Strategic Marketing Plan

for
Cebu Pacific Air Inc.
(www.cebupacificair.com)

Prepared by
Jangaile Danae Alfelor
200901725 MKA32

Executive Summary
Cebu Pacific Air is currently the countrys leading domestic carrier, serving the most
domestic destinations with the largest number flights and routes, and equipped with the youngest
fleet. Cebu Air, Inc., operating as Cebu Pacific Air, is based on the grounds of Ninoy Aquino
International Airport (Manila Terminal 3), Pasay City, Metro Manila, thePhilippines. It offers
scheduled flights to both domestic and international destinations. Its main base is Ninoy Aquino
International Airport, Manila, with other hubs at Mactan-Cebu International Airport, Francisco
Bangoy International Airportand Diosdado Macapagal International Airport.
The airline is a subsidiary of JG Summit Holdings, controlled by the Gokongwei family one of the richest Filipino-Chinese families based in the Philippines. Cebu Pacific is currently
headed by Lance Gokongwei, presumptive heir of John Gokongwei, the chairman emeritus of JG
Summit. The company has 1,182 employees (as of March 2007). In October 2010, the airline
completed an IPO of 30.4% of outstanding shares.
Cebu Pacific signed a joint-venture agreement with SIA Engineering Company for the
maintenance of the Airbus A319 and A320 aircraft. The new company, called Aviation
Partnership (Philippines) Corporation, is co-owned by SIA Engineering Ltd and Cebu Pacific.
We have identified 3 major competitors of Cebu Pacific which are: Philippine Airlines,
Zest Airways and Air Philippines and a large number of airlines. Based on the result, price and
service quality have the highest bearing since these two items determine the sales of the business.
Service quality has the heaviest weight because the Filipinos are mindful and have high
standards. They want to maximize their money for convenience and security. Based on the CPM,
Cebu Pacific Airlines is leading in the market as it got a total score of 3.45 because its major
strengths are its advertising and price.
EFE Matrix is based on the evaluation of Economic Analysis of the external factors
affecting the business in getting the potential opportunities and threats for Cebu Pacific Airlines.
Considering the above EFE, Cebu Pacific current competitive position or business strength
in the industry is above average. Over-all, it has been coping up well with the factors which can
positively or adversely affect its financial positioning, especially in the current period.
We recommend marketing penetration and Horizontal Integration as business strategies to be
used by Cebu Pacific Airlines. Market Penetration strategy seeks to increase market share for
present products or services in present markets through greater marketing efforts. This includes
increasing the number of pilots, increasing advertising expenditures, offering extensive sales
promotion of trip packages, or increasing publicity efforts. Also, Horizontal Integration aims to
merge with other airlines and used a market penetration. It is suitable to Cebu Pacific Airlines
because it currently opens new routes and establishes airport deals in domestically and
internationally.

Table of Contents

A.

Company History and Background

B.

Product and Services

C.

Competitive Situations

D.

Industry Analysis

12

E.

Industry Forecast

16

F.
G.
H.
I.
J.
K.
L.
M.
N.
O.
P.

Plan of the Company

Mission Statement
Vision Statement
Strategic Objectives
Business Level Strategy
Functional Strategies
Implementation Plan
Monitoring and Controlling System
Performance Evaluation
Reference
Bibliography

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27
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A.

Company History and Background

Cebu Pacific Air is an airline company located at Ninoy Aquino International
Airport locally based here in Philippines. It offers booked flights to both domestic and
international destinations. The airline is a subsidiary of JG Summit Holdings and its
current Chief Executive Officer is Lance Gokongwei.
Cebu Pacific was established on August 26,1988 then later on started its
operations on March 8, 1996 with a promise to give "low fare, great value" to
everyone who wanted to fly. The airline was established on August 26, 1988, and
3

started operations on March 8, 1996. Republic Act No. 7151, which grants franchise
to Cebu Air, Inc. was approved on August 30, 1991. Cebu Air, Inc. was subsequently
acquired by JG Summit Holdings. Domestic services commenced following market
deregulation by the Philippine government. It temporarily ceased operations in
February 1998 after being grounded by the government due to an accident, but
resumed services later the next month following re-certification of its aircraft. It
initially started with 24 domestic flights daily among Metro Manila, Metro Cebu and
Metro Davao. By the end of 2001, its operations had grown to about 80 daily flights
to 18 domestic destinations.
After offering low fares to domestic destinations, CEB launched its international
operations on November 2001 and now flies to Bangkok, Busan, Guangzhou, Ho Chi
Minh, Hong Kong, Jakarta, Kota Kinabalu, Kuala Lumpur, Macau, Osaka, Seoul,
Shanghai, Singapore and Taipei. In short, destinations, where one can go shopping
and sightseeing!
To get every Juan to more places everyday, CEB operates a fleet of 33 Airbus (10
A319 and 23 A320) and 8 ATR 72-500 aircraft, the youngest fleet in the Philippines.
With the completion of the re-fleeting program, our capacity has doubled.
CEB offers the lowest year round Lite Fares for its destinations. CEB remains to
be the pioneer in creative pricing strategies as it manages to offer the lowest fare in
every route it operates.
Cebu Pacific is not just the leader in low fares but also in innovation and
creativity! CEB is the first local airline to introduce e-ticketing, prepaid excess
baggage and seat selection in the Philippines. Guests have also learned to anticipate a
uniquely upbeat flying experience with CEB, as this is the only domestic carrier that
offers fun in the skies with its games on board popularly known as Fun Flights,
together with its entertaining inflight magazine Smile.
CEB also partnered with various destination hotels, car rental service, travel
insurance and entertainment ticketing service, to provide its guests a more convenient
travel experience. On time performance, schedule reliability and a smooth,
comfortable flight are just some of the things that the air-traveling public has come to
expect from Cebu Pacific.
In the 2000s, Cebu Pacific was granted rights to operate international flights to the
region, including Malaysia, Indonesia, Singapore, Thailand, South Korea, Hong
Kong, and Guam. International flights were launched on November 22, 2001, with a
twice-daily service to Hong Kong. On March 1, 2002, it commenced thrice-weekly
flights to Seoul.Other regional flights were introduced and suspended later; however,
4

