Cebu Pacific has clarified its stance on long-haul operations between the Philippines and the United States mainland. Mike Szucs, the airline’s chief, confirmed that they will not venture into transpacific flights, despite recognizing the “best fare growth” on these routes in the current post-pandemic environment. This decision comes as the airline focuses on its established business model and core markets.
During a briefing on May 10, Szucs highlighted that there is currently an under-capacity on some trans-Pacific routes from the Philippines to North America. This shortage has led to higher yields, benefiting operators like PAL. “There is that temptation to [want to] go in there and get some high yields. But we feel at some point there will be inevitable [market] correction,” Szucs stated. He emphasized that long-haul operations are not aligned with Cebu Pacific’s business model, saying, “It is not what we do…it is not our DNA.”
Concentration on Regional Markets
Instead, Cebu Pacific will continue to focus on its operations within a “four-hour circle” from the Philippines. This strategy targets flights of around four hours from the country, tapping into a market of over 2 billion people. Szucs explained, “We’ve got plenty of addressable markets…very close to home that doesn’t stretch or challenge the business model that we have been accustomed to.”
Szucs responded to inquiries about the potential for entering the long-haul market, especially as other low-cost airlines, like India’s IndiGo, are expanding into widebody long-range operations. In late April, IndiGo announced an order for Airbus A350 jets, which includes 30 firm orders and options for another 70. IndiGo’s chief, Pieter Elbers, mentioned that this order would allow IndiGo to “connect to the world” from India’s metro cities.
Current Utilization of Widebody Aircraft
Cebu Pacific does have widebody aircraft in its fleet, specifically A330s, and maintains a small long-haul network primarily serving points in the Middle East. However, Szucs noted that these are “very much outliers” in the airline’s business model. The airline uses its widebody aircraft primarily to provide additional capacity on its short-haul routes. Szucs stated, “One can anticipate that we will stick to our guns. We see a huge opportunity in this part of the world.”
Cebu Pacific reported a significant increase in profit for the first quarter, with a doubling of profit driven by a surge in revenue. This growth was largely attributed to strong passenger travel demand, which outpaced the rise in costs.
Cebu Pacific remains committed to its core regional market strategy, focusing on short-haul operations within a four-hour radius from the Philippines. Despite the current opportunities for high yields on trans-Pacific routes, the airline believes in maintaining its established business model and capitalizing on growth opportunities close to home.
Source: FlightGlobal
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