FACTORS AFFECTING

TRAVEL INDUSTRY

Llanto, Bea

Lupena, Rochelle

Mendiola, Makki

Shiu, Phoebe

So, Nika

Introduction

Travel (or Tourism) is going for entertainment, leisure or business purposes. The World

Tourism Organization defines tourists as people who "travel to and stay in places

outside their usual environment.

The travel sectors covers the following services:

● Transportation services (such as ships, airlines and taxis)

● Hospitality services

The most travelled destinations of Filipinos: France, US, Spain and China

The major forms of travel include ship travel road travel, railroad travel and the most

popular, air travel.

The travel sector includes the following industries:

Tourism Industry: The global tourism industry is a multi-million dollar industry. It

contributes approximately 10% of the world GDP. The industry began booming with

increasing affordability of overseas travel.

Hospitality Industry: It includes services provided by the tourism and food sectors.

It highly likely and prone to economic fluctuations. It can be broadly classified into

entertainment and accommodation.

(Source: Economy Watch 2007 figures)

One of the leading domestic carriers, 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, Zamboanga International Airport, Francisco Bangoy International

Airport[3] and Diosdado Macapagal International Airport.

The airline is a subsidiary of JG Summit Holdings. 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 200) In October 2010, the

airline completed an IPO of 30.4% of outstanding shares. In the following year, Cebu

Pacific carried out almost 12 million passengers.

The latest news about the Travel industry in the Philippines dated on March 12, 2012.

The country’s international air travel sector grew by nearly a tenth in 2011,

outpacing the growth of the global aviation sector, which suffered from economic crises

and volatile fuel prices. Data from the Civil Aeronautics Board (CAB) released this week

showed the number of passengers going in and out of the Philippines growing to 15.65

million passengers, up by 9.6 percent over the previous 12-month period. Combined

with the domestic sector, the country’s total air travel industry grew by 11.57 percent

in 2011. This came despite challenges experienced in the rest of the world, where

passenger traffic grew by a modest 6 percent.

“Overall, 2011 was a year of contrasts. Healthy passenger growth, primarily in

the first half of the year, was offset by a declining cargo market. Optimism in China

contrasted with gloom in Europe. Ironically, the weak euro supported business travel

demand,” International Air Travel Association (IATA) CEO Tony Tyler said in a recent

statement. “Improving business confidence is good news, but 2012 is still going to be

a tough year,” he said. For the Philippine market, the expansion in international traffic

in 2011 was slower than the 2010 year-on-year growth rate of 12.45 percent, dragged

down partly by the dismal performance of flag carrier Philippine Airlines (PAL). (Source:

Paolo C. Montecillo of Philippine Daily Inquirer)

Economy (Makki)

The economy, in general, is one of the many factors affecting the travel industry.

It is one of the many factors that play a big role in the success of businesses. As we

all know, the economy has not been improving for the past few years. Statistics show

that the economy is doing better than before, but do we feel that it is? Unfortunately,

many people either still do not earn enough or are still unemployed in the Philippines.

Because of this, businesses such as the travel industry are affected. In a wider sense, if

people do not earn profit as much, this can cause the decrease of their customers. For

many, people would prioritize their obligations such as paying for their mortgage or their

necessities. Therefore, it is unlikely that travelling would be the first thing that they will

spend on.

One issue that we need to ponder upon is the price elasticity of demand which

make a big impact in this industry. Elasticity of demand, for example, is when certain

aspects like the cost or the demand of travel is constantly changing. Since the price

of oil has been rapidly increasing, it becomes one of the reasons as to why the cost of

the tickets is increasing while the demand for travel by the consumers is decreasing.

For instance, Cebu Pacific has been having promos and offering low fares to different

destinations in the Philippines and in our neighboring countries. Because of this, they

are known by many Filipinos which help them gain more customers. Even though they

have been offering low fares with the oil price rapidly increasing, they still earn the right

amount of profit since travel industries always try to cater new services to the people.

Another issue is the wage inequality. Ever since the deregulation of airline

industries has occurred, wage inequality has existed. It is very common especially

in airline industries because a variety of jobs are made available by this type of

business. According to the representative of SeaZone (2008) , a contributing network

of Yahoo!, “the broad range of employment areas include pilots, management,

secretaries, ticketing personnel, flight attendants, mechanics, baggage handlers,

and more. The airline industry employs some of the highest investments in human

capital than any other industry. However, continuing cuts in pay and a lack of standard

wage compensation, industry wide, further shows the truth that not only does wage

inequality exist, but pressures for higher productivity from air carriers continue to widen

the gap.” Various airlines nowadays do not only cut wages, but they even demand

greater productivity from its employees. Not only that, but airlines prefer hiring part-

time or contractual employees rather than full-time employees to avoid giving benefits to

individuals who have been employed in the company for a long time.

The externalities also continue to be an issue until today. The procedures done

in an airline industry such as the takeoff and landing of the planes continues to give an

impact to nearby homeowners due to the noise disturbances. Because of this, people

keep on complaining to individuals who are in charge of travel industries to place

regulations or policies that will help minimize the noise level created by the airlines.

