Mactan-Cebu Airport: a new terminal, and strong international growth


Mactan-Cebu International Airport has emerged as a major gateway to the Philippines, more than doubling international passenger traffic over the past four years. The airport is poised for more rapid international growth following the opening of a new international terminal.

Mactan-Cebu opened Terminal 2 in Jul-2018, expanding the airport's capacity from 4.5 million to 12.5 million annual passengers. Mactan-Cebu was previously operating well above capacity, handling 10 million passengers in 2017. The existing terminal is now being used for domestic operations, which have also been growing rapidly in recent years, while all international flights have been relocated to Terminal 2.

The airport was privatised in late 2014, when a joint venture consisting of India's GMR and the Philippine company Megawide Construction took over operations and committed to building the second terminal. Construction of the 65,500 metres terminal began in Jul-2015 and was completed in just three years.

  • Mactan-Cebu International Airport has experienced significant growth in international passenger traffic, more than doubling over the past four years.
  • The opening of Terminal 2 in July 2018 has nearly tripled the airport's capacity, allowing for further growth in international traffic.
  • Domestic traffic at Mactan-Cebu has also been growing rapidly, driven by expansion from Philippine Airlines and AirAsia.
  • Cebu Pacific remains the market leader in Cebu, but Philippine Airlines and AirAsia have been closing the gap in recent years.
  • North Asia dominates the international market at Mactan-Cebu, accounting for


  • Mactan-Cebu International Airport opened a new terminal in Jul-2018, nearly tripling the airport's capacity.
  • Terminal 2 is being used for international traffic, which has more than doubled over the past four years.
  • Terminal 2 has the capacity to accommodate another doubling of international traffic, which is likely, given the rapid growth of inbound traffic and Mactan-Cebu's position as a transit hub.
  • Mactan-Cebu's domestic traffic has also been growing rapidly, driven by expansion from Philippine Airlines and AirAsia.
  • Cebu Pacific has maintained its position as market leader in Cebu, but Philippine Airlines and AirAsia have significantly narrowed the gap over the past four years.

The CAPA LCCs in North Asia Summit will be held in Cebu on 24/25-Jun-2019.

Mactan-Cebu traffic increases by more than 50% in just four years

Mactan-Cebu passenger traffic has increased by more than 50% over the past four years. The airport is on pace to handle 11 million passengers for the full year in 2018, compared to less than 7 million in 2014.

Passenger growth of 13% was recorded in the past three consecutive years - 2015, 2016 and 2017 - and was up another 9% in 1H2018.

Mactan-Cebu passenger traffic and year-over-year growth: 2010 to 1H2018

Notes: *Some Philippine Airline flights are operated by PAL Express.
Seat figure and capacity share figures are approximate.

Mactan-Cebu has particularly experienced rapid international growth, driven by a slew of new services from both local and foreign airlines. The airport is on pace to handle approximately 3.7 million international passengers in 2018, compared to only 1.7 million in 2014.

International passenger growth reached a staggering 29% in 2017, representing an acceleration compared to the 20% growth achieved in 2015 and 21% growth achieved in 2016. International passenger traffic growth slowed slightly in 1H2018, but was still up by an impressive 17%.

Mactan-Cebu international passenger traffic and year-over-year growth: 2010 to 1H2018

The airport's domestic traffic has also increased rapidly in recent years, but not as rapidly as the international traffic. Cebu's domestic traffic was up by 12% in 2015, by 11% in 2016, 8% in 2017 and 5% in 1H2018 - in all cases a few percentage points slower than the overall traffic growth.

The domestic market currently accounts for 64% of Cebu's seat capacity and accounted for 67% of passenger traffic in 1H2018. The domestic market accounted for 75% of Cebu's total passenger traffic in 2014 and 78% in 2010.

Mactan-Cebu domestic passenger traffic and year-over-year growth: 2010 to 1H2018

Cebu Pacific is the market leader, but PAL and AirAsia have been catching up

There are currently seven airlines operating domestic services at Mactan-Cebu and 23 airlines operating international services, including 17 foreign airlines (based on OAG schedule data for the week commencing 13-Aug-2018).

Cebu Pacific is the largest airline group by capacity at Cebu, accounting for around 31% of total seat capacity. The Philippine Airlines (PAL) Group accounts for 26%, and the AirAsia Group accounts for 21%.

The Cebu Pacific Group consists of Cebu Pacific and its turboprop subsidiary Cebgo; the PAL Group consists of Philippine Airlines and its full service subsidiary PAL Express. Philippines AirAsia (PAA) is currently the only AirAsia Group airline serving Cebu.

While Cebu Pacific has been able to maintain its status as Cebu's largest airline, its market share has been declining in recent years due to more rapid expansion from the PAL Group and PAA.

Cebu Pacific's domestic capacity share has declined from 68% to 44%

The PAL Group has nearly doubled its domestic seat capacity at Cebu over the past four years. The group currently accounts for approximately 32% of domestic seat capacity at Mactan-Cebu, compared to approximately 25% in Aug-2014.