including flights to Singapore (from November 6, 2002, to January 2003) and from
Manila via Subic to Seoul (from December 2002) due in part to the effects of the
SARS epidemic.
The airline resumed its Manila-to-Singapore flights on August 31, 2006 and
launched its direct flight from Cebu to Singapore on October 23, 2006, the first lowcost airline to serve the Cebu-Singapore-Cebu sector, and in direct competition with
Singapore Airlines' subsidiary SilkAir, CEB is now the only Philippine carrier serving
the Cebu-Singapore-Cebu route after PAL terminated its direct service. The airline
operates direct flights from Cebu to Hong Kong which commenced October 2, 2006,
which also made CEB the only Philippine carrier to serve a Cebu-Hong Kong-Cebu
route after PAL terminated its direct service and is now code-sharing with Cathay
Pacific for this route. In May 2005, Cebu Pacific received two Airbus A320 aircraft
on lease from CIT Leasing and operated its first service with the new aircraft on June
3, 2005, from Manila to Davao City. In December 2006, after a month or two of
operating the new direct flights, Cebu Pacific announced that it would increase flight
frequency for its Cebu-Hong Kong-Cebu from four to five times weekly and CebuSingapore-Cebu flights from four to six weekly effective January 25, 2007. As of
January 2008, it operates regional flights to Busan, Hong Kong, Singapore, SeoulIncheon, Taipei and Bangkok beginning April 6, 2008 from its Cebu hub; and
Bangkok, Guangzhou, Hong Kong, Jakarta, Kuala Lumpur, Macau, Singapore,
Taipei, Seoul-Incheon, Shanghai and Xiamen from Manila. Cebu Pacific's plans to
begin international flights from Clark were initially unsuccessful when its request was
denied. The nations involved came to an agreement that Cebu Pacific would be only
allowed to operate charter flights from Clark to the respective countries' airport(s).
Only Singapore initially agreed to allow Cebu Pacific to fly scheduled flights from
Clark to Singapore. Currently Cebu Pacific only operates a route from Clark to Cebu,
but has since announced that it will be commencing international flights from Clark
to Hong Kong, Macau and Singapore from November 2008 as well as domestic
flights from Clark to Cebu. In June 2007, Cebu Pacific announced an order of up to
14 brand-new ATR-72-500 aircraft, with six firm orders and eight options. It plans to
initially offer flights to Boracay, using Boracay's Godofredo P. Ramos Airport.
On November 12, 2007, Cebu Pacific announced Davao's Francisco Bangoy
International Airport as its fourth hub. Cebu Pacific announced that it would initially
fly internationally from Davao to Singapore, Hong Kong and fly one domestic flight
to Iloilo. Both direct services from Davao to Singapore and Iloilo commenced on
May 8, 2008, while the service to Hong Kong commenced on May 9, 2008.
In late 2007, Cebu Pacific mentioned that it is aiming to cross the Pacific and launch
non-stop flights to the United States West Coast, Houston, Texas and Chicago, Illinois
by mid-2009. On December 18, 2007, Cebu Pacific announced that it would exercise
options on its recent ATR-72-500 turboprop order (initially six firm) to increase its
firm order to 10. On February 19, 2008, Cebu Pacific Air received its first brand-new
5

ATR 72-500 from Toulouse, France and expected to take delivery of another five
ATRs from March to December 2008.The initial two ATRs fly on routes such as Cebu
to Bacolod. Cebu Pacific took delivery of its 16th brand-new, 179-seater Airbus A320
aircraft, from Toulouse, France, on March 20, 2008. The new aircraft supports CEB's
expanding international and domestic operations which include flights to 12, soon to
be 15, international destinations. On May 28, 2008, Cebu Pacific was named as the
world's number one airline in terms of growth. The airline was also ranked fifth in
Asia for Budget Airline passengers transported and 23rd in the world. The airline
carried a total of almost 5.5 million passengers in 2007, up 57.4 per cent from 2006.
On July 22, 2008, Cebu Pacific was the first airline to use the new Terminal 3 of the
Ninoy Aquino International Airport with its flight to Caticlan being the first to depart
at 0515 local time. On August 1, 2008, it moved its international operations to the
terminal; thus, becoming the first airline to have regular international commercial
flights from the new terminal.
In August 2009, Cebu Pacific became the first airline in the Philippines to use social
media. On January 6, 2011, Cebu Pacific flew its 50 millionth passenger from Manila
to Beijing. The airline targets to reach the 100 million passengers mark in 2015. A
website dedicated to connection thru social media of various airlines around the
world, awarded Cebu Pacific Air as the 'most sociable airline of the world' for being
voted no. 1 in 2011, besting other established airlines such as KLM, AirAsia,
Singapore Airlines including other domestic airlines. Cebu Pacific will commence
international long-haul flights to Middle-East, U.S.A., Australia and some parts of
Europe on third quarter of 2013 using Airbus A330-300.
In October 2010, EU aviation authorities visited the Philippines to conduct safety
assessments, observing positive reforms in the safety standards being taken by the
Civil Aviation Authority of the Philippines. The EU is subsequently considering
lifting their ban, but have made recommendations to facilitate greater collaboration
between the CAAP and Philippine government in order to make further progress.
Cebu Pacific Airlines is a low-cost airline based in Pasay City, Manila, Philippines. It
is one of the Philippines national flag carriers, and currently the countrys leading
domestic airline. Cebu Pacific is the leading domestic carrier in the Philippines and
operates the most domestic destinations, flights and routes and has the youngest fleet.
It operates scheduled domestic and international services. Its main base is Ninoy
Aquino International Airport, Manila, with a hub at Mactan-Cebu International
Airport, Francisco Bangoy International Airport and Diosdado Macapagal
International Airport. It offers scheduled flights to both domestic and international
destinations. Cebu Pacific Air is currently the countrys leading domestic carrier,
serving the most domestic destinations with the largest number flights and routes, and
equipped with the youngest fleet. Its main base is Ninoy Aquino International Airport,
6

Manila, with other hubs at Mactan-Cebu International Airport,Francisco Bangoy

International Airport and Diosdado Macapagal International Airport.
B.

