Merkado Barkada
October 24, 2024 | 9:04am
Both Cebu Pacific [CEB 33.80 ?2.3%; 36% avgVol] and Philippine Airlines [PAL 5.35 ?0.4%; 156% avgVol] have had to cancel flights and in response to airport closures and disrupted airport operations as a result of Severe Tropical Storm Kristine. The storm is expected to make landfall today “over Isabela or northern Aurora early morning, crossing Northern Luzon and exiting by the afternoon”, but the impact to regular airport operations was already being felt in locations like the Bicol International Airport where staff were unable to reach the airport “due to impassable roads” caused by the intense rain preceding the arrival of Kristine’s eye. According to TravelAndTourWorld.com, the storm will have a “ripple effect on international tourism, connecting flights, and global supply chains.”
MB BOTTOM-LINE: Recent studies have shown that climate change (specifically changes in ocean surface temperatures and currents) has caused storms and typhoons to form closer to our coastline, intensify more rapidly than normal, and remain stronger for longer as they pass over land. While we are no stranger to storms (we get about 20 per year), I think we are starting to feel the difference, and I’m curious to investigate how CEB and PAL are talking about the operational risks posed by the new storm status quo. There are costs associated with every canceled flight, every changed route, and every unhappy passenger, and for the most part, the airlines are not in a position to prevent any of it. I haven’t done any research to establish a baseline for what storms have traditionally cost our airlines in the past to know how recent years have been different, and I suspect that any analysis like that is likely to be skewed by COVID and the altered operations of the post-COVID recovery, but I think this is something that I might take a closer look at if I were including the airlines into my long-term middle-class growth thesis.
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