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MANILA, Philippines — The country’s largest budget airline Cebu Pacific Air plans to continue expanding its US and Australia network in 2016, despite a slow growth rate, Centre for Asia Pacific Aviation (CAPA) said.
International aviation think tank CAPA said in its December report that the Gokongwei-led airline is aiming to launch flights to Guam, Honolulu, and Melbourne this year, despite an expected modest seat growth of 2% to 4% – its lowest rate of expansion for several years – as Cebu Pacific is not planning of adding more jets.
Cebu Pacific last month added its 4th destination in Japan. It has also launched 4 long-haul destinations since September 2014, driving a 27% increase in revenue passenger kilometers (RPKs) through the first 9 months of 2015.
RPK is a measure of volume of passengers carried by an airline.
“Cebu Pacific has traditionally been the most conservative and rational of Southeast Asia’s main LCCs (low-cost carriers). The group’s flexible fleet plan and disciplined approach to seat capacity growth is a major strength,” CAPA said in its report.
Cebu Pacific operates a fleet of 55 aircraft to 29 international and 34 domestic destinations. This makes the carrier the Southeast Asia’s third largest low-cost carrier group behind AirAsia and Lion Air, CAPA said.
Almost ready for Honolulu
The aviation think tank said Cebu Pacific is almost ready to launch Honolulu, with the expected double-digit growth for its available seat kilometers (ASK) this 2016.
ASK is the total flight passenger capacity of an airline in kilometers.
“The ASK growth for this year will be driven partially by the full year impact of Doha which was launched in June 2015,” CAPA said.
CAPA added that Cebu Pacific’s launch of Honolulu and Melbourne flights will likely be in the second half of the year.
The aviation think tank said Honolulu and Melbourne have been in the business plan for Cebu Pacific’s long-haul unit since it was established.
“Preparations for Honolulu advanced after the Philippines was upgraded in April 2014 by the US Federal Aviation Administration to a Category 1 safety rating. Under Category 2, Philippine carriers were barred from launching new services to the US,” CAPA said.
According to CAPA, Cebu Pacific had been looking at launching Honolulu in 2015, but the process of securing all the required approvals has taken longer than expected.
“Cebu Pacific now has all the required regulatory approvals but is still waiting for approval from Manila Airport, which needs to allocate the proposed new A330 service to Honolulu terminal space,” CAPA said.
Needs time for Melbourne
According to the think tank’s latest report, preparation for the Melbourne operations have been underway since May 2015 when the Philippines and Australia agreed to expand air services agreement.
Cebu Pacific was previously limited to 5 weekly flights to Australia, which it is now using for Sydney.
“But Melbourne is also currently being held up by a pending request to Manila Airport for a gate to support the new service, which Cebu Pacific has proposed operating with 4 weekly flights,” CAPA said.
Once the Philippine air regulator approves Cebu Pacific’s request, CAPA said the airline “will run a final check on the numbers before proceeding and setting a launch date.” (READ: PAL, Cebu Pacific to launch new int’l flights in December)
CAPA added that Cebu Pacific will need some time to launch Melbourne and Honolulu flights, as it first needs to free up Airbus 330 capacity by removing some of the short-haul flights.
CAPA said the launch of Melbourne and Honolulu flights will require freeing up some of Cebu Pacific’s Airbus 320s. This move is to fill up the capacity needed in the regional market, as some Airbus 330s will soon be used for the new long-haul routes, the think tank added.
Enters US with Guam
Cebu Pacific’s only other new international destination planned for 2016 is Guam, which is being launched with 4 weekly flights on March 15.
Its rival Philippine Airlines, Incorporation (PAL) is the only local carrier in the Manila-Guam market with one daily flight.
“Cebu Pacific is eager to get its feet wet with US operations with Guam before making a final commitment to Hawaii,” CAPA said.
The think tank added that the Manila-Guam is a “much less risky route” to get acquainted with the US market as it can be operated with a narrowbody aircraft.
Guam is slightly less than 4 hours from Manila, according to CAPA. “Cebu Pacific’s longest Airbus 320 route is Manila-Beijing, which is almost 5 hours.”
“While Cebu Pacific’s long-haul operation has been unprofitable in 2015, the group believes it is tracking well and could become profitable in 2016,” the international aviation think tank said.
CAPA further noted that Cebu Pacific is confident yields will continue to improve as its long-haul routes mature. — Rappler.com
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