Product and Services

SERVICES OFFERED
Web-in Check Service - Check-in online and avoid the airport counter line! With
Cebu Pacifics web check-in service, you can go the web and check-in for your flight
48 hours up to 4 hours before your departure time. Learn more about this exciting
product that will greatly cut down on your transaction time in the airport below.
Fun Shop - Introducing the Cebu Pacific Fun Shop! Cebu Pacific presents a wide
array of savory light snacks and drinks fit for everyones taste. Our buy on board
menu always has delicious new offerings monthly. Take a bite and experience our
delightful light meals. While in the air you can also get Cebu Pacific branded
souvenirs like caps, shirts and bags.

Duty free Shopping - Have a wide range of world class products for you to choose
from. These exclusive items range from cosmetics, skin care, French perfumes,
jewelry, chocolates, gift items and fun items for children. Enjoy great savings when
you buy Duty Free onboard. You can ask cabin attendants for purchase or for any
information.
Go Mastercard - The Go! MasterCard is a credit card issued by Metrobank Card
Corporation in behalf of JG Summit Holdings, Inc. (JGSHI), a holdings company of
Robinsons Retail Group and Cebu Pacific. The Go! MasterCard marries free
shopping and free flight privileges in one card while providing a great opportunity to
earn points faster in participating establishments under the Robinsons Retail Group
and Cebu Pacific.
WWF Bright Skies - To ensure that every Juan can continue looking forward to
discovering the beauty of the Philippines and every Cebu Pacific destination, we have
partnered with the World Wide Fund for Nature (WWF-Philippines) through the
Bright Skies programme to fight global warming and climate change. In our bid to
do our share in environmental conservation, we offer Cebu Pacific guests an
innovative option of making their contribution to environmental transformation, by
donating a minimal amount during the online booking process, which will be used to
support WWF-Philippines community-based climate adaptation project in Sablayan,
Mindoro.

Cargo Services - Ship your goods with Cebu Pacifics Cargo Service. Now you can
send your cargo via Cebu Pacific, whether around the Philippines or to other
countries. Our partner airlines, Continental Airlines, Qatar Airways, Saudi Arabian
Airlines, and Emirates, make transport abroad even faster and more convenient. Our
Cargo Service now gives you a one-stop shop that lets you send your package from
domestic points to overseas destinations via Manila.
CEB Biz Corporate and Government partner - guarantees you that introduced the
program exclusively designed to cater to your company requirements. Our low cost,
high quality of service will definitely increase profits by cutting cost on travel
expenses. We provide access to our easy-to-use online booking facility which gives
you the convenience of having your bookings done in your own office. Gives you
access to our low GO fares and other promo fares and the ability to place reservation.

C.

Competitive Situations

External Factor Evaluation (EFE) Matrix Analysis:

9

The external factor terrorism is the most important because no matter how cheap and
grandeur our fare is, it will not attract customers if terrorism is rampant. There is a
situation in a Middle-eastern country where their airline industry was severely
affected by the frequency of terrorist attack blowing the airplane. This factor, if
addressed properly by the government, will benefit not only the airline industry, but
the whole populace as well.
COMPANY PROFILE MATRIX.
Legend:
Weight: 0.0 not important
1.0 important
Rating: 4 major strength 3 minor strength 2 minor weakness 1 major
weakness
Basis: Company Profile and Industry Analysis
*The company with the highest TOTAL has the strongest strategic position among the
competitors in this industry.

10

D. Industry Analysis

Air travel remains a large and growing industry. It facilitates economic growth,
International investment, world trade and tourism and therefore is one of the main
proponent of globalization. Airline companies have three main goals, providing good
service to the customers, returning the investment with an increase to their
shareholders, and lastly providing sustenance to nations economy. Airline Industry
must not only take in priority the goal they have set up for their company but also the
dynamics that affect the improvement and success of their industry. Such as their
airport capacity, route structures, technology, cost to leave or buy the aircraft. There
are also some unpredictable dynamics that when unprepared can affect the whole
industry like the weather that is irregular especially in Philippines where there are
typhoons all year round. Fuel cost is also a main factor in the dynamics that could
change the entire industry. Fuel is also the second largest expense and a significant
portion of an airline total cost. The largest expense an airlines incur is labor that the
airline must pay to pilots, flight attendants, dispatchers, bagger handlers, and others.
The Airline industry must always put in mind the key factors that affect their
success. The customer satisfaction, Competitive rates, Technology, Airworthiness,
and the destination.
Truly the industry have come from a long way, from 1952 wherein the Civil
Aeronautics Act was passed by the Philippine Government up to 2010 where it was
renowned that the growth in air travel rose up to 10%, it was also the time wherein
there new revenue streams, and new channel of markets. It was also the year wherein
the technology have taken up into a new level and has become a competitive
advantage. By this year consumers have been opting for more customers self service
and the IT industry have seen a major transformation.
There are also some external factors that affect the industry such as the Civil
Aviation Authority of the Philippines. It establish the prescribe rules and regulations
for the inspection and registration of aircraft owned and operated in the Philippines
and all air. Facilities.
The Airline Industry in Philippines consist of many competitors the primary and
the National flag carrier of the Philippines is the Philippine Airlines. Its major activity
is to provide air transportation for passengers and cargo within and outside the
Philippines. They take off to the most popular domestic jet routes and international
and regional points that visited by Filipinos or provide a good source of visitors to the
Philippines Route network covered 20 points in the Philippines and 30 international
destinations.

