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AIRLINES Cebu Pacific


with them [about] how to effectively market this country.”


That means working with the airport authority and tourist boards – including the Philippines – to promote both ends of the route. “We tell them, ‘partner with us, we will give you the tourism, we will give you the passengers’,” he says. Cebu Pacific’s other long-haul route, Dubai, serves the migrant worker flow and seems successful despite the airline dropping Riyadh, Kuwait and Doha in 2017 – blaming stiff competition. But Shau says the airline is “looking into everything”. Back to those China expansion plans again, where caution is the key word: “We will probably increase in terms of frequency – boost aircraft so that seat density becomes bigger, then when we study the market more, we will look into the secondary cities.”


Aiming high Secondary cities in Asia can mean those with populations in excess of 10 million, which makes them very attractive. “From a Philippines point


of view, we still have our own secondary cities to think about – such as Clark, Cebu, Davao – that can go to these primary markets we serve. Rather than making it Manila-centric, we like to develop secondary hubs in the Philippines first before we look into international second hubs.” He reiterates that he will continue to


target the three-to-five-hour range “in the mega cities of Asia”. “We still feel these are very much under-served. There’s potential for everybody to have a piece of the pie. We’d like a bigger share as we continue to grow.” Becoming a feeder airline is another


opportunity, he says. Cebu Pacific is a member of the Value Alliance – a group of seven Asian LCCs – however, Shau indicates that finding a partner long-haul carrier is not top of the agenda: “We have kept our options open for any interesting partnerships, but we are still looking. We want to concentrate on the greater Asia market and make sure we establish it well before we go for other areas.” As for its own expansion, some new


international routes will need wide-body jets and a tender is currently with Airbus for the A330neo and for Boeing’s 787. “Our first A330 arrived six years ago,


so we are looking into replacing them in the next few months, but that will be a minimum 18 months down the road. By that time some of the lease options can be up for return and we are looking for a fleet size of 10-15 to replace them.”


42 ISSUE 2 ROUTES NEWS 2019 routesonline.com


The Philippines is improving its infrastructure, most recently with a new terminal at Cebu-Mactan International Airport


Facts & stats


Fleet: 72


Destinations: 63 (37 domestic, 26 international) Annual Passengers (2017):


19.75 million


These will naturally be in a high-density


configuration. “Density is a game changer; we were the first airline in the world to have 436 seats in an A330. We fly it from the north to Incheon, to Narita, Hong Kong, Singapore, Bangkok and even Taipei. Cost per seat is the most important thing.” When it comes to costs, oil makes up


a disproportionate spend for LCCs. “It’s about 35-45%,” according to Shau. To alleviate this, Cebu Pacific will bring 12 new aircraft into the fleet this year. Its first A321neo, delivered in January, has, he says, cut per seat costs by 30% compared to the A320 classic and fuel burn by 15% compared to the A321ceo.


Cebu Pacific’s fleet


comprises short-haul Airbus and ATR aircraft


With a population of 108 million, there should be enough customers from the Philippines to fill the new, bigger aircraft. The Philippines aviation market is


growing strongly. In 2017, the total number of air passengers grew 8.8% to 49.2 million, outstripping the country’s GDP growth of 6.7%. Within this, domestic passenger numbers rose 5.9%, but international passengers grew 11.9% to 24.4 million. Moreover, infrastructure is improving; the Philippines boasts 16 major airport projects completed, 28 under way and one getting started. However, the country also presents challenges, with cash being king and credit card use very low, but Shau says: “We are able to counteract that with payment centres and other forms of payments.” He adds that the market “is still very much fare driven”, which may mean casualties to come as new carriers try to compete. Shau predicts consolidation of some LCCs and airlines. “It’s inevitable; they have been popping up too quickly, probably, and over-extending themselves.” Does that mean Cebu Pacific will take advantage and go on a buying spree? Shau coyly says Cebu “is always looking for opportunities” but adds: “There has to be a reason why we’re doing it. We’re not doing it just for growth and just for market reach, we have to make commercial sense. We’re accountable to our shareholders.” 


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