Cebu Pacific eyes regional expansion

Cebu Pacific eyes regional expansion
by Robert Stockdill
Sent by Jil North
Senior Inflight Media Manager – Smile – Cebu Pacific Air Inflight Magazine

Cebu Pacific has reported a 21 per cent boost in international passenger numbers during the second quarter of 2011 as it continues to expand beyond a thriving domestic market.

While the bulk of its business is still domestic – where it claims to have a 45 per cent market share by passenger numbers – the strongest growth is coming from international sectors as a steadily growing fleet allows it to expand its reach.

In the latest quarter total traffic grew 14.8 per cent.

Cebu Pacific (CEB) continues to post profits anchored on its successful low-cost model while its older rival Philippine Airlines struggles with an older fleet and a reliance on long-haul premium fare international routes to drive income.

CEB’s largest hubs are Manila and Cebu, but it is now aggressively targeting a third hub, Davao, The Philippines’ second largest commercial centre.

International growth was across the board during the last quarter, but especially notable in services to Hong Kong, Singapore, Kuala Lumpur, Bangkok and Korea.

The low cost model allows more locals to fly instead of taking buses and ferries, with CEB appearing to boost its share of the low cost audience due to brand building and constant online promotions. The airline now boasts 300,000 Facebook friends and 220,000 Twitter followers.

Further growth is guaranteed with the airline expecting three new Airbus A320 aircraft between September 2011 and January 2012 and two more will follow under operating leases for delivery in 2012.

CEB has exercised options to purchase seven Airbus A320 aircraft for delivery in 2015 and 2016 and an order of 30 Airbus A321neo aircraft has been confirmed for delivery from 2017 to 2021.

The A321s have a greater passenger capacity (220 seats compared with 180 for the A320) and a longer range. But given traffic congestion in and out of Manila and some regional hubs, at least some of the new planes will be deployed on existing routes allowing the airline to increase capacity without increasing frequency.

Asked during a media conference call about route plans, CEB executives conceded the new A321neos lacked the range to allow the carrier to commence serving Sydney or Melbourne in Australia, or even Brisbane. But the planes could reach Perth on Australia’s west coast, some Indian destinations (but not as far as Mumbai) or Japanese cities as far as Sapporo.

The CEB executives said it was too early to determine new routes.

“There are a few more options that come onto the radar screen, but whether they’ll be acted on I’m not sure,” one told the briefing.

The company sees significant opportunities in Kuala Lumpur amongst other regional markets, but negotiating landing rights is always a challenge with a rising number of low cost carriers moving into the market.

A CEB spokesman said the proposed Asean Open Skies agreement “can’t happen sooner”.

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