11

Figure 1: List of all the commercial airlines in Philippines

Airline

ICAO

IATA

Callsign

Commenced
operations

Fleet size

Headquarters

AirAsia Philippines

AAU

PQ

COOL RED

2012

Angeles City

Airphil Express

GAP

2P

AIRPHIL

1996

21

Pasay City

Cebu Pacific

CEB

5J

CEBU

1996

40

Pasay City

Philippine Airlines

PAL

PR

PHILIPPINE

1941

41

Pasay City

Fil-Asian Airways

MSE

MX

MID-SEA

2008

Lapu-Lapu City

Sky Pasada

WCC

SP

PASADA

2010

Pasay City

South East Asian Airlines

SRQ

DG

SEAIR

1995

Makati City

Spirit of Manila Airlines

MNP

SM

MANILA SKY

2010

Pasay City

Zest Airways

EZD

Z2

ZEST

1995

18

Pasay City

In Figure 1 it shows all the listed local commercial airlines in the Philippines it is the
list of competitor that can affect the overall status of the airline industry.
Figure 2: Porters Five Model

In
Figure 2 wherein the porters model was shown it identified what are the poetical new

12

entrants, bargaining power of the buyers, substitute product and services, bargaining
power of suppliers and the main competition within the industry.
PORTERS FRAMEWORK ANALYSIS
Suppliers
Its main base is Ninoy Aquino International Airport, Manila, with other hubs
at Mactan-Cebu
International
Airport, Francisco
Bangoy
International
Airport and Diosdado Macapagal International Airport. The airline is a subsidiary
of JG Summit Holdings, controlled by the Gokongwei family - one of the richest
Filipino-Chinese families based in the Philippines. Cebu Pacific is currently headed
by Lance Gokongwei, presumptive heir of John Gokongwei, the chairman emeritus of
JG Summit. Cebu Pacific is the only Philippine-based member airline of Northwest
Airlines World Perks award travel program. In April 2005, Cebu Pacific signed a
joint-venture agreement with SIA Engineering Company for the maintenance of the
Airbus A319 and A320 aircraft. The new company, called Aviation Partnership
(Philippines) Corporation, is co-owned by SIA Engineering Ltd and Cebu Pacific. On
18 December 2008, Cebu Pacific announced that they have ordered an additional
four ATR-72-500 turboprop aircraft. This order increases their order of ATR-72
aircraft
from
6
firm
plus
8
options
to
10
firm
plus
8options.
Consumers
Most of the travellers now preferred air travel than land or sea travel. Air
travel is much faster that land or sea travel, because of some matters like business
matters, some of the executives need to travel for some important manners. The
biggest consumer in this industry is the local and foreign tourist. We all know that
Filipinos loves to travel and almost half of it prefer to travel by air. And Philippines
are known for being the recreation place in the world, so the foreign tourist is starting
to grow. Its a big advantage to the industry.
Substitute Services
Therere other kinds of transportation and become substitute to air
transportation such as buses, ships, etc. but it cannot be totally replaced by any of it,
first its time convenience, second the range of destination, third comfort ability. And
thats what consumers want. Cebu Pacific Air is currently the countrys leading
domestic carrier, serving the most domestic destinations with the largest number
flights and routes, and equipped with the youngest fleet.
Market Competitors
Zest Airways
Philippine Airlines
Air Philippines
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Zest Airways
Zest Airways Inc. (formerly Asian Spirit) is an airline based in Pasay City, Manila in
the Philippines. It operates scheduled domestic and international tourist services,
mainly feeder services linking Manila and Cebu with 24 domestic destinations in
support of the trunk route operations of other airlines. Its main base is Ninoy Aquino
International Airport, Manila, and with a hub at Mactan-Cebu International Airport
Also these hubs outside Manila still have to be made operative as of July 2009. The
airline was originally founded as Asian Spirit, the first airline in the Philippines to be
run as a cooperative.
The airline wants to fly to three international points to Sandakan (- already stopped),
Malaysia from Zamboanga, to Seoul from Kalibo, Laoag, and Davao, and Macau
from Angeles City. However these international routings never took off. It intends to
commence international expansion to Bangkok and Singapore from Manila sometime
in 2009.
On March 26, 2008, AMY Holdings Corp. established ZEST AIRWAYS, INC. as it
sees the opportunity for growth in the airline and aviation industry.
The thrust of the management is focused on:
Accelerating profitability by introducing BRAND NEW aircraft
Innovating marketing strategies.
On September 25, 2008, the Securities and Exchange Commission formally approved
the corporate name of Zest Air and the juridical personality of Zest Airways, Inc. was
formally established.
ZEST AIR will initially operate to 20 local destinations and will launch its regional
and Southeast Asian operations beginning June 2009.