Since this is so, the market performance is affected.

Employment (Phoebe)

Employees working in airlines or airplanes are an important factor in the traveling

world. In REPUBLIC ACT NO. 7160, employees who work in the travel industry

especially in airlines in the Philippines should be a Filipino citizen. Filipinos are known

for their hospitality and it will increase the transaction of air travel. Pilot in the Philippine

Airlines are known for their good pilot skills. An example of it is the ‘perfect’ emergency

landing that had happened in LA. But not only does it show that the Philippine Airlines

have this kind of pilots but also the other airlines like Cebu Pacific, Zest Air and more.

With it, more people may not only travel in the Philippines to increase the industry but

also the other travel corporations for their well trained Pilots. Even though with inviting

employees, they can also decrease flights or affect negatively to the travel industry. And

this has just occurred last year due to the conflict between Philippine airlines and their

employees. It is stated by Pastrana that “More than 102 international flights and 70 local

flights were cancelled as a result of the strike, with about 14,000 passengers affected.”

Imagine how much loss that cost the airline for the cancellation itself.

Hospitality (Roch)

In the airline industry, hospitality is said to be the most prominent aspect.

Pleasure and comfort while traveling are meant to be provided by hospitality services

provided by each airline. Every company is careful in providing the best services in

order to attract more passengers.

Filipinos are famous for their warm and welcoming hospitality. It is a common

trait that Filipinos are known for by foreigners who have traveled around the country.

Hence, giving foreigners incentives to travel to the country and see not only the

beautiful sceneries and the colorful cultures of the Philippines, but also to experience

the honor and promise of true friendship brought by the hospitality of the locals.

Moreover, Philippine airline companies are expected to hold employees who possess

the said trait for the visitors’ first impression would come from the welcoming spirit on

board through the services given by the Filipino crew members. This is the reason why

hospitality within airline companies is important.

Policies (Roch)

Every business needs policies. These business policies are rules obeyed by

an institution that describes business processes, industry practices, and the scope

and characteristics of an institution’s offerings. In the airline industry, policies are very

important. The policies implemented are strongly for the benefit of the passengers and

the airline company as well. Airline companies have standards which would ensure the

safety and convenience of the passengers without taking away the privilege of each

traveler of having a quality flight. For instance, since the famous 9/11 attack, security

in airports have changed dramatically. Limits on liquid products on carry-ons were

implemented and each person is required to go through numerous x-rays assuring

thorough inspections for each and everyone’s safety. On the other hand, passengers

would also have to follow some rules not only for their safety, but also for the airlines

company’s financial safety. For example, the policies on flight cancellations would

protect the company from having losses in their profit. Policies are important in airlines

because it keeps the flow of operations moving while maintaining safety and quality

flights for everyone.

Infrastructure (Nika)

A factor in the travel industry is the infrastructure. The purpose of infrastructure is

to “provide the basis for people and business to access goods, services and activities.”

One of the most important infrastructure for a travel industry is the airport. Under the

airport infrastructure there are the runways, terminal buildings, cargo buildings, transit

areas, power units, lighting, navigational aids, and other facilities and systems used in

order to make an airport function. It is important to have an efficient airport because it

is where all the arrival and departure flights are. An international airport accommodates

international flights as well as domestic ones. There are also domestic airports which

cater only to domestic flights. International airports are generally bigger compared to

domestic ones because it should be able to accommodate larger and more aircrafts, as

well as more passengers.The infrastructure is as important as the airport itself because

without is the airport could not function efficiently and safely.

Resources (Nika)

Travel industries depend greatly on its resources. The resources of a travel industry

are the cultural heritage and the resources of the country. The travel industry is very

competitive and right marketing strategies should be done to attract more tourists.

Here in the Philippines, there are plenty of cultural heritage and natural resources still

maintained. Cultural heritage is a part of resources for the travel industry because

nowadays, people are more interested in experiencing different cultures. Thus, cultural

heritage has become a part of the resources for many world travel destinations. A more

obvious one is the natural resource. Natural resources are resources for the travel

industry because they draw attention from tourists to visit the place. Palawan is an

example of natural resource in the Philippines. Palawan has several beaches that are

really beautiful, the coral reefs are abundant and also the wild lives. Not many places

can offer what Palawan has, so by advertising Palawan domestically and internationally

there is a chance of getting more tourists to come to the Philippines and the travel

sector will also increase because of this.

Health Problems (Bea)

A hefty and growing number of people for professional, social, recreational and

philanthropic purposes commonly travel internationally. They travel greater distances

and at greater speed than before and this ascending trend looks to uproar in the next

years; hence making the traveller exposed and are more prone to a variety of health

threat. In travelling there are unexpected and major changes in altitude, humidity,

microbes and temperature which may lead to ill-health. All travellers should know about

the budding hazards of the countries they are travelling to and learn how to minimize

their risk of acquiring illness. Headfirst planning, proper preventive measures and wary

precautions can extensively diminish the risks of adverse health consequences.

