Cebu Pacific Considers Fleet Expansion, Eyes Middle East

As slot limitations at Ninoy Aquino International Airport in Manila continue to pose a threat to airlines that are seeking expansion, Cebu Pacific is considering the possibility of using larger aircraft. The budget carrier has primarily been seeking aircraft with larger capacity as part of its long haul route expansion efforts but is now considering the possibility of shifting operations on some existing regional routes to larger aircraft. 

Copyright Photo: Manuel Nierra/PPSG
According to Lance Gokongwei, President & CEO of Cebu Pacific, the airline plans to conduct feasibility studies to review the airline's existing fleet of fifty aircraft. "We're constantly evaluating our fleet plan. At this time, we're still on our feasibility study," said Gokongwei. "We're getting basic data from manufacturers and are evaluating the business case."

Cebu Pacific's Airbus A320 fleet offers an average seating capacity of 180 seats in an all economy configuration. However, Cebu Pacific currently has brand-new Airbus A321neo aircraft on order that will be configured with 220 economy seats in a single-class layout. "I think the market is going towards larger planes, because the slots are limited. We are still studying if we could shift from using Airbus A320s to A321," said Gokongwei. "We have to make maximum use of limited slots."

Meanwhile, Gokongwei added that Cebu Pacific continues to pursue expansion in Europe and the United States, which would require the acquisition of larger and longer range aircraft. "We are in constant contact with all manufacturers such as Airbus, Boeing, and even smaller industry players," added Gokongwei. Currently, Cebu Pacific has been acquiring Airbus A330-300 aircraft for its long-haul operations but these do not have sufficient range to serve Europe or the mainland United States from the Philippines.

Last month, Cebu Pacific announced that it will be expanding its existing long haul operations beyond Dubai and expanding to Kuwait and Sydney, Australia in September. The airline is scheduled to receive its fifth Airbus A330 in August. The carrier is currently targeting increased seat entitlements in the Australian and Hong Kong markets.

However, the carrier has not lost sight of its original plan to serve overseas Filipino workers in the Middle East. Cebu Pacific's entry into the Middle East market has not been without growing pains and challenges but the airline remains optimistic after its initial 9 months of operations serving Dubai in the United Arab Emirates.

"Cebu Pacific continues to look at opportunities for expansion. We are creating a bigger pie, rather than simply grabbing market share," said Gokongwei. "To us, it is of utmost importance to create new demand that ultimately benefits not just Cebu Pacific but the whole aviation and tourism sectors." He added that the airline has been working hard to keep costs and fares to a minimum, while working with partners to promote the Philippines as a tourist destination to residents of the United Arab Emirates.

In addition to its existing service to Dubai, Cebu Pacific already has plans to launch service to Kuwait in September of this year. Although no official announcements have been made, it is believed that the carrier could also expand service to Saudi Arabia by the end of the year. Riyadh and Dammam are two destinations that presently top the list of possibilities in the Middle East. Cebu Pacific is also exploring the possibility of serving Oman and Qatar.

According to Gokongwei, results of the airline's initial long-haul route to Dubai have shown a lot of promise with the carrier flying 75,000 passengers in the first six months of operation. He noted that the Philippines to Dubai market has grown by close to 30 percent since the entry of Cebu Pacific and average fares in the market have dropped between 10 to 15 percent, with Cebu Pacific offering fares that are as much as 35 percent less than competing carriers on the same route. "Because of the availability of lower fares, travel between the Philippines and UAE is much more affordable today than it was a year ago," said Gokongwei.

Gokongwei says that the United Arab Emirates is a promising market for Cebu Pacific being home to 750,000 overseas Filipinos. He added that there is great potential to develop tourism traffic given that Cebu Pacific can connect passengers from Dubai to the widest network in the Philippines with 35 local and 24 international destinations. "Our main goal is to serve Filipino expatriates who can utilize our extensive network in the Philippines to visit their hometowns, or our extensive Asian network for holidays," said Gokongwei.

As Gokongwei points out, Cebu Pacific considers the budget long-haul market as a completely different product that appeals to a unique market segment, which does not compete directly with legacy carriers. "Cebu Pacific envisions its budget long-haul services to stimulate new demand, as we have successfully done in other markets in the past," said Gokongwei. "It is music to our ears when a passenger tells us that he or she was only flying long-haul once a year because fares were expensive, and now that Cebu Pacific offers lower fares, he or she can now afford to travel twice a year."

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