CAPA Analysis: Cebu Pacific To Expand Operations in China

The Center for Asia Pacific Aviation (CAPA), one of the world’s leading aviation think-tanks, said in a recent report that Cebu Pacific (5J) is expected to expand operations in China with the expected delivery of its brand new A321NEO that will allow the low cost carrier to open new routes and grow capacity. 

Image result for Cebu Pacific A321
Cebu Pacific ordered 32 Airbus 321NEOs

“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. Currently 5J has 17 weekly flights to four destinations in China.

“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.

Based on CAPA analysis, 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. 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.

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.

Cebu Pacific Evaluates B787 and A350

Image result for B787

Aviation think tank CAPA, Centre for Aviation, said that Philippine low cost carrier Cebu Pacific (5J) is evaluating the acquisition of either Airbus 350 or Boeing 787 for its nonstop PH-US flights. Both the A350 and B787 are larger and long-range aircraft.

According to CAPA Analysis, Cebu Pacific is now entering the next phase of its longhaul plan after the delivery of its seventh and eight A330-300 this December 12, 2016 and January 2017 respectively.  These A330s are currently deployed primarily for its Middle East and Australia flights.

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This ‘next phase’ looks at larger planes with longer range. This makes the A350 and B787 the most ideal aircraft. By third quarter of 2017, 5J is set to offer formal invitations to both Airbus and Boeing.


No official word or announcement yet from Cebu Pacific when the CAPA Analysis was released yesterday.


Currently, national carrier Philippine Airlines has no competition in the lucrative direct PH-US trans-Pacific flights.



CAPA: Mactan-Cebu International Airport Grows Rapidly as Hub


With passenger growth of 13% through the first 10 months of 2015, Cebu (Philippines) has emerged as one of the fastest-growing airports in Southeast Asia. The relaunch of several domestic routes by the Philippine Airlines Group, Cebu Pacific group and foreign carriers, Mactan-Cebu International Airport is poised for more rapid growth in 2016 as PAL continues to pursue expansion at its second hub, with more new domestic routes and the launch of services to Los Angeles, Cebu’s first long haul route. The Cebu Pacific Group also plans to expand its Cebu base in 2016, with at least two more turboprops.

Mactan-Cebu, the Philippines’ second largest airport, is well positioned for long-term growth as the airport’s new private owners have begun construction of a new terminal, which will increase annual capacity to 12.5 million annual passengers. The new terminal will enable Cebu to build as a hub for transit traffic, and to benefit further from infrastructure constraints at Manila, which are prompting Philippine carriers to base additional aircraft at secondary cities.


Foreign and Philippine carriers alike face constraints on expanding in Manila. Cebu is a growing market in its own right – with strength in both the inbound and outbound sectors, but ultimately Cebu’s growth is enabled by the constraints at Manila and by its own expansion. Cebu is also currently operating above its designed capacity of 4.5 million annual passengers, but unlike Manila it has space, and a commitment to expand.

Mactan-Cebu was taken over in late 2014 by a consortium consisting of India’s GMR and Philippine company Megawide Construction. GMR-Megawide has a 25-year concession to manage and expand Mactan-Cebu Airport.


The new joint venture company began a three-year new terminal construction project in Jun-2015. The new terminal is designed to boost the airport’s capacity to 12.5 million passengers when it opens in 2018.

Given its current growth spurt, Cebu could pass the 10 million annual passenger milestone by 2018 and be close to processing 12.5 million passengers at the end of this decade. With the new private owners the airport should be able to continue expanding, and keep up with growing demand for an alternative hub in the Philippines.


Given the steady 6% to 7% per annum economic growth in the Philippines, options besides Manila are needed. As the second largest city Cebu offers a sizeable local market. With its position in the middle of the country Cebu also has the geography to emerge as a large hub linking secondary cities throughout the Philippines, as well as international destinations within the region and afar.



CAPA: ATR Receives EASA Certification for High Density ATR 72-600

The high-density seating configuration option for the ATR 72-600 aircraft has received its certification from the European Aviation Safety Agency (EASA).

Using the existing airframe, the new high density configuration option is achieved by optimizing the pitch and adjusting forward cargo compartment, bringing the aircraft maximum capacity from 74 to 78 seats. ATR’s greater passenger capacity further enhances airline revenue potential. The option will also be available as a retrofit.