Philippine Airlines

Philippine Airlines, Inc. (abbreviated as PAL), also known historically as Philippine

Air Lines, is the flag carrier and national airline of the Philippines. Headquartered in
the Philippine National Bank Financial Center in Pasay City, the airline was founded
in 1941 and is the oldest commercial airline in Asia operating under its original name.
Out of its hubs at Ninoy Aquino International Airport of Manila and Mactan-Cebu
International Airport of Cebu City, Philippine Airlines serves nineteen destinations in
the Philippines and 24 destinations in Southeast Asia, Middle East, East Asia,
Oceania and North America.
Philippine Airlines Inc. owns and operates national and international flights. The
companys fleet includes Boeing 747-400, Airbus A340-300, Airbus A320-200, and
14

Boeing 737-400. Its international destinations include Jakarta; Vancouver; Los

Angeles; Honolulu; and Shanghai and national destinations include Along, Nag,
Leaps, Butane, and Dalai. Philippine Airlines was founded in 1941 and is
headquartered in Makati, Philippines. Philippine Airlines Inc. operates as a subsidiary
of PAL Holdings, Inc.
Formerly one of the largest Asian airlines, PAL was severely affected by the 1997
Asian Financial Crisis. In what was believed to be one of the Philippines biggest
corporate failures, PAL was forced to downsize its international operations by
completely cutting operations to Europe and eventually Southwest Asia, cutting
virtually all domestic services excluding routes operated from Manila, reducing the
size of its fleet and terminating the jobs of thousands of employees. The airline was
placed under receivership in 1998, gradually restoring operations to many of the
destinations it formerly serviced. PAL exited receivership in 2007 with ambitious
plans to further its previously-serviced destinations, as well as diversify its fleet.
Philippine Airlines is the only airline in the Philippines to be accredited with the IATA
Operational Safety Audit (IOSA) by the International Air Transport Association
(IATA) and has been awarded a 3-star rating by the independent research consultancy
firm Skytrax.

E. Industry Forecast

These figures are revealed in the IATA Airline Industry Forecast 2012-2016. This
industry consensus outlook for system-wide passenger growth sees passenger
numbers expanding by an average of 5.3% per annum between 2012 and 2016. The
28.5% increase in passenger numbers over the forecast period will see almost 500
million new passengers traveling on domestic routes and 331 million new passengers
on international services.
International freight volumes will grow at 3% per annum to total 34.5 million
tonnes in 2016. That is 4.8 million more tonnes of air cargo than the 29.6 million
tonnes carried in 2011.
The emerging economies of Asia-Pacific, Latin America and the Middle East will
see the strongest passenger growth. This will be led by routes within or connected to
China, which are expected to account for 193 million of the 831 million new
passengers over the forecast period (159 million on domestic routes and 34 million
traveling internationally). Passenger growth within the Asia-Pacific region (domestic
and international) is expected to add around 380 million passengers over the forecast
period.
Through 2016, the United States will continue to be the largest single market for
domestic passengers (710.2 million). In the same year, passengers on international
routes connected to the United States will total 223 million, making it the largest
15

single market for international travel as well. Reflecting the maturity of the United
States market, growth rates (2.6% for domestic and 4.3% for international) will be
well below the international average (5.3 % for international travel and 5.2% for
domestic traffic).
International Passenger Development
International passenger numbers are expected to grow from 1.11 billion in 2011 to
1.45 billion passengers in 2016, bringing 331 million passengers for a compound
annual growth rate (CAGR) of 5.3%.
Five of the 10 fastest growing markets for international passenger traffic are among
the Commonwealth of Independent States or were part of the former Soviet Union
with the others in Latin America, Africa and the Asia-Pacific region. Kazakhstan
leads at 20.3% CAGR, followed by Uzbekistan (11.1%), Sudan (9.2%), Uruguay
(9%), Azerbaijan (8.9%), Ukraine (8.8%), Cambodia (8.7%), Chile (8.5%), Panama
(8.5%) and the Russian Federation (8.4%).
By 2016, the top five countries for international travel measured by number of
passengers will be the United States (at 223.1 million, an increase of 42.1 million),
the United Kingdom (at 200.8 million, 32.8 million new passengers), Germany (at
172.9 million, +28.2 million), Spain (134.6 million, +21.6 million), and France (123.1
million, +23.4 million).
Domestic Passenger Development
Domestic passenger numbers are expected to rise from 1.72 billion in 2011 to 2.21
billion in 2016, a 494 million increase reflecting a CAGR of 5.2% over the period.
Kazakhstan will experience the fastest growth rate at 22.5% CAGR, adding 3.9
million passengers to the 2.2 million in 2011. India will have the second highest
growth rate at 13.1% CAGR, adding 49.3 million new passengers. Chinas 10.1% rate
will result in 158.9 million new domestic passengers. No other country is expected to
experience double-digit growth rates over the forecast period. Brazil, which has the
industrys third largest domestic market after the United States and China, will
experience an 8% CAGR, adding 38 million new passengers.
By 2016 the five largest markets for domestic passengers will be the United States
(710.2 million), China (415 million), Brazil (118.9 million), India (107.2 million),
and Japan (93.2 million).
International Freight Developments
International freight volumes are expected to grow at a five-year CAGR of 3.0%,
which is the result of an upward growth trend over forecast period - starting at 1.4%
growth in 2012 and reaching 3.7% in 2016.
The five fastest growing international freight markets over the 2011-2016 period
will be Sri Lanka (8.7% CAGR), Vietnam (7.4%), Brazil (6.3%), India (6.0%) and
16

