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24
Apr

Cebu Pacific expected to mount more China flights -- CAPA report

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By Imee Charlee C. Delavin | BusinessWorld Online

CEBU PACIFIC is expected to expand operations to China with the delivery of its ordered A321neo aircrafts that allow the budget carrier to open new routes and grow its capacity, the Center for Asia Pacific Aviation (CAPA) said in a recent report.

The aviation think tank said the budget carrier has 47 aircraft on order, of which 32 are A321neos.

“Cebu Pacific is particularly keen to use the A321neo to open new routes deeper into China,” CAPA said in its report, noting that the aircrafts will also support plans for its North Asia expansion.

It said Cebu Pacific currently has a “small China operation,” consisting of only 17 weekly flights to four destinations.

“However, it is keen to add new flights to China, both scheduled and charters, in line with expected further rapid growth in the China-Philippines market,” it added.

CAPA said visitor numbers from China grew by approximately 20% in 2016, as China overtook Japan to become the country’s third largest source market for the Philippines.

The think tank added that aside from China, Cebu Pacific is also considering opening a branch office in Japan to help support future capacity growth in both markets.

“Cebu Pacific has expanded in Japan in recent years, adding three destinations for a total of four, and will likely use the A321neo to add capacity and new destinations,” it said in its report.

CAPA said Japan is now Cebu Pacific’s third largest international market after Hong Kong and Singapore, while South Korea is its fourth largest international market.

“It’s presence in Korea is surprisingly small given that South Korea is the Philippines largest source market for visitors,” the aviation think tank added.

Cebu Pacific is looking to improve market share in South Korea with the A321neos adding to the expected capacity growth, CAPA said. The budget carrier already opened a branch office in Seoul in late 2016.

CAPA noted that branch offices, which are “unusual,” for low cost carriers, should improve Cebu Pacific’s local distribution in international markets that consist mainly of inbound passengers.

For this year, the think tank said Cebu Pacific “does not have the capacity to pursue significant growth in any of its international markets in 2017, but is putting in place the building blocks to support faster international growth once the A321neo arrives.”

European plane-maker Airbus has committed to delivering three A321neos to the budget carrier in the fourth quarter, although some delays may push back the schedule.

Cebu Pacific ended 2016 with a fleet of 57 aircraft -- up only two from the beginning of the year. Cebu Pacific’s fleet was flat at 47 aircraft, while its turboprop subsidiary Cebgo expanded its fleet from eight to 10 aircraft.

“The Cebu Pacific Group is planning once again to add only two aircraft in 2017, for a total of 59. The group plans to maintain the size of its narrowbody jet fleet at 39 aircraft as three more A319s are phased out and the first three A321neos are delivered. At the same time, an eighth A330 is being delivered and the turboprop fleet is expanding by one more aircraft for a total of 11,” CAPA said in its report.

Cebu Pacific currently offers flights to nine destinations in China -- Beijing, Guangzhou, Haikou, Lijiang, Ningbo, Shanghai, Shenzhen, Xiamen, Xian; four in Japan -- Fukuoka, Nagoya, Osaka, and Tokyo; and flights to Incheon and Busan in South Korea, according to its Web site.

Cebu Air, the listed operator of Cebu Pacific and Cebgo, saw its net income last year surge by 122% annually to P9.8 billion propelled by higher passenger, cargo and ancillary revenues.

It flew 19.1 million passengers, up 4.1% from the 18.4 million passengers ferried in 2015.