Cebgo was the first airline to choose the high-density seating, in a deal for sixteen new ATR 72-600s announced at the Paris Airshow earlier this year. The first aircraft in the 78-seat layout will enter commercial service in August 2016. The additional seats are very valuable for airlines operating in the regions where traffic grows rapidly and the demand is highly sensitive to fare.

“The demand comes from airlines, especially in the Southeast Asian market, requesting to further optimize the cabin space and to increase the number of available seats for regional flights,” says Thierry Casale, ATR Senior Vice President Programmes. “With the lowest seat-mile cost in the regional market and unparalleled operating economics, the 78-seat ATR 72-600 turboprop is a perfect combination between comfort and efficiency.”

Source: CAPA,

Cebu Pacific Revenue Up 9% in 3rd Quarter 2015

Cebu Pacific revenue up 9% – financial highlights for three months ended 30-Sep-2015:

Image Source:
  • Revenue: PHP12,753 million (USD276.7 million), +8.7% year-on-year;
    • Passenger: PHP9313 million (USD202.1 million), +5.0%;
    • Ancillary: PHP2554 million (USD55.4 million), +25.5%;
  • Total costs: PHP11,756 million (USD255.1 million), -0.7%;
  • Operating profit: PHP997.1 million (USD21.6 million), compared to a loss of PHP107.4 million (USD2.3 million) in p-c-p;
  • Net profit (loss): (PHP1645 million) (USD35.7 million), compared to a loss of PHP1099 million (USD23.8 million) in p-c-p;
  • Total assets: PHP81,178 million (USD1762 million);
    • Cash and cash equivalents: PHP4584 million (USD99.5 million);
  • Total liabilities: PHP56,992 million (USD1237 million).

*Based on the average conversion rate at USD1 = PHP46.0826

Cebu Pacific (CEB), flew 4.4 million passengers in the 3rd quarter of 2015, posting a growth of 10.6% over the same period last year.

The airline carried a total of 13.7 million passengers from January to September, 2015, an increase of 9% year-on-year.

Growth in passengers carried by the Cebu Pacific Air group from January to September, 2015 can be attributed to increase in capacity in key domestic and long haul routes.

As of September 30, 2015, the CEB group operates 2,530 weekly flights in 62 destinations and 93 routes. We look forward to expanding our operations to even more domestic and international markets soon, says Atty. JR Mantaring, CEB officer-in-charge for corporate affairs.

CEBs Q3 2015 total revenues surged 9% year-on-year to P12.8 billion. This brings our total revenues for the first 9 months of 2015 to P42.3 billion, a growth of 10% year-on-year. Passenger revenues  increased by 5% to P9.3 billion. Ancillary revenues grew 26% to P2.6 billion driven by a 13% increase in ancillary revenue per passenger.

Cargo revenues also posted an increase of 8% to P886 million as we carried 44.5 million kilos of cargo, up by 4.2% over the same period last year.

CEBs 55-strong fleet is comprised of 8 Airbus A319, 33 Airbus A320, 6 Airbus A330, and 8 ATR 72-500 aircraft. It is one of the most modern aircraft fleets in the world. Between 2016 and 2021, CEB will take delivery of 5 more brand-new Airbus A320, 30 Airbus A321neo, and 16 ATR 72-600 aircraft.


Source:, Emmie Abadilla (

CAPA Analysis: Philippine Airlines’ Int’l Expansion Continues with 5 New Destinations, A350-900 HGW Orders

(Image Source: P. Pigeyre / Master Films Copyright Airbus)

Philippine Airlines (PAL) is further expanding its international operation as it grows its fleet and improves utilization of its existing wide body aircraft. PAL’s international network will exceed 41 destinations in Jan-2016 compared to only 25 in Jan-2013.

PAL is adding five international destinations over the next two months, including two destinations in the Middle East and three in Australasia. Long-haul growth will resume in Mar-2016 with the launch of services from Cebu to Los Angeles, which will be PAL’s first wide body international route from Cebu.

Opportunities to further growth the long-haul operation will come in late 2016 as PAL adds two more 777-300ERs. The expected acquisition of a new higher gross weight version of the A350-900 will be used to upgrade New York to non-stops in 2017 and potentially be deployed to upgrade Toronto to non-stop and launch a fourth US destination.


CAPA Warns Of Capacity Glut


Southeast Asia’s aviation sector remains an extremely competitive market with a high risk of continued overcapacity given the region’s huge aircraft orders , according to Centre for Asia Pacific Aviation’s recent analysis.

