Melbourne-Manila capacity to triple as Cebu Pacific launches and Philippine Airlines expands

5 March, 2018

Competition in the Melbourne-Manila market is intensifying significantly as Cebu Pacific enters and Philippine Airlines (PAL) adds capacity.


  • Cebu Pacific is launching services from Melbourne to Manila in Aug-2018, generating 1,308 one-way weekly seats;
  • Philippine Airlines is adding two weekly flights from Melbourne to Manila in Jun-2018, resulting in 618 additional one-way seats;
  • Melbourne-Manila capacity will more than triple from only 927 one-way seats currently to 2,853 seats;
  • While it will take time for the all the additional capacity to be absorbed, the increase should be manageable given Cebu Pacific's ability to stimulate demand with low fares and PAL's ability to carry Melbourne-London traffic as a new schedule is introduced.

Melbourne-Manila has been underserved for years, drawing attention from both Cebu Pacific and PAL. The route is currently served with only three weekly flights from one airline (PAL), while Sydney-Manila is served with up to 20 weekly flights from three airlines (Cebu Pacific, Qantas and PAL). While Sydney-Manila is a bigger overall market, a large portion of Melbourne-Manila passengers now fly via Sydney due to the lack of nonstop capacity and competition on Melbourne-Manila.

On 27-Feb-2018, Cebu Pacific announced the launch of three weekly Melbourne-Manila flights from 14-Aug-2018 using 436-seat single class A330-300s. The announcement is not as a surprise as Cebu Pacific flagged Melbourne as its second destination in Australia after launching Sydney in 2014. Blue Swan reported in Nov-2017 that Melbourne was on top of Cebu Pacific's priority list for new long-haul destinations and could be launched in 2018.

See related report: Cebu Pacific looks to grow further in Australia in 2018 with Melbourne

PAL also has been looking to add flights to Melbourne, which could have swayed Cebu Pacific to make a move sooner rather than later. Just as Cebu Pacific announced the launch of Melbourne, PAL filed a new schedule for Melbourne featuring two additional frequencies from 1-Jun-2018.

The two additional flights will depart Melbourne at 440am, facilitating connections with London. PAL's existing three flights from Melbourne land in Manila after the London flight departs.

PAL introduced a similar split schedule to Sydney in 2015, resulting in quick connections to London and a daily service. PAL now has three departures from Sydney at 6am and four departures at 1150am. Blue Swan stated in previous analysis reports that PAL was looking at introducing a similar split schedule for Melbourne as part of plan to add frequencies using its new A321neos fleet.

See related report: Philippine Airlines' eyes further expansion in Australia thanks to increased range options

PAL will likely increase Melbourne to daily once it receives all six of its long haul configured A321neos, which are due to be delivered this year. The six aircraft have been earmarked for Brisbane, Melbourne, Sydney along with new routes to India but engine related delivery delays could impact the deployment schedule.

PAL has already had to delay the deployment of A321neos on Brisbane-Manila, the first long haul route for the new fleet. Nonstop flights from Brisbane to Manila is being launched with three weekly A340 flights on 27-Mar-2018 and will transition to four weekly A321neo flights once the new aircraft is ready.

See related report: CASA approvals force another airline to change launch plans: Philippine Airlines to use ageing A340s on new Brisbane route

Sydney-Manila could potentially be upgraded to double daily, along with the upgrade of Melbourne-Manila to daily, as additional A321neos are delivered. Melbourne and Sydney are now served with 309-seat three class A330-300s, featuring lie flat business class seats and premium economy. The A321neos will also have lie flat business class seats but will not have a premium economy cabin.

The launch of three weekly flights from Cebu Pacific and the two additional A330-300 flights from PAL will add 1,926 weekly one-way seats in the Melbourne-Manila market, resulting in 2,853 seats compared to only 927 seats currently. While this is a huge increase, it should be absorbable over time when factoring in the Melbourne-Manila traffic that now flies via Sydney and the stimulation impact from a new LCC competitor.

Cebu Pacific has driven rapid growth in the Sydney-Manila market over the last three and a half years rather than take away market share from existing competitors. Filipino visitor numbers to Australia have particularly increased rapidly and Cebu Pacific's low fares also have enticed more Australians to holiday in the Philippines.

Cebu Pacific should have a similar impact in Melbourne, attracting more Filipinos to holiday in Victoria and more Victorians to holiday in the Philippines. Cebu Pacific also should attract some traffic from other cities in Australia using Value Alliance partner Tigerair Australia, which is based at Melbourne. Domestic to international connections are much more convenient at Melbourne Airport compared to Sydney, where passengers need to transfer between terminals.

The increase in capacity by PAL may prove more challenging as PAL is a full-service airline. However, PAL was able to grow in Sydney after Cebu Pacific entered as the overall market expanded significantly. PAL should also be able to attract more sixth freedom traffic from Melbourne, particularly to London, under the new schedule. PAL may also reduce

Melbourne capacity later this year as the A321neo is introduced, making the situation more manageable. Seven weekly A321neo flights will further improve connections and PAL's ability to attract business traffic while driving nearly a 20% decrease in capacity.