Health risks associated with travel are greater for certain groups of travellers, pregnant

women, the elderly, the disabled, and those who have pre-existing health problems.

Pregnancy

Travel is not generally contraindicated during pregnancy until close to the expected

date of delivery, provided that the pregnancy is uncomplicated and the woman’s health

is good. Airlines impose some travel restrictions in late pregnancy and the neonatal

period.

Disability

Physical disability is not usually a contraindication for travel if the general health status

of the traveller is good. Airlines have regulations on the conditions for travel for disabled

passengers who need to be accompanied. The information needed should be obtained

from the airline in advance.

Any traveller with an on-going illness should carry all necessary medication and medical

items for the entire duration of the journey. All medications, especially prescription

medications, should be stored in carry-on luggage, in their original containers with clear

labels.

With all that being said, the role of health to the travel industry is a major factor to

look at. Since, health comes first for every individual. Who would want to risk their life to

go to a country infected with a disease, right? Thus, making it harder for the travel

industry to sell tickets since buyers are reluctant to buy tickets because they know for a

fact that their health would be at stake. One example is the 2004 Meningococcemia

Baguio outbreak where 20 people died and led to a downpour of sales in the travel

industry. In result the travelers were scared in coming to the Philippines since they

know if the travellers go here they would be infected.

The role of travel industry professionals; Tour operators, travel agents, airline and

shipping companies each of them have an important responsibility to safeguard the

health of travellers. It is in the interests of the travel industry that travellers have the

fewest possible problems when travelling to, and visiting, foreign countries. Contact

with travellers before the journey provides a unique opportunity to inform them of the

situation in each of the countries they are visiting.

Safety and Security (Phoebe)

One of the important factors in the travel industry is safety. Who would even want

to travel in air knowing that he is going to die or even go to a country knowing there is

war or terrorism? Security and safety helps let the people or travellers to decide whether

to ride the airline or not. First is the airplane, if the airplane is known for crash landings,

people would not ride that airline anymore. Fortunately there is none in the Philippines.

The Philippine travel industry makes sure that their airplane is at work before they fly

a plane. Example would be the Philippines airlines, because they have nice and safe

plane structure. Second would be the country itself. It is safe to travel in the Philippines,

but people must also be watchful of where they will go. One example would be killings

and kidnappings happening in Mindanao, with it, tourists would not go there even with

the beautiful islands and places that should be visited there. Because of it, tourist may

not travel to Mindanao which will decrease the travels from abroad to the country or

region. Another thing that should be included in the category is the safety of the airport.

Safety in here includes a welcoming greet from the airport structure itself to invite more

travelers to the country.

Summary and Conclusion

The economy plays a big role in one’s business.

There are some certain circumstances that will greatly affect the travel industry. A lot

of Filipinos are in a low class race and cannot afford to spend on travel because they

would use and spend in more practical things. Furthermore, the price of oil is up roaring

that there is a need to change the price of ticket sales. In order for the company to keep

up with the increase cost of gasoline they started promos and low fares to balance out

everything and still earn despite the problem.

Hospitality is the key to a successful travel industry. If a travel company is known

for their accommodating and great kindness it will attract customers gaining more profit.

Wage inequality is present in a travel company. This means that the travel

company wants to cut down the wages and expect greater performance from the

employees. In addition to that, they prefer part-time employees because they don’t want

to give out benefits and such. If this continues the employees would resign from work

because of inequality. Since, there are only fewer employees it will lead to a decrease

of income because no one would cater to the needs of customers.

In a travel company, there should policies to be followed. Without these

regulations, there would be chaos and disaster that is why it is important to abide all

these rules. If the customers and employees follow all these rules then there would a

smooth and a proper sailing of the company.

It is important to have an efficient infrastructure most especially the runaways

and the airplane itself because it may lead to unforced and unexpected disasters if they

do not maintain their infrastructure into its best form. If disaster happens, the company

will have a bad image making the customers reluctant to buy tickets because of the

incident. Also, the terminals should be at its best. Since, a lot of foreigners are going in

and out of our country. They must see the best and only the best because that is what

they paid for.

Natural Resources are one key factor that draws the travellers here in the

Philippines thus making the travel company beneficial from it. Since, our country is

blessed with beautiful places that travellers are dying to check it out. Our country’s rich

resources serves as the main reason as to why people come here.

Safety/Security and health helps the customers decide whether to travel or not.

Who would want to go to a place knowing that there is an epidemic or the place is filled

with terrorists? Health and safety comes first with any individual

With all that being said, Today’s economy proves that Travel Industry are

totally interdependent. Efforts to cut off employees, maintaining their infrastructure,

keeping up with all the rules, showing hospitality amongst their employees, good

performance of our economy and the beauty of our national resources is slowly

diminishing can impact one another. More than ever before, every factor should perform

well to stay in the game and provide the kind of service that travellers have come to

expect. They need one another to perform well. To carry out the value of hospitality we

need employees. To perform flights and bring the customers to another destination,

infrastructure is needed. Most especially, the need of customers is a must in order for

the company to still function. But in a wider sense, all these factors must be considered

and analyse to prevent and find solutions.

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