Yey! Exam week is over. So I have a time now to update my blog.
This post is our requirement in school. Supposedly, it should be submitted through our respective blogs but our teacher decided that we submit a hard copy for easy checking. Since I still haven't created a blog post recently, I decided to post my reaction paper about an economic issue to leave readers something new to read.
In Partial Fulfillment of ECON 222
Cebu
Pacific's 2011 earnings fall on high fuel costs
MANILA, Philippines -
Budget carrier Cebu Pacific's earnings last year fell by almost half due to
high jet fuel costs.
In a statement to the
Philippine Stock Exchange, the Gokongwei-led airline said its 2011 net income
amounted to P3.624 billion, down 47.6% from P6.922 billion in 2010.
It said the 16.7% growth in
its revenues to P33.935 billion failed to offset the increase in its expenses.
Cebu Pacific's operating
expenses grew 34.3% to P30.408 billion last year as fuel costs surged 39.3%
amid escalating global market prices. Fuel made up about 50% of the airline's
total expenses.
Fuel
surcharges
Due to higher oil prices,
Cebu Pacific wants to hike fuel surcharges collected from passengers of its local
flights.
The airline has asked the
Civil Aeronautics Board (CAB) to approve a P50 to P100 adjustment in
surcharges.
The International Air
Transport Association’s price monitor showed that jet fuel prices reached
$137.1 per barrel as of March, up 9.7% from the same period last year and 6.1%
higher compared to the previous month.
The CAB set the hearing for
Cebu Pacific's petition on March 22.
Source:
http://rp3.abs-cbnnews.com/business/03/14/12/cebu-pacifics-2011-earnings-fall-high
fuel-costs
REACTION:
News
about oil price hike is not new to us. This issue does not only affect one
person or firm but it affects a lot of people or the economy as a whole. Oil
price hike is a burden to motorist, consumers and even business entities that
uses large amounts of fuel in their operation. Due to the high price of fuel in
the market, the price of other commodities would increase as well. This would
be another load for the consumers. They will be forced to buy products that are
expensive because it is necessary for their everyday living and be left with
nothing on their pockets. When I read the news about the decrease in Cebu
Pacific’s earnings, I realized that high fuel costs do not only affect prices
of commodities but also the price of services offered by some firms.
In the case of Cebu Pacific, they
opted to increase fuel surcharges that they collect from passengers. This
decision can affect the outcome of their operations. Increase in fuel surcharge
would mean increase in price paid by the passengers. People may hesitate to buy
a ticket or not. This would result to fewer sales and less customers. Customers
might opt to wait for promo fares to lessen the costs of traveling. On a
positive note, the increase in fuel surcharge can give the firm enough funds to
cover expenses on high fuel costs.
I think, the government should
resolve this problem. They should work hand in hand with the department of
energy (DOE) to regulate the prices of oil in the market. I know this is not
simple but with right decision and plan, everything would be possible. If the
government can regulate prices of oil, this would be a big help to all people –
motorists, consumers and even big firms. It is also important for people to be
aware of this issue for them to cope up with change in their living. People
should also make right decisions and be wise consumers.
share your thought about this issue...!
:)
