Cebu Pacific’s global vision for the Philippines

New aircraft, strategic alliances and regional development will all feed into Cebu Pacific’s growth.

International aviation player Cebu Pacific continues to pursue its mission of providing Filipinos with the most affordable and fastest way to get home or to visit their loved ones all over the world.

One positive side effect of the airline’s strategy is increasing accessibility to the Philippines, making the country a competitive leisure and business destination. A case in point is its inaugural US route, which will connect Manila and Guam four times weekly from March 15, 2016.

Atty. JR Mantaring, Cebu Pacific’s vice-president for corporate affairs, says the service paves the way for more flights into the US and readies the airline’s operations and ground team for US air transport requirements.

“It also signifies a scalable expansion for us as we continue to develop the Philippines as a global hub for air travel,” he adds. “With the inclusion of Guam in our network, we are embarking on yet another expansion path across the Pacific, boosting travel demand and stimulating better business and leisure opportunities for the communities we cater to.”

The airline’s aircraft order book will play a huge part in its expansion plans. Between 2016 and 2021, Cebu Pacific will take delivery of five Airbus A320s, 30 A321neos, and 16 ATR 72-600 aircraft.

The A321neo will generate significant opportunities for the airline. It has a range up to 750nm greater than the A320, depending on payload. This will allow Cebu Pacific to serve more cities in Australia, Northern Japan, and India. The aircraft also offers 220 seats in a single-class layout, enabling Cebu Pacific to offer more seat capacity to key routes or airports with restricted slots.

The aircraft is eco-efficient too, delivering fuel savings of more than 15% compared with older-generation aircraft, equating to a reduction in carbon dioxide of some 3,600 tons per aircraft per year. In addition, the aircraft will provide a double-digit reduction in nitrogen oxide emissions and reduced engine noise.

The ATRs on order will be operated by subsidiary Cebgo, formerly Tigerair Philippines. The acquisition came about through a strategic alliance with Tigerair Singapore, which Mantaring says “allows both carriers to harness synergies and efficiencies to enhance network coverage, flight frequencies and customer service, and jointly market routes using codeshare and interline agreements”.

Travellers can enjoy seamless connections between the two airlines, with easy one-stop ticketing for connecting flights and baggage checkin, for example. Specifically, Tigerair’s customers can now fly from south-east Asia to 34 Philippine destinations, South Korea and Japan on Cebu Pacific’s network. Meanwhile, the airline’s customers in the Philippines will be able to add Tigerair’s destinations in China, India and the Maldives to their flight itineraries.

In September, 2015, Cebu Pacific transferred all of its ATR operations to Cebgo. The 16 ATR 72-600 aircraft will gradually replace and expand the existing fleet of eight ATR 72-500s.

“The Philippines has close to 90 commercial airports, but only 29 can accommodate A320 operations,” notes Mantaring. “Cebgo’s ATR fleet can serve potentially over three million passengers annually, in new routes and markets within the Philippines. It will boost domestic tourism and trade in strategic network hubs. Cebgo is set to expand services in six strategic hubs in Visayas and Mindanao, including Cebu, Caticlan and Davao.”

Local and regional developments will assist Cebu Pacific’s growth. The Philippines has close to 100 million people and their propensity to fly is yet to mature – which bodes well for long-term air travel growth.

In terms of infrastructure, rapid exit taxiways at Manila’s Ninoy Aquino International Airport will allow an extra two aircraft movements per hour, alleviating congestion in the short term. The UK’s air navigation service provider, NATS, is working on a project that will significantly improve on this and boost hourly take-offs and landings to 60 from its current 40 limit.

Mantaring suggests the government could also look at multiple airports for a mega-city like Manila. “The alternative airport should ideally be closer than Clark [International Airport, Manila] if we consider other countries with developed airports closer to the capital,” he says.

He also calls for the development of terminals and aviation facilities to meet present and future demand at Philippine airports in general. “We need to establish airport operations that can keep up with the 24/7 flow of passengers and cargo,” says Mantaring.

Meanwhile, the Association of Southeast Asian Nations Single Aviation Market (ASAM), which is slowly beginning to roll out, will give Cebu Pacific additional route possibilities. ASAM will give passengers better options, better services, and a seamless air travel experience between ASEAN member countries.

Equipped with a growing fleet, Cebu Pacific is well placed to serve travellers in new markets. Destinations with large Filipino communities, such as Hawaii in the US, and Melbourne in Australia are high on Cebu Pacific’s wish list. The airline is also interested in mounting additional flights to key destinations in the Middle East.

Mantaring accepts that the airline must be cautious even so. Low-cost carriers in the region are expected to remain highly competitive as they account for more than 70% of outstanding aircraft orders in southeast Asia. Analysts suggest that overcapacity could be a challenge in the long term.

Flexibility will be vital. “Cebu Pacific will continue to review expansion plans, mount additional frequencies to meet growing demand in emerging markets, and continue to offer the lowest fares to the widest low-cost network to and from the Philippines,” concludes Mantaring.

(This article first appeared in Routes News – Issue 2, 2016)