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. B. C. D. E. F. G. H. I. J. K. L. M. N. O. P.

Company History and Background Product and Services Competitive Situations Industry Analysis Industry Forecast 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

4 5 9 12 16 19 20 20 21 21 23 25 25 26 27 28

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 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, 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 KongCebu 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 Cebu-Singapore-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,
5

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 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, 179seater 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, 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: 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 2012 1996 1996 1941 2008 2010 1995 2010 1995 2

Fleet size

Headquarters

AirAsia Philippines Airphil Express Cebu Pacific Philippine Airlines Fil-Asian Airways Sky Pasada South East Asian Airlines Spirit of Manila Airlines Zest Airways

AAU GAP CEB PAL MSE WCC SRQ MNP EZD

PQ 2P 5J PR MX SP DG SM Z2

COOL RED AIRPHIL CEBU PHILIPPINE MID-SEA PASADA SEAIR MANILA SKY ZEST

Angeles City Pasay City Pasay City Pasay City Lapu-Lapu City Pasay City Makati City Pasay City Pasay City

21 40 41 4 2 8 3 18

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

12

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

13

Air Philippines 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.

14

Philippine Airlines Inc. owns and operates national and international flights. The companys fleet includes Boeing 747-400, Airbus A340-300, Airbus A320-200, and 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.

15

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 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.
16

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 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
17

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 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
18

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 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.

19

We are an employer of choice, providing many opportunities for professional and personal growth in learning, egalitarian and non-bureaucratic workplace. 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
20

strategy that imbibes certain characteristics of the other type of competitive strategies, but more dominantly combines strategic emphasis on low cost and differentiation. 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
21

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 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
22

any kind of industry. Cebu Pacific Airline will be focusing on Marketing Strategy, Research & Development Strategy, Human Resource and Management Strategy, 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.

23

L.

Implementation Plan

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
24

control and spectacular advances in computer technology have opened new vistas for information systems and, hence, control.

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

25

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

26

F. Bibliography

27