CEBU PACIFIC Airline Case Study

Group 2
Topic: Customer Relationship Management

Introduction

Cebu Pacific Air is the largest domestic airline company in the Philippines. The company was
established in August 1988 and began operating in March 1996. With their parent company, JG
Summit, it ranked fifth in Asia in terms of an increase in total passengers in 2008. The company
carried 5.38 million passengers in 2008, which is a 20.7% increase over 2007. As of 2010, has
added a number of international destinations, which gives Filipinos an opportunity to visit
countries like Brunei, Japan, Vietnam, and more. Cebu Pacific is the leading company that
provides the low-cost to both domestic and international flights in the Philippines.

Cebu Pacific has been criticized for its poor passenger service, alleged overbooking, flight
delays, and cancellations. For instance, the airline was also criticized for lack of coordination in
the aftermath of the runway excursion incident at Francisco Bangoy International Airport in 2013
and the numerous flight cancellations and delays during the December 2014 Christmas peak
season.

In January 2018, Cebu Pacific was named as one of the world's least punctual airlines, with an
on-time performance of 57.6% in 2017 based on data from OAG. Also included in the list from
the Philippines is another low-cost airline, Philippines Air Asia, with an on-time performance of
58.0%.

The airline was again criticized in 2023 because of its "unsatisfactory" service to passengers,
prompting the Senate of the Philippines to begin an investigation on June 21, 2023.

I. Time Context

June 21, 2023

II. Viewpoint

An operation problem must be solved by the operational management. They must walk
through the process and workflow of the business to improve the services offered to customers.
This problem is perennial that needs to be addressed by the Airline.

III. Central Problem

With a company slogan, “Now, everybody can fly” Cebu Pacific gave their consumers a
promise to give low costs but great value. However, since Cebu Pacific Air has been reaching
greater heights this resulted in increasing their prices. Moreover, a lot of delayed and canceled
flights customers are experiencing. Also, their competitors have been following their low-cost
strategy. PAL has now adopted a market penetration strategy in all their flights by lowering their
prices against Cebu Pacific. As a counterattack, Cebu Pacific focused on their customer
services. How can Cebu Pacific remain the leading airline in the Philippines?
What particular dimension/s in
service quality is lacking in
Cebu Pacific airline?
Discuss further.
- Cebu Pacific airline in this
case did not just lack in one
service quality
dimension, but all of it.
Tangibles, reliability,
responsiveness, assurance and
empathy,
they lack all of these. Let’s talk
about why it is the case, one by
one.
First, on the tangibles, the
amount of adequate leg room on
the airplane is
insufficient. Passengers cannot
sit comfortably throughout the
flight especially those
who are taller than average
height.
Next, the reliability, apparently
Cebu Pacific airline did good on
this on the past. But
that is then, what about now?
Numerous flights were delayed
due to multiple
reasons caused by the airline
company’s lack of attention on
fixing this issue
What particular dimension/s in
service quality is lacking in
Cebu Pacific airline?
Discuss further.
- Cebu Pacific airline in this
case did not just lack in one
service quality
dimension, but all of it.
Tangibles, reliability,
responsiveness, assurance and
empathy,
they lack all of these. Let’s talk
about why it is the case, one by
one.
First, on the tangibles, the
amount of adequate leg room on
the airplane is
insufficient. Passengers cannot
sit comfortably throughout the
flight especially those
who are taller than average
height.
Next, the reliability, apparently
Cebu Pacific airline did good on
this on the past. But
that is then, what about now?
Numerous flights were delayed
due to multiple
reasons caused by the airline
company’s lack of attention on
fixing this issue.
Next, responsiveness, Cebu
Pacific airline clearly did not
train their personnel
properly. They did nothing
when an emergency happened.
Passengers weren’t
informed what happened when
the emergency occurred. And
the airline company
have not responded to the
questions and concerns of their
customers.
Next, assurance, seeing the
hopeful OFWs, finally getting
to see their family that they
have been separated in a long
time, but in the end having their
flight delayed
because of overbooking is
heartbreaking. Those OFWs and
other customers booked
their flight and it got confirmed,
only to eventually know that the
flight is
overbooked. Customers now
cannot assure that if they book
their flight, they would
be able to board the plane.
Lastly, empathy. With the
previous statements, Cebu
Pacific airline certainly lacked
on this service quality. Corrupt
airport staff emerged which
causes unjust treatment
for each and every customer
just to have that money from a
pathetic activity.
Cebu Pacific airline in this case did not only lack in one service quality dimension, but all of it.
Tangibles, reliability, responsiveness, assurance, and empathy, they lack all of these.

