Cebu Pacific eyes Gulf expansion

DUBAI, United Arab Emirates – Cebu Pacific is looking at launching direct services to Saudi Arabia and Kuwait in the second half of the year, buoyed by promising figures from its first 6 months of operations in the UAE.

In an exclusive interview with The Filipino Times, Cebu Pacific chief executive offiver Lance Gokongwei disclosed that the the airline flew 75,000 passengers daily with its 436-seater A330-300 fleet in the UAE route since its operations commenced several months back.

“Cebu Pacific continues to look at opportunities for expansion. We are creating a bigger pie, rather than simply grabbing market share. 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,” Gokongwei said.

He said the airline, while continuing to offer lowest possible fares to stimulate demand and increase seat loads, is likewise working closely with partners to promote the Philippines as a leisure destination for UAE residents.

“We are also looking at launching direct services to other long-haul destinations, such as the Kingdom of Saudi Arabia, Kuwait, and Australia in the second half of the year,” he said.

According to Gokongwei, Cebu Pacific flew approximately 32,000 passengers from its maiden flight on Oct 7, 2013 to Dec 31, 2013 in the Dubai route.

“For 2014, we have flown approximately 43,000 passengers from January to March. Traffic has been picking up with Cebu Pacific posting an 80% load factor in April this year,” he said.

Gokongwei said the Philippines-to-Dubai market has grown close to 30% since Cebu Pacific launched its flight compared to the same period prior to the route service.

“When annualized, this translates to an additional 150,000 passengers on the route,” he said.

Moreover, average fares for the entire market have also dropped by 10% to 15%, with Cebu Pacific offering fares that are up to 35% lower than other airlines operating the same route, Gokongwei said.

“Because of the availability of lower fares, travel between the Philippines and UAE is much more affordable today than it was a year ago,” he said.

Underserved market

The decision to open a long-haul, budget Philippines-to-Dubai service was hinged on a number of factors, among them, UAE being host to approximately 750,000 Filipinos, which, Gokongwei said, is the airline’s largest long-haul market to and from the Philippines.

This market, he said, has great potential to help generate tourism traffic as well through Cebu Pacific, which, he added, flies the widest network in the Philippines with 35 local destinations and 24 international destinations in Asia and the Middle East.

“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,” Gokongwei said.

Cebu Pacific looks at budget long-haul as a different product, appealing to a specific market segment that does not directly compete with the legacy airlines’ offerings.

“Cebu Pacific envisions its budget long-haul services to stimulate new demand, as we have successfully done in other markets in the past. 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,” said Gokongwei.

He said Cebu Pacific saw an “underserved market” when it launched last year. “We saw an opportunity to serve Filipinos who are not able to fly direct to Dubai, and offer Cebu Pacific’s trademark low fares.”

Cebu Pacific operates from 6 Philippine airports: Ninoy Aquino International Airport in Manila; Clark International Airport in Central Luzon; Cebu-Mactan, Iloilo and Kalibo International Airports in central Philippines; and Francisco Bangoy International Airport in Davao.

Cebu Pacific also flies to Malaysia, Indonesia, Singapore, Thailand, South Korea and Hong Kong.

Official estimates peg the number of Filipinos in Saudi Arabia at up to 1.5 million. In Kuwait, it’s up to 200,000. The A330-300 carries a list price of US$245.6 million. – Rappler.com

This article was posted with permission from The Filipino Times.