Cebu Airport has emerged as a battleground for the two main airline groups in the Philippines. Cebu Pacific and Philippine Airlines (PAL) are both pursuing ambitious domestic expansion at Cebu, pressuring yields on point-to-point routes that bypass congested Manila.
Cebu Pacific is adding capacity on seven domestic routes from its hub at Mactan-Cebu International Airport. PAL is adding capacity on six domestic routes from Cebu, including three routes that are also experiencing increases from Cebu Pacific.
New international services, including four that were launched at Cebu over the last three weeks, will help support the domestic expansion as they provide a new source of feed. However the domestic expansion will likely lead to overcapacity on several routes, impacting profitability in a highly price-sensitive domestic market that has already experienced a large surge in capacity over the last year.
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