has not shared its financial results.

Low-cost carrier Cebu Pacific, the other major airline based in the Philippines, has also yet to publish its Q1 financial results. – Rappler.com