Philippine budget carrier Cebu Pacific is proceeding with its expansion plans, despite rising fuel costs weighing heavily on its books.

From November, it will start operating its fourth international hub at the airport at Clark, just outside Manila.

Cebu Pacific aims to fly more passengers this year and expand its services. But like other carriers worldwide, business conditions have been challenging due to soaring jet fuel prices.

Cebu Pacific booked a loss of about US$350,000 in the first half of the year. The airline recognised that the current three months will also be tough.

"The third quarter is typically most difficult for airlines in the Philippines because of the rainy season. Coupled with high oil prices between July and September, we do expect to (end up) in the red in the third quarter," said Lance Gokongwei, president and CEO of Cebu Pacific.

But despite the challenges, Cebu Pacific is not giving up on its expansion plans.

Starting November, it will start operating its fourth international hub at the Diosdado Macapagal International Airport in Clark, Pampanga - an hour's drive from the capital Manila.

Gokongwei said: "We believe that Clark will be a very good base to place a hub; it's within an hour's drive from Manila and has 8 million people. If you look at their GDP, it is the second wealthiest place in the Philippines after Metro Manila."

"There are also a lot of industries moving into Clark, and we believe it is a very attractive growth market. The addition of all these flights will develop Clark into a gateway for central and northern Luzon."

Although the overall volume growth of the local airline industry may have slowed this year to 10-12 per cent, compared to 23 per cent in 2007, Cebu Pacific expects its passenger volume to grow by 25-30 per cent.

In May, Cebu Pacific set the record in carrying the most number of passengers in the history of Philippine domestic air travel for a single month. Based on the data of the Civil Aeronautic Board, Cebu Pacific carried 512,081 passengers in May 2008, beating the decade old record held by the flag carrier Philippine Airlines.

With consumer prices reaching a 17-year high of 12.2 per cent in July, Cebu Pacific has been trying to draw in more passengers by cutting airfares. It is targeting to fly 7 million passengers this year - up from 5.5 million in 2007.

Image: Airbus A320 in Cebu Pacific Air livery.