The centre said competition with and between LCCs will continue to intensify as LCCs account for over 70% of outstanding aircraft orders in Southeast Asia.

“Among all regions and sub-regions, Southeast Asia has the highest ratio of orders to current fleet (about 0.9). While the rate of capacity growth has slowed somewhat for the short-term following a spate of deferrals and subleases, the unprecedented high ratio of orders to current fleet indicates that overcapacity could be a challenge over the long-term.”

“If airlines are disciplined with capacity and fuel prices remain low, Southeast Asian airline profitability should continue to improve. But in the highly dynamic Southeast Asian market place it is hard imagine all airlines refraining from ambitious or strategic expansion. Meanwhile low fuel prices along with political and economic stability can never be guaranteed.”

CAPA said the 16 publicly traded airlines in Southeast Asia, including affiliates or subsidiaries which report financial figures, turned a combined operating profit of about USD641 million in the first half of the year.

The same group of airlines incurred over USD500 million in operating losses in the first half of last year, representing a year-over-year swing of over USD1.1 billion.

Of these 16 carriers, 15 saw their profitability improve in the first half of this year. The only exception was Indonesia AirAsia, which saw a slight increase in operating losses following the 28 December 2014 crash of one of its A320s.

In 1H2014 only five carriers in this group of 16 were profitable. All five –Malaysia AirAsia, Cebu Pacific, Philippine Airlines, Bangkok Airways and SilkAir – were able to further growth operating profits in 1H2015.

Of the 11 airlines that were unprofitable in 1H2014 five swung to profits in 1H2015 – Singapore Airlines, Thai Airways, Thai AirAsia, Garuda Indonesia and Citilink – and two posted break-even results – Nok Air and Tigerair Singapore. Three carriers were able to narrow their losses – SIA Cargo, Philippines AirAsia and Malaysia AirAsia X.


Note: All figures are for six months ending 30 June 2015 and 30 June 2014.
Conversions to USD are based on average conversion rates for 1H2015 and 1H2014.

*All figures are for individual airline except for Cebu Pacific and Thai Airways, which only reports operating figures at the group level. Therefore in only these cases subsidiaries (Cebgo and Thai Smile) are not listed separately and are combined with their parent airlines.

Source: CAPA – Centre for Aviation, ,

For full report visit

CAPA Analysis: AirAsia Drives Growth At Philippines’ Puerto Princesa Airport As Palawan Visitors Surge

Puerto Princesa Airport could experience major growth as the Philippine island of Palawan emerges as a popular tourism destination. AirAsia is particularly keen to pursue major growth in Palawan and use Puerto Princesa as an international hub.

The small airport, which currently only handles domestic is flights and international charters, has been operating well above capacity. But a major expansion project is expected to be completed by early 2017, providing a new terminal and international facilities.

Philippines AirAsia (PAA) plans to launch scheduled international flights from Puerto Princesa to China and potentially other international destinations including Malaysia. For now Philippine market leader Cebu Pacific has no plans for international operations at Puerto Princesa but could be swayed to relook at the market if PAA’s focus on Palawan proves successful.

Palawan Attracted Almost 1M Visitors in 2014

Caticlan, which a 10min ferry from the popular tourist island of Boracay, is currently the 14th largest airport in the Philippines based on current seat capacity. The rapid growth over the last several years in visitor numbers to Boracay has mainly been accommodated by Kalibo Airport, which is about 70km from Boracay and Caticlan. As CAPA highlighted in the first report, Kalibo is now the fourth largest airport in the Philippines after Manila, Cebu and Davao.

Manila, Cebu and Davao are all major population centres while Kalibo and Puerto Princesa relies almost entirely on inbound traffic. Aklan province, where Kalibo and Boracay are located, reported 1.5 million visitor numbers in 2014 while Palawan province reported just under 1 million visitors.

Palawan is positioned for potentially faster growth than Boracay and could eventually overtake Aklan as the second largest tourist region in the Philippines after Central Visayas. Central Visays, which includes Cebu and nearby islands, has about 3 million annual visitors.

Boracay is already well developed and has become congested. Palawan is a much larger island is still largely undeveloped. The island is about 500km long (but very narrow) and has a population of less than 1 million.

Puerto Princesa Airport Is Now Operating Well Above Capacity

The Puerto Princesa Airport currently handles about 1.5 million annual passengers but was designed to accommodate only about 350,000 annual passengers. A major expansion project began in 2014 with the awarding of a USD83 million project to a Korean construction company.

