MANILA, Philippines [UPDATED] – Homegrown budget carrier Cebu Pacific Air announced that it will be flying to long-haul destinations that may include Australia, Middle East, and parts of Europe and the US by mid-2013.
In a press conference on Tuesday, January 31, airline president and CEO Lance Gokongwei said, “We will be flying farther. We will be flying long haul.”
Gokongwei said they have filed an application with the Civil Aeronautics Board (CAB) for permits to fly to unspecified routes, but mentioned that Hawaii and Guam are considered as “potential” destinations.
Cebu Pacific has been planning to fly long haul since 2009. It initially mulled mounting flights to Middle East after the bilateral air negotiations with United Arab Emirates increased weekly flights.
“We were already examining long-haul flights very carefully. Is there a market? Yes, there is. Our primary beneficiary will be the OFWs. With cheaper fares they will be able to come home more often,” Gokongwei said.
Cebu Pacific will be charging fares 35% lower than those currently offered by other airlines, and as much as 80% lower when it offers promo fares. He gave an example: if other airlines are charging around $500 for a one-way ticket to any long-haul destination, Cebu Pacific may collect an average fare of $350.
Gokongwei had been wanting to tap the over 2.5 million overseas Filpinos who work in the Middle East, as well as the the 4 million in US market, which he had described as “underserved.”
“We are exploring serving cities where large Filipino community resides. Data indicates that more than half of Filipinos deployed in these regions take multiple stops and connecting flights because no home carrier can fly them there non-stop,” said Gokongwei.
He noted that Middle East airlines flew via direct flights to Manila an average of 165,000 passengers in 2011. Against the 293,000 Filipinos deployed there, nearly half of Filipinos who flew to Saudi Arabia had to take multiple flights to get to their destinations.
The only local carrier servicing these long haul markets is Philipppine Airlines.
Any Philippine carrier is barred from mounting new or increased operations to the US and Europe as the safety downgrade of the US aviation regulatory body, the FAA, as well as the ban from the European Union remain in place.
Gokongwei said Cebu Pacific will lease up to 8 mid-size widebody Airbus A330-300 aircraft, which has a 400-seat capacity, for these long-haul routes.
This new strategy would be similar to AirAsia X, a unit of Malaysian low-cost carrier AirAsia, and Scoot, Singapore Airlines’ subsidiary.
Cebu Pacific, the first Asian carrier to adapt the budget airline model, currently flies short-haul routes, or local and regional destinations that are less than 4 hours away.
Its current operations bank on fast turnovers, with planes spending more time in the air than on the ground to maximize yield.
It has a fleet of 37 aircraft, including Airbus A320s for existing short-haul routes and turbopop ATR 72-500s that service small provincial airports.
Cebu Pacific has passed PAL, which used to monopolize Philippine skies, to become the country’s top airline in terms of passenger numbers.
Despite the US and EU regulatory situation, PAL, a legacy airline, has focused on its profitable international routes–a sector that Cebu Pacific now wants a share of also.