AirAsia has more than quadrupled its domestic capacity at Cebu over the past four years, but on a much smaller base. AirAsia currently accounts for around 23% of domestic capacity at Cebu, compared to only 6% in Aug-2014.

The Cebu Pacific Group's current share domestic seat capacity is approximately 44%, compared to 68% in Aug-2014. Cebu Pacific has slightly reduced its domestic capacity in Cebu over the past four years.

The small independent regional airlines AirSWIFT and Air Juan also operate from Mactan-Cebu but account for a less than 1% share of domestic seat capacity, according to CAPA and OAG data.

Mactan-Cebu domestic seat capacity by airline: 13-Aug-2018 to 19-Aug-2018

Rank Airline Weekly seats Capacity Share
1 Philippine Airlines* 60,301 32%
2 Cebu Pacific 58,010 31%
3 Philippines AirAsia 43,200 23%
4 Cebgo 23,560 13%
5 AirSWIFT 960 <1%
6 Air Juan 198 <1%

AirAsia and PAL focused on Cebu as their fleets expanded

Cebu Pacific took a hiatus from expanding its narrowbody jet fleet over the past few years. However, the airline is resuming narrowbody expansion, which will give it the capacity to resume domestic expansion over the next few years at Cebu and other markets.

PAA and PAL have continued to add aircraft over the past few years and have been focusing expansion at Cebu - and, to a lesser extent, other secondary airports - due to the slot constraints at Manila.

PAA and PAL have also pursued international capacity expansion at Cebu over the past few years, as has Cebu Pacific. However, the number of international seats added is relatively modest compared to the domestic expansion, and foreign airlines have accounted for a large share of the growth in Cebu's international market.

PAL and PAA are the largest international airlines at Cebu

PAA is currently the largest international airline at Cebu by capacity, accounting for a 16% share of international seat capacity. However, this is temporary, and PAL will retake the top position later this year.

PAA currently has close to 16,000 weekly international seats at Cebu, compared to less than 8,000 at the beginning of this year. However, PAA is planning to reduce its international seat capacity at Cebu to 9,000 seats in Oct-2018 after Boracay Island reopens. Most of PAA's international expansion at Cebu in 2018 has been driven by the transfer of North Asia routes from Kalibo during the six-month closure of Boracay.

The PAL Group currently has nearly 15,000 weekly international seats at Cebu, which will grow slightly later this year, whereas PAA's capacity will decline. Cebu Pacific has 8,000 weekly international seats at Cebu, which will also grow slightly later this year.

In Nov-2018, the PAL Group's share of international seat capacity will be approximately 21%, compared to 12% for both PAA and Cebu Pacific. Foreign airlines account for most of the remaining 45% of capacity as the other two Philippine airlines operating international flights from Cebu - Pan Pacific Airlines and Royal Air Charter - are very small.

Foreign airlines expand rapidly

Of the 17 foreign airlines currently serving Cebu, eight have launched services within the past three years - Emirates, EVA Air, Lucky Air, Okay Airways, Sichuan Airlines, T'way, Vanilla Air and Xiamen Airlines. Most of the nine airlines that were already serving the market have also added capacity - in particular China Eastern, Jeju Air and Jin Air.

Korea is the largest international market from Cebu and currently accounts for 60% of Cebu's international seat capacity. Six Korean airlines serve the Cebu-Korea market, along with four Philippine carriers.

The Korean LCC Jeju Air is the largest foreign airline in the Cebu market and currently operates two daily flights from Seoul, as well as one daily flight from Busan. Jin Air and Korean Air are also among the top five foreign airlines in the Cebu market.

Of the 17 foreign airlines, 14 are from North Asia. In addition to the six Korean airlines, Cebu is served by five Chinese airlines, Hong Kong-based Cathay Pacific, Japanese LCC Vanilla Air and Taiwan's EVA Air. Cathay Pacific and China Eastern are among the top five foreign airlines serving Cebu.

Mactan-Cebu international seat capacity by airline: 13-Aug-2018 to 19-Aug-2018

Rank Airline Weekly seats Capacity share
1 Philippines AirAsia 16,200 16%
2 Philippine Airlines* 15,200 15%
3 Cebu Pacific 8,234 8%
4 JEJU air 7,938 8%
5 Cathay Pacific 7,916 8%
6 Jin Air 7,480 7%
7 Pan Pacific Airlines 5,760 6%
8 China Eastern Airlines 4,450 4%
9 Korean Air 4,356 4%
10 Air Busan 2,800 3%
11 Emirates Airline 2,597 3%
12 T'way Air 2,590 3%
13 EVA Air 2,576 3%
14 Vanilla Air 2,520 3%
15 Asiana Airlines 2,464 2%
16 Xiamen Airlines 2,076 2%
17 Sichuan Airlines 1,552 2%
18 SilkAir 1,449 1.%
19 Royal Air Charter 1,148 1.%
20 Okay Airways 1,092 1.%
21 Scoot 1,080 1.%
22 Lucky Air 954 1%
Notes: *Some Philippine Airline flights are operated by PAL Express.
Seat figure and capacity share figures are approximate.
The three other (non-North Asia) foreign airlines serving Cebu are Emirates, Scoot and SilkAir. Scoot and SilkAir serve Cebu from Singapore, and Emirates provides the only long haul flight from Cebu, operating a daily 777 service on a Dubai-Cebu-Clark-Cebu circular routing.