Construction began in late 2014 and is expected to be completed by early 2017. The project includes a new passenger terminal with capacity to handle 2 million annual passengers, a cargo terminal, apron, taxiways and new navigation equipment. The new terminal has been designed to handle regular international flights, which the Palawan tourism sector is keen to attract.

The Philippine and Palawan governments expect the new airport to meet international standards and see the facility as a key component in a plan to attract more tourists to Palawan island. Philippines president Benigno Aquino III visited the airport and construction site on 29-Jun-2015, an indication of the importance the government has placed on developing an international airport to help support growth of Palawan’s promising tourism sector.

AirAsia Sees Opportunities To Grow in Palawan

In Mar-2015 the Palawan government along with AirAsia and other partners launched a tourism campaign to promote the island, which was voted in 2014 as the “best island in the world” by Conde Nast Traveller readers. The “World’s Best Island” campaign is designed to increase awareness among both domestic and international travellers and make Palawan more affordable through more seats, cheaper fares and new hotel packages.

The campaign aims to double the number of visitors to Palawan in 2015 to 2 million. But such a goal seems unrealistic as seat capacity at Puerto Princesa has increased only slightly. AirAsia pledged as part of the campaign to add a fifth daily flight on the Manila-Puerto Princesa route but its schedule for Jul-2015 and the remainder of 2015 show it will maintain four daily frequencies.

AirAsia has identified Puerto Princesa as one of two or three new international hubs that the group plans to open in the Philippines as PAA/AirAsia Zest restructures its network. The new business plan for the two carriers, which are expected to eventually transition to a single air operators’ certificate, focuses on developing under-served leisure destinations.

As CAPA has previously highlighted, AirAsia’s Philippine operation has struggled financially since it was launched in 2012. But the group sees emerging leisure destinations in the Philippines such as Puerto Princesa as having huge opportunities for growth while staying under the radar screen of Cebu Pacific.

Cebu Pacific for now is studying potential opportunities at Puerto Princesa but the typically conservative carrier is unlikely to make a move until the market becomes more mature. PAL is also unlikely to launch scheduled international flights at Puerto Princesa and instead stick to charters which have little or no risk as they are underwritten by agents in key source markets such as Taiwan.

AirAsia Expects To Serve China From Puerto Princesa

The AirAsia strategy for Puerto Princesa envisions launching several scheduled routes to mainland China. AirAsia plans to wait for the new international terminal and customs facility, which could potentially be completed by the beginning of the 2016 northern winter season.

Shanghai would be a logical initial route for AirAsia’s new international hub at Puerto Princesa as PAA/AirAsia Zest already serve Shanghai from Kalibo and has been looking at resuming service to Shanghai from Manila. There are several other potential Chinese routes from Puerto Princesa as the AirAsia Group already serves 13 Chinese airports from its hubs in Thailand and/or Malaysia.

AirAsia is keen to leverage its strong presence in the Chinese international market, where it is the leading LCC, by opening new routes to popular leisure destinations throughout Southeast Asia. AirAsia is already serving China from several secondary airports, including Krabi in Thailand and Kalibo in the Philippines, and is expected to add several more including Puerto Princesa over the next few years.

The new AirAsia business plan for its Philippines operation also envisions the launch of flights to Japan, Singapore and Taiwan. But at least for now the focus is on launching flights to Taiwan from Manila and to Japan and Singapore from Cebu.

PAA/AirAsia Zest currently operates 10 scheduled international routes, connecting three Philippine airports (Cebu, Kalibo, and Manila) with seven destinations – Busan, Hong Kong, Kuala Lumpur, Kota Kinabalu, Macau, Seoul and Shanghai.

Seoul is served from all three bases while Busan and Shanghai are only currently served from Kalibo. Hong Kong, Kuala Lumpur and Macau are only served by PAA/Zest from Manila although sister carrier Malaysia AirAsia serves Cebu, Manila alternative airport Clark and Kalibo from Kuala Lumpur. PAA/Zest now serves Kota Kinabalu from both Cebu and Manila, having launched Cebu-Kota Kinabalu in late Mar-2015.

AirAsia May Link PPS With Kota Kinabalu

PAA has stated it is interested in also serving Kota Kinbalu from Puerto Princesa. The two airports are only about 500km apart as Palawan is in the westernmost portion of the Philippines while Kota Kinabalu is located on the island of Borneo in eastern Malaysia.

