Cebu Pacific will launch its long-haul operations today with a daily flight on the Manila-Dubai route, using one of its two Airbus A330-300s.
Speaking to Flightglobal Pro, its general manager for long-haul division Alex Reyes says the launch of long-haul services is a “big step” for the low-cost carrier, and that its focus will be on flying to countries where there is a high concentration of Filipinos.
The Philippine carrier’s next long-haul route will also be to the Middle East, where its research has shown there are up to three million Filipinos residing.
“All the market research done shows there’s a lack of direct services. Philippines going into the UAE is well served by Emirates and Etihad with high density 777s yet most of the traffic has one or two stops. It is underserved,” says Reyes. He adds that the carrier’s main aim is to stimulate the market and triple it.
“If we just come in and take away the market share, it’s a bad job. It’s about creating new demand and growing the pie by leaps and bounds.”
He adds that the carrier already has rights to fly to cities in Saudi Arabia such as Riyadh and Jeddah, but it is still working on getting operating permits and regulatory approvals. Thereafter, it intends to start services to cities in the United States, Australia and Europe.
Cebu Pacific is unable to start services to the US, unless it wet-leases aircraft from an American carrier or one in a category 1 country, because of Philippines' category 2 status. Reyes says the carrier has “considered and looked at” the option, but would likely start services to the US only after the country gets promoted to category 1, a move he says the Philippine government expects should happen within the year.
The carrier is also planning to make its case at an EU safety meeting before the end of the year, to have it removed from the blacklist of banned operators. In July, flag carrier Philippine Airlines was the only carrier in the country that was removed from the blacklist. Cebu Pacific’s removal was impeded because of an incident where its A320 veered off the runway after landing at Davao International airport in June.
“We have aircraft coming that can make some parts of Europe non-stop. We have to build today to get rights to fly there,” says Reyes, adding that the carrier has applied for rights to fly to Italy.
The carrier expects to take delivery of another three A330s in the first half of 2014, followed by the sixth by the first quarter of 2015. The jets, all brand new and packed with 436 seats in an all-economy layout, are leased from AWAS, CIT Aerospace and Intrepid Aviation.
Asked whether the airline is looking at ordering next generation jets for its long-haul operations, Reyes says it is in discussions with airframers but a decision is unlikely to be made within the year. Though newer aircraft are more fuel efficient, they are also more expensive to acquire, he notes.
“When doing fleet planning, we’re always trying to balance. Is it worth paying higher price for next generation aircraft? Does it allow you long term to bring down unit costs? We’re continuing the study but there are no firm conclusions,” says Reyes.
He adds that the long-haul division's strategy will not be vastly different from its short-haul unit, where the aim is to have a 30-40% cost difference from a full-service carrier and stimulate demand to grow the market. There are also no plans to split the long-haul operations with a separate air operator's certificate.