Egypt (5.9%). Five of the 10 fastest growing countries are in the Middle East North
Africa (MENA) region, reflecting MENAs growing importance in international air
freight.
By 2016, the largest international freight markets will be the United States (7.7
million tonnes), Germany (4.2 million tonnes), China (3.5 million tonnes), Hong
Kong (3.2 million tonnes), Japan (2.9 million tonnes), the United Arab Emirates (2.5
million tonnes), the Republic of Korea (1.9 million tonnes), the United Kingdom (1.8
million tonnes), India (1.6 million tonnes) and the Netherlands (1.6 million tonnes).
Freight carriage within the Asia-Pacific region will account for around 30% of the
expected total increase in freight tonnage over the period.
Regional Outlook over the 2012-2016 forecast period
Asia-Pacific passenger traffic is forecast to grow at 6.7% CAGR. Traffic within the
Asia-Pacific region will represent 33% of global passengers in 2016, up from 29% in
2011. This makes the region the largest regional market for air transport (ahead of
North America and Europe which each represent 21%). International freight demand
will rise 3% CAGR, in line with global growth over the period. Routes within and
connected to the Asia-Pacific region will comprise some 57% of cargo shipments.
Africa will report the strongest passenger growth with 6.8% CAGR. International
cargo demand will rise 4%.
The Middle East is expected to have the third fastest growth rate at 6.6%.
International freight demand will grow at 4.9%, the strongest growth among the
regions.
Europe will see international passenger demand growth of 4.4% CAGR.
International freight demand for the region will grow 2.2% CAGR, the slowest for
any region.
North America will record the slowest international passenger demand growth--4.3%
CAGR. International freight demand will rise 2.4%.
Latin America will see international passenger demand grow 5.8% CAGR.
International freight demand will increase 4.4% per annum.
The information was stated by IATA Airline Industry Forecast 2012-2016. This
forecast affect Philippines airline industry providing the needed information to
determine what are the future trends in the airline industry that will meet the
requirements of their increasingly discerning customers, some airlines are having to
invest heavily in the quality of service that they offer, both on the ground and in the
air. Ticketless travel, new interactive entertainment systems, and more comfortable
seating are just some of the product enhancements being introduced to attract and
retain customers. Successful airlines will be those that continue to tackle their costs
and improve their products, thereby securing a strong presence in the key world
aviation markets Emergence of the Low Cost Carriers (LCCs) such as Air Asia, Jet
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star Growth in Tourism A380: The largest passenger aircraft to date - Due to its size,
many airports had to modify and improve facilities to accommodate it. The first
aircraft, was delivered to Singapore Airlines on 15 October 2007 and entered service
on 25 October 2007. As of October 2011 there had been 236 firm orders for the A380,
of which 59 have been delivered.

F. Plan of the Company

Cebu Pacific Air target markets are the business and leisure travelers, who want to
be fulfilled by a low cost, no frills, and fun airline service. Cebu Pacific Air is a low
cost carrier who can offer many routes, has the youngest fleet, and can give a Fun
Flight experience. The market size is Php 40.41 Billion its market share is Php 19.48
Billion. Cebu Pacific maintains its affordability yet provides customers fun and
entertaining flight. Compared to other airline industry Cebu Pacific Air is priced 51%
lower than PAL and 11% and 21% higher than AirPhil and Zest Air. They also use
sales promotion, word of mouth, advertising, public relations, and events and
experiences. Cebu Pacific Airs Primary Target Market are the business and leisure
travelers they range from ages 21-55, male and female, social class BCD, single and
married. Also they are price conscious internet and technology savvy professionals
and leisure tourists who want/love to travel locally.
Cebu pacific makes sure that their target market needs, wants & demands were
provided. Professionals and tourists need to experience luxury, to achieve status and
recognition, gain self-esteem, and to be fulfilled to attain self-actualization
Professionals and tourists choose Cebu Pacific over other airlines because of price,
service, safety, extensive distribution coverage, on-time flights, and brand promise of
a Fun Flight experience. Cebu Pacific make sure it dominates the domestic market
and is priced lower than Philippine Airlines, its main competitor. Its main positioning
creating its brand identity is Its time everyone flies or occasionally modified with
humorous intent as Its time every Juan flies. It signifies the capability of the
Filipino citizen to afford a good airline experience. Cebu Pacific has the youngest
fleet in the Philippines and continues to differentiate itself from other airlines.
LCCsCEB operates a fleet of 25 Airbus (10 A319 and 15 A320) and 8 ATR 72-500
aircraft. They also offer the lowest year round Lite Fares for its destinations local and
international. Cebu Pacific Air remains to be the pioneer in creative pricing strategies
as it manages to offer the lowest fare in every route it operates. Cebu Pacifics
innovation is key to its domestic market dominance. They have initialized the first
local airline to introduce e-ticketing, prepaid excess baggage and seat selection in the
Philippines. The only domestic carrier that offers fun in the skies with its games on
board popularly known as Fun Flights, together with its entertaining inflight
magazine Smile
They also made it so that All Fares are now Lite Fares Customers dont have to
pay for: Newspapers, lounges, free meals Paper tickets, frequent flyer programs. Lite
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Fares have two variants: Year-round fares Promo fares. It was also noted that Cebu
Pacifics website is the most visited e-commerce travel website from 2008- June 2010
according to Alexa Top Sites. Cebu Pacific leverages on their strong internet
presence to advertise sales promotions. They also use social network sites to promote
sales. The use of social networking sites is also a form of Word of Mouth Marketing.
Cebu Pacifics safety demo dance even went viral. Cebu Pacific also uses print and
TV advertising, supported by radio and outdoor advertising. The company uses
various PR campaigns such as press releases, annual reports, and their company
magazine
To grow online brand recognition, Cebu Pacific leverages on its strong ecommerce website. Airlines now rely heavily on e-commerce and e-marketing. Cebu
Pacifics main strength is their e-commerce website. Cebu Pacifics main distribution
channel is the internet. Their Three principal distribution channels: Internet Booking
sales office, call centers, client accounts Third-party sales outlet Distributors General
Sales Agents Wholesalers and Preferred sales agents.

G.

Mission Statement

Main Mission: Cebu Pacific brings people together through an affordable, reliable mode
of travela fun-filled experience thats delivered with a true heart and soul for service.
Cebu Pacific provides an opportunity for everyone to travel anywhere and everywhere
they wanted with a fun-filled experience that is conveyed with passion for excellent
service.