a. Tangibles- the amount of adequate leg room on the airplane is insufficient. Passengers
cannot sit comfortably throughout the flight especially those who are taller than average
height.
 b. Reliability- Cebu Pacific Airlines did well on this in the past. But that is then, what about
now? Numerous flights were delayed due to multiple reasons caused by the airline
company’s lack of attention to fixing this issue.
c. Responsiveness - Cebu Pacific Airline clearly did not train its personnel properly. They
did nothing when an emergency happened. Passengers weren’t informed what
happened when an emergency occurred. The Airline Company has not responded to the
questions and concerns of their customers.
d. Assurance – Seeing the OFWs, finally getting to see their family that they have been
separated for a long time, but in the end having their flight delayed because of
overbooking is heartbreaking. Those OFWs and other customers booked their flight and
got it confirmed, only to eventually know that the flight was overbooked. Customers now
cannot be assured that if they book their flight, they will be able to board the plane.
e. Empathy - Cebu Pac airline certainly lacked this service quality. Corrupt airport staff
emerged which caused unjust treatment for each and every customer just to have that
money from an unconstitutional activity

IV. Objectives

1. Cebu Pacific Airlines should provide a reliable service to its customers. It Lessens
delayed and overbooking flights and gives assurance to their customers to have a lower
cost but a quality service.
2. Improve its facilities and provide a comfortable ambiance to its customers, which can be
considered a Home away from Home.

V. Areas of Consideration

1. Cebu Pacific Airlines should perform a root cause analysis of the delayed flights and
revisit its workflow process to provide a reliable quality service to its consumers. Lower cost but
it must not compromise the quality of service.

2. Cebu Pacific Airlines should have provided a better place for their customers by
rehabilitating their facilities.

VI. Alternative Courses of Action

1. Focus on customer satisfaction by improving their services and systems –Avoid delayed
flights and overbooking. Giving assurance to their customers of the scheduled flight.
Train staff to be friendlier and more helpful to their customers. -Offer more amenities like
a pillow or fast wifi. -Get feedback from passengers on ways to improve their flight and
implement them as soon as possible. Improve their websites and social media accounts
accessible and easy to use -Maintain safety and security -Update their online bookings
and promos every day.
2. Offer Better Deals -Cebu Pacific can have family or Barkada promos showing their
consumers they are saving money. The promos must be affordable and accommodating.
 3. Promote their promos -Have posters, advertisements, and commercials -Get various
celebrities to promote their airline
4. Offer more trips to tourist spots -Have seasonal trips to certain places (e.g. Summer –
Boracay/Palawan etc.) -Expand the places their customers can go to.

IV. Pros and Cons

1. Focus on customer satisfaction by improving their services

PROS : happier passengers, customer loyalty, increase in customers
CONS : more costs, may need time and training,
2. Offer Better Deals
PROS : attract more customers
CONS : higher costs, there is a long process
3. Promote
PROS : attract more people, exposure for the airline
CONS : high costs, compete against other competitors
4. Offer more trips to tourist spots
PROS :variety of destinations, higher number of customers
CONS : need for more employees, higher costs, limited time only

VII. Conclusion

Given that Cebu Pacific is known for their low prices and excellent customer service, the best
alternative is no 1. to focus on their customer satisfaction by improving their quality service and
bringing back Cebu Pacific glory. This may take time and mean more costs for the company but
their customers should be their number one priority. Cebu Pacific Air must be able to make their
customers feel comfortable and safe at the same time. Their passengers will feel great and
happy during their flight which will make them loyal to the company and even share their
experience with their friends. This strategy will increase their customer and their profits

VIII. Plan of Action

The operation manager will conduct a thorough study on the perennial problem that affects their
service, and customer satisfaction and redound to lower revenues to losses. The root cause
analysis will also be a great help to know the cause of the delayed flight. After knowing its
causes they should create plans to answer those problems. One of the factors that causes
delays per our study is overbooking. They must improve their systems, not to receive bookings
beyond their capacity. The organization should also adopt Customer Relationship Management
to increase customer satisfaction.

 Organizations are struggling to do more with less.

 Rising competition

 The need for new services continues to grow.

 Organizations are finding it tougher to sustain sales, as traditional marketing models
are not working as well.

 Must add and integrate additional customer

 Information and communication channels to respond to demand

 The “New Consumer” / “Buyer- Centric” market demands it.