Filipino carrier Cebu Pacific Air is moving into the medium low-cost segment by launching -300 operations next year.
The carrier’s CEO, Lance Gokongwei, says they aim to start flying A330-300s in 2013’s third quarter and be flying four A330-300s within the first year. They aim to have a fleet of eight by 2016, says Gokongwei, adding that all will be new aircraft on operating lease. “Cebu Pacific has no second-hand aircraft.” He says the first four leased A330s have already been secured and the deposits paid. Gokongwei declines to say who the lessor is, but says an announcement will be made at the Singapore Air Show. He also says an engine support contract, for the A330s, has already been signed and will also be announced at the Singapore Air Show.
Gokongwei declines to disclose the engine type. Cebu Pacific’s-family aircraft use Engines.
When asked which year Cebu Pacific will be ready to purchase widebodies, he replied: “There’s an evolution of aircraft with theand . This puts us in a position to order aircraft and have something for delivery in 2020 or 2021.”
He says the A350 is a good aircraft that they will consider. Gokongwei notes that the A350-900 appears to be more popular than the -800 and says it may be a similar situation with the A320-family aircraft, where some carriers have gravitated towards the A321. He also says the 787 is a good aircraft and has the added advantage of already being in commercial service. Gokongwei says whichever widebody they choose to operate in future, it only plans to have one type of widebody. This means the aircraft has to fulfill all missions, including having the range to cover the U.S. West Coast from Manila, something the A330-300 is unable to do. He says it would be impractical and too costly for Cebu Pacific to have two types of widebodies in its fleet.
Gokongwei declines to say which destinations the A330 operation will serve, because it is still subject to regulatory approval, but says the aircraft has 11hr range, allowing it to reach all of Asia, Australasia, the Middle East, parts of Russia and eastern Europe as well as Hawaii and Alaska in the U.S.
Gokongwei says he is open to the idea of working withand Alaskan Airlines to reach points on the U.S. mainland, as an interim solution, but adds such deals are less of a priority and Cebu Pacific is all about being a point-to-point carrier.
The fact that the A330 lacks the range to reach California is significant because this is the most lucrative route for Filipino long-haul traffic. But Gokongwei says Philippine Airlines is already serving San Francisco and Los Angeles. As for the next eight routes in the top ten - for international Filipino traffic - there is no Philippine designated carrier serving the routes, he says. Instead, Filipinos are flying on Middle Eastern carriers and Southeast Asian carriers to reach these destinations, he adds. These top ten routes include flights from Manila to: Dubai, Doha, Abu Dhabi and points in Saudi Arabia.
Gokongwei says Cebu Pacific’s A330s will all be in a single-class configuration. Cebu Pacific VP commercial planning, Alex Reyes, says the A330s will seat around 400 passengers with nine-abreast. “Airlines like XL Airways in Europe andhave nine-abreast,” he adds.
Most medium-haul low-cost carriers have two classes, so as to tap some higher yield traffic. But Cebu Pacific may be going for single-class, to begin with at least, because its initial routes really will be catering mostly to Filipino migrant workers. If that is the case, the Middle East may be the first market.
and have their medium-haul low-cost carriers on a separate air operator certificate and with a different management team, so it is run as a separate business. Gokongwei says Cebu Pacific’s A330 operation “will be under the Cebu Pacific AOC. Cebu Pacific has the rights to the destinations. However, we will create a separate management team to manage this operation. We are staffing up the long-haul team to meet the challenge of this different operation.”
Gokongwei says the A330 operation will be a significant revenue and profit contributor to the airline. Four A330s in operation will increase the airline’s revenue by 50%, based on current numbers, he says.
When asked about the profitability of medium-haul versus long-haul routes for low-cost carriers, Gokongwei said: “Certainly the advantage of LCCs is magnified on the shorter routes. In selecting our routes, we have a preference for medium compared to long-haul routes.”