Cebu Pacific looks to grow further in Australia in 2018 with Melbourne

10 November, 2017

Cebu Pacific is looking at launching services to Melbourne in 2018, further strengthening the Philippine low cost carrier’s position in Australia following the upcoming upgrade of Sydney to daily.

Cebu Pacific has served Sydney for three years and has talked about the possibility of adding service to Melbourne since launching Sydney in late 2014. Talk about Melbourne has escalated over the last year as the performance on Manila-Sydney has improved, prompting the decision to upgrade Sydney to daily for the peak summer season. Sydney has until now been served with four to five weekly frequencies depending on the time of year.

Cebu Pacific will operate seven weekly frequencies to Sydney in Dec-2017 and Jan-2018, compared to five weekly frequencies for the same period last year. Cebu Pacific for now has loaded a schedule of five weekly frequencies on Manila-Sydney from early Feb-2018. Cebu Pacific CEO Advisor Mike Szucs told CAPA on the sidelines of the 8-Nov-2017 CAPA Asia Aviation Summit that the airline plans to initially operate five or six frequencies during the non-peak and shoulder months but aims to eventually serve Sydney with a daily year-round schedule.

“Australia is working well because it is selling well on both ends,” Cebu Pacific CEO Advisor Mike Szucs said. “Australia is a very good market for us.”

Mr Szucs also said Cebu Pacific is now looking at launching services to Melbourne in 2018. “Australia is doing really well for us. We’ve grown the Manila-Sydney market phenomenally. We are the number one player in terms of passenger traffic on Manila-Sydney. We are increasing Sydney to daily frequencies from this December,” he said. “Melbourne is on the agenda for some time next year. We are not there yet – we need to go and finalise the numbers but Melbourne is looking interesting.”

Philippine Airlines (PAL) is currently the only airline operating the Manila-Melbourne route, while Manila-Sydney has three nonstop competitors including PAL, Qantas and Cebu Pacific. PAL serves Sydney daily and Melbourne with three weekly flights, while Qantas has five to six frequencies on Sydney-Manila (depending on the time of year).

Cebu Pacific has a fleet of eight A330-300s but has been using its widebody fleet mainly on short haul routes since suspending three Middle East services in mid-2017. Sydney and Dubai, which is served daily most of the year, are the only remaining long haul routes in Cebu Pacific’s network and use the equivalent of two aircraft.

Mr Szucs said Cebu Pacific will have the opportunity to resume long haul growth in 2018 as A321s enter the fleet. Cebu Pacific mainly plans to use the new A321 fleet to up-gauge short haul routes from A320s but has the flexibility to use some of the A321s to replace A330s on short haul routes, freeing up A330s for new long haul routes. “As the A321s come in next year we will be able to start redeploying A330s again into some targeted long haul markets,” Mr Szucs explained.

Under this scenario, Melbourne is on the top of the list as Cebu Pacific is not interested for now in resuming expansion in the Middle East, due to what it considers irrational competition in the Philippines-Middle East market. Cebu Pacific is also not interested, for now, in launching Manila-Honolulu, which originally was in its long haul network plan, as this market is highly competitive and unbalanced, consisting mainly of ethnic or VFR traffic.

Manila-Melbourne is a less competitive route and the Australia-Philippines is a more balanced market. In the Sydney market, Cebu Pacific has been able to generate a relatively even mix of outbound and inbound traffic, covering the leisure, ethnic or VFR and business segments. For the latter, Cebu Pacific mainly targets SMEs as it does not have a premium product.

“Australia is working well because it is selling well on both ends,” Mr Szucs said. “Australia is a very good market for us.”

See related reports:
Philippines emerges as fastest growing source market for Australia tourism
Cebu Pacific ready to upgrade Sydney to daily…Philippines experiencing record tourism growth