Cebu Pacific stays true to regional model, skips long-haul expansion

As first reported by FlightGlobal, low-cost carrier Cebu Pacific has firmly ruled out venturing into long-haul operations, despite witnessing strong fare growth on trans-Pacific routes in the post-pandemic environment.

During a results briefing on May 10, Cebu Pacific President and CEO Mike Szucs acknowledged that airlines operating long-haul flights have been able to reap profits due to under-capacity and high yields on these routes.

However, Szucs asserted that long-haul operations are not part of the airline’s DNA.

“There is that temptation to go in there and get some high yields. But we feel at some point there will be inevitable [market] correction.”

Cebu Pacific President and CEO Mike Szucs

“It is not what we do… it is not our DNA,” he added.

Instead, Cebu Pacific will focus on flights within a “four-hour circle” from the Philippines, covering a catchment area of over 2 billion people. This strategy aligns with the airline’s low-cost business model and avoids stretching its operations beyond its core competencies.

The comments underscore the challenges faced by low-cost carriers in sustaining long-haul operations. As Forbes reports, numerous airlines, including Laker Airways, Tower Air, Primera, WOW, and Norwegian Air Shuttle, have attempted and failed to make the low-cost, long-haul model work, often succumbing to unsustainable losses.

Industry experts, like Ryanair CEO Michael O’Leary, have long been skeptical of the viability of low-cost, long-haul operations, citing the significant premium some travelers are willing to pay for premium cabins on long-haul flights.

However, Cebu Pacific’s Szucs remains resolute in the airline’s regional focus.

“We’ve got plenty of addressable markets… very close to home that doesn’t stretch or challenge the business model that we have been accustomed to,” he said.

While Cebu Pacific operates a small number of widebody Airbus A330 aircraft, primarily for additional capacity on short-haul routes, Szucs described the airline’s existing long-haul flights to the Middle East as “very much outliers.”

“One can anticipate that we will stick to our guns. We see a huge opportunity in this part of the world,” Szucs added, reiterating the airline’s commitment to its regional strategy.

The budget airline currently operates flights from Manila to Dubai, Melbourne, and Sydney. In the past, Cebu Pacific also operated A330 flights to Dammam, Doha, Kuwait, and Riyadh.

Cebu Pacific ventured into long-haul operations with the launch of Manila-Dubai flights on October 7, 2013.

The airline operates a widebody fleet of eight Airbus A330neo aircraft, with another eight expected to be delivered in the years to come.

Dirk Andrei Salcedo Avatar

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