Cebu Pacific Air SWOT: Asia’s first LCC, Philippines market leader
Cebu Pacific is Asia’s oldest LCC, having launched services in 1996 – four years before Lion and five years before AirAsia. However, after initially following a pure LCC model, Cebu Pacific became distracted and adopted more of a hybrid or FSC model. Cebu Pacific’s parent JG Summit subsequently realised this was a mistake and the airline returned to its LCC roots in 2004. It has not looked back since.
Cebu Pacific started to pursue rapid expansion in 2005 and has since increased its passenger traffic tenfold – from 2 million in 2005 to 20 million in 2017. Cebu Pacific became the largest airline group in the Philippine domestic market in 2009 and its domestic market share has been more than 50% since 2013. While Philippine Airlines is still bigger in the international market, Cebu Pacific now has a significant international presence and has captured over 20% market share since 2015.
Most importantly, Cebu Pacific has been consistently profitable since completing an IPO in 2010. Cebu Pacific has outperformed PAL in virtually every metric for the last decade and has become one of the strongest airlines in Asia.
Cebu Pacific has limited its risk by not following other Southeast Asian LCCs in establishing overseas JVs and placing large aircraft orders. Its strategy may seem overly conservative, but has been very successful – and profitable – as Cebu Pacific has cashed in on its dominant and first mover position in the fast expanding Philippines market.
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