H.

Vision Statement

We enhance the quality of life of the communities we serve and are an active partner in
the nations progress.
Cebu Pacific is internationally renowned as the most successful low-cost carrier in the
Asia-Pacific region. We take pride in being the best domestic airline and the Filipino
travellers first choice. We are reputed for our unparalleled genuine, warm and caring
service. We are recognized for our innovation and commitment to excellence, and we are
the industry and academe benchmark for success.
We are an employer of choice, providing many opportunities for professional and
personal growth in learning, egalitarian and non-bureaucratic workplace.
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Our people are goal-oriented team players, empowered and disciplined, with a big sense
of integrity, enthusiastically spreading the culture of fun throughout the world.
Our equipment, facilities and systems enable us to ensure consistent highly efficient
levels of operation. We have a deep sense of family extending beyond the airline,
encompassing the communities we serve and the family we love.

I.

Strategic Objectives

Becoming Global

What we offer will appeal to customers across the globe. Wherever we operate,
individuals and business travellers alike will want to fly with us whenever they can.

Premium Service

We will make sure all our customers enjoy a unique premium service whenever and
wherever they come into contact with us. Our customers will recognize that the
service we offer is worth paying that little bit more for.

Preferred Airline

Remain the top choice for international flights for premium customers as well as
cargo, economy and shorter flight.

Meet Customers' Needs

Explore the latest options and products to enhance customer loyalty

J.

Business Level Strategy

There are four generic strategies that are used to help organizations establish a
competitive advantage over industry rivals. Those are Overall Low-Cost Provider
Strategy, Broad Differentiation Strategy, Focused Low-Cost Strategy, Focused
Differentiation Strategy and Best-Cost Provider Strategy. Cebu Pacifics main goal is to
provide an opportunity for everyone to travel anywhere and everywhere they wanted with
a fun-filled experience that is conveyed with passion for excellent service, using a
strategy that imbibes certain characteristics of the other type of competitive strategies, but
more dominantly combines strategic emphasis on low cost and differentiation.
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Cebu Pacific will use Best-Cost Provider strategy because goes well with the
companys objective which is to become global, offer premium service that will attract
customers, becoming their preferred airline that will meet customers' needs. Using BestCost Provider strategy can attain a competitive edge over rivals in hitting a broader
market which is composed majority of consumers seeking for a low cost opportunity to
travel.
Aside from focusing in using a low-cost strategy Cebu Pacific also push into
achieving it through maintaining tight control over production and overhead costs but still
provide with an upscale product at much lower cost than the competitor in the airline
industry. Because of this advantages are competitors are likely to avoid a price war, since
the low cost firm will continue to earn profits after competitors compete away their
profits especially in airline industry. also powerful customers that force firms to produce
goods/service at lower profits may exit the market rather than earn below average profits
leaving the low cost organization in a monopoly positions. Buyers then loose much of
their buying power. It is also hard for new entrants to move in the industry because low
cost leaders create barriers to market entry through its continuous focus on efficiency and
reducing costs.
Aside from that using this strategy also improve Cebu Pacifics ability to adapt to
environmental changes, learn new skills and technologies, and more effectively leverage
core competencies across business units and products lines which should enable the firm
to produce produces with differentiated features at lower costs.
Cebu pacific will also use under market penetration such as effective advertisements will
be made for the Cebu pacific in the TV and radio ads, print newspapers and magazines.
There will also have an establishment of Research and Development (R&D) Unit which
has a special economic significance apart from its conventional association with scientific
and technological development. R&D investment generally reflects a governments or
organizations willingness to forgo current operations or profit to improve future
performance or returns, and its abilities to conduct research and development. Some
Secondary Strategies Cebu Pacific could use is Under Horizontal Integration which will
have to do with Merging with other Airlines. In microeconomics and strategic
management, the term horizontal integration describes a type of ownership and control. It
is a strategy used by a business or corporation that seeks to sell a type of product in
numerous markets. Horizontal integration in marketing is much more common than
vertical integration in production. Horizontal integration occurs when a firm in the same
industry and in the same stage of production is being taken-over or merged with/by
another firm which is in the same industry and in the same stage of production as of with
the merged firm. Cebu Pacific has a good financial position therefore; it has the capacity
to merge with another hotel company in the industry. If Cebu Pacific merge with another
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airline, it would be possible for both companies to compete not only in the Philippine
industry but also with the other foreign countries as well.
Renovation of Cebu Pacific facilities to a more modern and futuristic style can
also affect some good impact to consumers. New facilities design and development is
more than often a crucial factor in the survival of a company. In an industry that is fast
changing, firms must continually revise their design and range of facilities. This is
necessary due to continuous technology change and development as well as other
competitors and the changing preference of customers. A system driven by marketing is
one that puts the customer needs first, and only produces services that are known to
customers. Market research is carried out, which establishes what is needed. If the
development is technology driven then it is a matter of changing what it is possible to
make. The facilities are developed so that hotel processes are as efficient as possible and
the services are technically superior, hence possessing a natural advantage in the market
place.

K.