North Asia dominates Cebu's international market

North Asia overall accounts for 85% of Cebu's international seat capacity, according to CAPA and OAG data. Southeast Asia has a 10% share, and the Middle East accounts for the remaining 5%.

There are currently 45,000 weekly one-way seats between Cebu and North Asia. Cebu-North Asia capacity has doubled over the past three years - from less than 23,000 weekly one-way seats in Aug-2015.

LCCs now account for close to half of Cebu-North Asia capacity and account for nearly 60% of total capacity at Mactan-Cebu. Fittingly, Cebu will host the next CAPA LCCs in North Asia Summit on 24/25-Jun-2019.

Qatar Airways to provide second link to Middle East

Middle East capacity is expected to grow by early 2019 as Qatar Airways has unveiled plans to resume services to Cebu. Qatar suspended services to Cebu in 2012, when the Cebu market was much smaller, and has included Cebu among a list of four new Southeast Asian destinations to be launched in its current financial year.

See related report: Southeast Asia-Middle East airline market: Qatar Airways grows rapidly, adds seven secondary cities

Qatar has not yet announced a launch date for Cebu but Mactan-Cebu Airport expects Qatar to launch Cebu-Doha service by the end of 2018. The airport is also reportedly working to secure new long haul routes to Europe from Finnair and Turkish. A new link with Australia is also a priority, with Brisbane being most likely the first Australian destination.

Mactan-Cebu also hopes PAL will resume service to Los Angeles, which it operated thrice weekly from Mar-2016 to Mar-2017 with A340s. PAL has been considering potentially using its new fleet of A350s to resume Cebu-Los Angeles; however, it is somewhat reluctant to use the new aircraft type from Cebu because the market consists primarily of leisure passengers, whereas the configuration of its A350s has a premium focus. PAL's 777-300ERs are less premium-focused, but are too large for the Cebu-Los Angeles route.

China market grows rapidly

While Cebu will likely be able to attract some new long haul services, North Asia will continue to account for most of its international growth. In particular, China is a fast growing source market for tourism in Cebu and the Central Visayas region. Mactan-Cebu expects five more China routes will be launched by early 2019.

Mactan-Cebu already has 12 routes to mainland China but China has less than half the capacity of Korea, although Korea has only four routes. South Korea is the largest source market for the Philippines and the Central Visayas region, but China has been growing faster. Chinese visitor numbers to the Philippines increased by 43% in 2017 and another 44% in the first five months of 2018, while South Korean visitor numbers increased by 9% in 2017 and only 3% in the first five months of 2018.

Central Visayas is one of the most popular tourist destinations in the Philippines. Central Visayas visitor arrivals increased by 17% in 2017, outpacing the overall 11% increase for the Philippines.

Mactan-Cebu has the ability to attract transit traffic

Mactan-Cebu has clearly benefitted, and will continue to benefit, from rapid tourism growth in Central Visayas. The airport is also well positioned to benefit from tourism growth in other regions of the Philippines due to its wide domestic network, which now includes 25 destinations.

For passengers heading to secondary and tertiary destinations in the Philippines, Mactan-Cebu offers a much better transit experience than Manila. Philippine carriers are also keen to encourage international passengers to transit at Mactan-Cebu rather than congested Manila, where airlines are better off focusing on the local market, given the limited ability to add capacity.

The recent opening of Terminal 2 further widens the gap between Mactan-Cebu and Manila, providing an even better experience for connecting passengers. The new terminal is spacious and has a unique resort style design. Extensive retail and food options are available, providing connecting passengers a level of service that has not previously been offered at any Philippine airport.

Other Philippine airports have also been expanding their international networks and new international airports are preparing to open, including a new airport on Bohol Island (which is also located in Central Visayas). However, the other secondary international airports in the Philippines are much smaller, they do not have extensive domestic networks, and will attract a relatively small share of visitor arrivals with a focus on niche local markets.

See related report: Philippines: new international airport at Panglao/Bohol boosts tourism

Mactan-Cebu has the capacity to continue growing

Mactan-Cebu has successfully positioned itself as the second major gateway to the Philippines, adding two million annual international passengers over the past four years. Manila is still much larger and has seven times the international passenger traffic. However, Mactan-Cebu will gradually close the gap with Manila because it has invested in the capacity to support growth, whereas Manila remains constrained.

Terminal 2 has ample capacity to support further international growth for the next several years. Even if Mactan-Cebu's international passenger traffic doubles again, the new terminal will still be operating slightly below capacity.

However, GMR-Megawide will need to continue investing in expansion to remain ahead of the growth curve. The original (now exclusively domestic) terminal is still operating above its design capacity, despite all international flights moving to Terminal 2.

The airport will need to expand its domestic terminal capacity and soon will also have to start planning a further international expansion if international traffic continues to grow rapidly.

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