Cebu Pacific Air
- CAPA Analysis
- Schedule Analysis
- Route Maps
- Annual Reports
- Print Summary
- IATA Code
- ICAO Code
- Corporate Address
- Airline Operations Center Building
Manila Domestic Airport Complex
Old Domestic Road
- Main hub
- Manila Ninoy Aquino International Airport
- Business model
- Low Cost Carrier
- Domestic | International
Based in Manila, Cebu Air Inc (operating as Cebu Pacific) is one of the largest low cost carriers in Asia. Controlled by the Gokongwei family-controlled JG Summit Holdings and partially listed in Feb-2011, Cebu Pacific‘s hub is at Manila Ninoy Aquino International Airport with secondary hubs at Mactan-Cebu International Airport, Francisco Bangoy International Airport and Diosdado Macapagal International Airport. Using a fleet which includes Airbus A319/320/330 and ATR72-500 aircraft, Cebu Pacific’s network consists of domestic and international services within Asia.
Location of Cebu Pacific Air main hub (Manila Ninoy Aquino International Airport)
Cebu Pacific share price
LCCs will continue to evolve into hybrids of the original core model. CAPA and OAG consider Cebu Pacific Air fits the LCC profile and it is included in our reporting on this basis. Please note: when reporting for an airline is changed from or to LCC the historical data is not affected and it can lead to a distortion in the current reported data. Contact us if you have any queries.
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The Philippines-Japan market is poised to see a huge influx of capacity, driven primarily by expansion from Philippine low-cost carriers. The expansion is made possible by a new air services agreement between the two countries and the lifting of restrictions by Japanese authorities on Philippine carriers.
Cebu Pacific Air, which currently only serves one destination in Japan with three weekly flights, is seeking the biggest expansion with at least 80 additional weekly flights and eight new destinations. AirAsia is planning to enter the Philippines-Japan market with 32 weekly flights while Tigerair is looking to enter with 56 weekly flights.
Philippine Airlines (PAL) and its regional subsidiary PAL Express are seeking to add 63 weekly flights. PAL is currently the market leader with 31 weekly flights to Japan. In the total there are currently only 76 weekly flights between the two countries, a figure which should quickly double and possibly triple depending on how many of the proposed new flights are implemented.
AirAsia is attempting to turn around its struggling operations in the Philippines by closing its base at Manila alternative airport Clark and focusing on expansion at Manila Ninoy Aquino International Airport using slots held by new partner Zest Air. AirAsia is also seeking approval for Zest to adopt the AirAsia brand, giving the LCC group two carriers in the Philippine market but a single product.
AirAsia has struggled in the Philippine market since it launched Philippines AirAsia in Mar-2012. The new affiliate’s base at Clark has been highly unprofitable with limited growth opportunities.
Shifting focus to Manila significantly improves AirAsia Group’s outlook in the Philippines. But AirAsia will still need to overcome intense competition from market leader Cebu Pacific, which has a much stronger position at Manila, as well as the Philippine Airlines Group and Tigerair Philippines.
Southeast Asia continues to experience rapid LCC expansion even though some key markets are approaching saturation. The region’s LCC fleet is poised to grow by about 20% in 2013, approaching 500 aircraft at year-end. With some of the largest airline orders in recent years coming from ASEAN-focused LCC groups, rapid growth for the sector is assured for the medium to long term.
The LCC penetration rate within Southeast Asia is now above 50%, having steadily increased over the last 10 years from less than 5% in 2003. Even in the intra-Southeast Asia international market, which is about one-third the size of the region’s domestic market, LCCs now account for 50% of total seat capacity – a remarkable figure given that ASEAN has not yet moved to a single market concept like the EU.
Opportunities still remain for LCC market share gains in some countries, particularly Myanmar and Vietnam. These important pioneer markets have the lowest LCC penetration rates among the seven main ASEAN countries but LCC start-ups from both countries are expanding rapidly.
Asian LCCs create new city-pairs, market dominance. Full-service carriers ignore them at their peril
Low-cost carriers have two primary impacts: first they stimulate new traffic and second they divert traffic from full-service counterparts. Some legacy airlines are adamant that LCCs will not impact their existing network and thus do not need to consider any response to LCCs. This is an old world argument often proved wrong; but even if it had merit it would not excuse legacy carriers from ignoring the opportunistic impact of LCCs: creating new growth.
LCCs are the sole or majority operator on 27% of short-haul capacity at Singapore Changi and 60% at Kuala Lumpur. This potential upside is no small sector to ignore.
One final argument from full-service airlines is that their strategy is to have a frequency advantage. But looking at markets like Singapore-Jakarta where LCCs do not account for the majority of capacity, they do account for the majority of frequencies. Asian growth is still in its infancy but for an indicator of the future could look to Europe, where the region's two biggest airlines are LCCs: Ryanair and easyJet. Moreover they are still growing, unlike their legacy counterparts.
Bilateral agreement differences are providing a check on the launch of services to Australia by Philippine low-cost carrier Cebu Pacific, which is interested in serving Melbourne and Sydney using its new fleet of A330-300s. The differences between Australian and Philippine authorities on an extension to their air services agreement is frustrating Australian airports, which have seen medium/long-haul low-cost carriers drive international traffic growth in recent years.
Cebu Pacific would be the fourth medium/long-haul LCC to operate international services to/from Australia, joining AirAsia X, Scoot and Jetstar. The rapid expansion of AirAsia X in Australia, where the Malaysian carrier will become by the end of 2013 the fourth largest foreign carrier, was analysed in the first part in this series of reports on the Asia-Australia market.
The Philippines is a much smaller market for Australia than Singapore or Malaysia. But there is potential for significant growth, particularly if a new LCC can enter, stimulating demand in a market which is highly price sensitive.
Asian airline costs and efficiencies vary widely. Compared to Europe, the region is home to efficient LCCs like AirAsia, which on a stage length-adjusted basis is more efficient than Vueling or easyjet – but perhaps not Ryanair. Thai Airways is the most efficient of the major full-service Asian airlines, but it is not much more efficient than Finnair, one of Europe's leanest carriers. But Thai is certainly more efficient than many of Europe's full-service airlines, which have similar costs and stage lengths, unlike Asia's full-service carriers that occupy a wide spectrum. At the top end is Japan's All Nippon Airways, which rivals SAS' costs – Europe's most expensive major airline.
These are some of the findings from CAPA's examination of Asian airline costs. Geography and local labour costs only partially dictate total airline costs: three Japanese airlines are the most expensive in this sample. Yet Japan's independent LCC, Skymark is cheaper than any Chinese carrier while one of Asia's most efficient full-service airlines – Singapore Airlines – is from a country with a cost of living closer to the West than other parts of Asia. Many of Asia's full-service airlines need to shape up – and LCCs need to maintain cost discipline for when the cost gap is inevitably narrowed.
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