Functional Strategies

Function is the intended role or purpose of a person or thing. While Functional

strategy is the approach a functional area takes to achieve corporate and business unit
objectives and strategies by maximizing resource productivity.
Cebu Pacific Functional strategies main goal is to achieve corporate and business unit
objectives and strategies by maximizing resource productivity to develop & nurture a
distinctive competence to provide a company competitive advantage.
Through a carefully planned objectives for Cebu Pacific Functional strategies we will
work in achieving success over the whole airline industry which are for Profitability in
producing at a net profit in business, increase in market share gaining and holding the
share for airline industry. Producing human talent through recruiting and maintaining a
high-quality workforce. Financial health acquiring financial capital and earning positive
returns. Cost efficiency using resources well to operate at low cost. Product quality
producing high-quality goods or services. Innovation developing new products and/or
processes. Social responsibility making a positive contribution to society.
It is concerned with developing and nurturing a distinctive competence to provide a
company or business unit with a competitive advantage. So it is very much important in
any kind of industry. Cebu Pacific Airline will be focusing on Marketing Strategy,
Research & Development Strategy, Human Resource and Management Strategy,
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Financial Strategy, Information Management Strategy and Manufacturing Strategy. These

functions are an important aspect in developing a strategic business plan because the
success of the company will depend in the planning for different department for specific
functions.
Marketing Strategy Marketing strategy deals with Pricing, selling and distributing a
Product. Here the companies use 2 types of strategies: Market Development. And Product
Development. In Market Development a Company or a Business Unit: Capture larger
market share of an existing market-Market saturation and Market Penetration Develop
new markets for current products
Research and Development Department is of great importance in business as the level
of competition, production processes and methods are rapidly increasing. It is of special
importance in the field of Marketing where companies keep an eagle eye on competitors
and customers in order to keep pace with modern trends and analyze the needs, demands
and desires of their customers.
There will also have an improvement of quality standard services. This means by
providing the best attention to the customer and addressing his or her needs or the
companys need. The service that is going to be given to them by must be excellent.
In our continuous quest for excellence, it is our ongoing commitment to provide a
Customer Comes First philosophy. We strongly believe that the products and services
we are providing to the customers must be of the highest levels of International Standards
and Quality. Our dedication and commitment to them is of utmost importance to us.
In providing a Total Management and Staff Commitment to Quality, we are
continuing to strive to better ourselves and services through a process of self-auditing,
corrective action, external checks and by educating and training our work force in the
latest work methods and procedures. We accomplish this through the regular monitoring
and checking of critical control points during a production process to ensure that the
required Quality standard is always achieved.
We are into quality and it is our goal to provide the highest quality of services
presented and delivered to the exact specifications of our customers, by maintaining the
utmost levels of customer satisfaction. Once our hotel is appreciated, we will continue to
maintain this high level of commitment, by providing the optimum level of service and
assistance whenever and wherever needed.

L.

Implementation Plan

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Base on our rigorous research and calculations we have chosen the Market
penetration as our primary strategy and as for our secondary strategy, we have chosen the
Horizontal Integration. Market Penetration strategy seeks to increase market share for
present products or services in present markets through greater marketing efforts. This
strategy is widely used alone and in combination with other strategies. Market strategies
include increasing the number of salespersons, increasing advertising expenditures,
offering extensive sales promotion items, or increasing publicity efforts.
The actions that we will apply to penetrate the market is to have an intensive
promotional publicity stunt and TV commercials for Technological factors like high tech
facilities and fleets. Horizontal Integration refers to a strategy of seeking ownership of or
increased control over a firms competitors. It is a strategy used by a business or
corporation that seeks to sell a type of product or services in numerous markets.
Horizontal integration occurs when a firm is being taken over by, or merged with, another
firm which is in the same industry and in the same stage of production as the merged
firm. The action that we will apply to increase control over other competitors is to merge
with other hotels. With financial position of Cebu Pacific, it has the capacity to merge
with other hotels and still be able to take control.

M. Monitoring and Controlling System

Executives of multibusiness firms are increasingly using management control systems to

align corporate strategy with organizational structure to create synergies across business
units. Senior managers find that it is no longer practical to expend vast resources to
continually restructure their organizations in order to align with changes in strategy and
environmental conditions. Instead, more organizations are learning a far more effective
approach chooses an organizational structure that works without major conflicts, and then
design to align that structure with strategy. The Monitoring and Controlling System presents
an overview of the strategic control process. The system deals with the decisions needed to
evaluate and control the strategic plan and corporate performance of a company. Essentially,
controlling involves the measurement and correction of activities of subordinates to make
sure that objectives and plans to achieve them are being accomplished. Control Systems and
Techniques, includes various control systems and techniques. It presents the elements of
controlling, production and financial control, human resource control, and organizational
change and development. It emphasizes the importance of developing an integrated control
system which enables managers to monitor the performance of all resources devoted to the
achievement of organizational performance. Information is the foundation of management
control and spectacular advances in computer technology have opened new vistas for
information systems and, hence, control.

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N. Performance Evaluation

A performance appraisal is a method by which the job performance of an employee is

evaluated. Performance appraisals are a part of career development and consist of regular
reviews of employee performance within organizations. Whether or not an employee's
compensation is directly tied to performance, effective performance evaluation is a crucial
component in ensuring organizational success. Done correctly, performance evaluation can
be a manager's best friend. Conversely, a poorly developed system, or one that is not
appropriately applied, will cause enormous harm to an organization. Working closely with
managers and employees to establish job-relevant evaluation criteria. Using focus groups to
create behavioral anchors to guide the rating system. Facilitating the development of
measurable outcomes to support goal-based systems. Providing options for integrating
performance evaluation with pay decisions, if desired. Establishing a protocol for addressing
performance issues and complete discussion of the importance of, and methods for,
rewarding and promoting positive performance

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O. Reference
http://www.slideshare.net/SoleilGan/how-cebu-pacific-air-changed-the-game
http://www.slideshare.net/louiemarkquizon/10-step-marketing-plan-cebu-pacific
http://www.slideshare.net/catansay/airline-industry-10446667
http://www.cebupacificair.com/pages/aboutus.aspx
http://www.cebupacificair.com/Quarterly%20Reports/CEB_17Q_Sep2012.pdf
http://en.wikipedia.org/wiki/Performance_appraisal

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F. Bibliography

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