Previous attempts to connect Kota Kinabalu with Puerto Princesa have been short-lived. Most recently Malaysia Airlines regional subsidiary MASwings operated the route from Nov-2013 to Aug-2014. Philippine regional carrier SEAir also briefly served the route in late 2008 and early 2009.

AirAsia has the advantage of leveraging strong sales channels in both Malaysia and the Philippines and marketing Kota Kinabalu-Puerto Princesa to foreign tourists that rely on AirAsia to hop around Asia. AirAsia also has a hub and transit product in Kota Kinabalu, which would provide passengers from several Southeast Asian cities (including Jakarta, Kuala Lumpur, Penang and Singapore) an opportunity to access Puerto Princesa without backtracking through congested Manila.

A Puerto Princesa-Kota Kinabalu link could be used to target source markets for the emerging Palawan tourism sector in Southeast Asia while Puerto Princesa-Manila and potentially a new Puerto Princesa-Cebu service could be used to target source market in North Asia that do not get new direct flights from Puerto Princesa. But at this point it is hard to imagine sufficient demand for regular A320 service between Kota Kinabalu and Puerto Princesa given the challenges other carriers faced in filling up much smaller aircraft on this route.

Puerto Princesa Has Big Potential But Also Big Challenges

The Puerto Princesa market clearly has huge long-term potential as tourists from within the Philippines and abroad are attracted to Palawan’s unspoiled beaches, particularly as other Philippine holiday destinations such as Boracay become increasingly crowded. But there could be challenges in developing international routes after the Puerto Princesa Airport is upgraded.

While AirAsia is extremely optimistic on the prospects for Palawan, other Philippine carriers are taking a more cautious wait and see type of approach. For example Cebu Pacific is now focusing on expanding international operations from other secondary airports in the Philippines although it will almost certainly make a move at Puerto Princesa in future if the market matures and it sees opportunities.

Therefore AirAsia will likely be the litmus test when the Puerto Princesa Airport starts to handle scheduled international flights.

A hub at Puerto Princesa could pay big dividends for AirAsia’s struggling Philippine joint venture and become a profitable niche. But it also represents a big gamble as AirAsia tries to turn around its Philippine operation.


CAPA: Philippines AirAsia/Zest AirAsia Rallies As It Prepares For IPO, But Challenges Remain

AirAsia is optimistic its Philippine operation has turned the corner after a challenging initial three years. Philippines AirAsia has been highly unprofitable since its 2012 launch while Zest also has remained loss-making since AirAsia acquired a stake in the carrier in 2013.

AirAsia has restructured its Philippine operation over the last year, making several network adjustments while cutting overall capacity and reducing the size of its Philippine-based fleet. Costs have been reduced and unit revenues have improved through a combination of load factor and yieldimprovements.

But AirAsia still faces challenges in the Philippines market which will have to be overcome for its Philippine operation to become profitable on a sustainable basis and for IPO ambitions to become realistic. AirAsia is planning further expansion at Kalibo, a gateway for the popular tourist island ofBoracay where demand has been growing rapidly. The performance of its Kalibo operation could be impacted by the upcoming completion of a runway extension and airport upgrade project at Caticlan, a smaller airport which is much closer to Boracay.

AirAsia’s Philippine JV has had a rough initial three years

The AirAsia Group launched Philippines AirAsia (PAA) in late Mar-2012. PAA was a problematic franchise from the beginning as it faced lengthy start-up delays which forced its first A320 to remain grounded for seven months before the airline finally secured approval to commence operations.

PAA was highly unprofitable in its one year as an independent carrier, accumulating losses of about USD30 million from 1-Apr-2012 to 30-Mar-2013, which equated to approximately USD70 per passenger carried. PAA also incurred losses of about USD9 million during the longer than anticipated pre-launch phase in 2H2011 and 1Q2012.

As CAPA previously reviewed, PAA struggled to gain traction in a crowded and highly competitive domestic market which at the time had six competitors on trunk routes. PAA’s average seat load factor was only 56% in 2012.

Yields were also unsustainably low while PAA’s costs were relatively high as it failed to achieve economy of scale. The PAA fleet never expanded beyond the initial two aircraft as the AirAsia Group was reluctant to allocate more aircraft to the affiliate, given its initial challenges.

The Zest acquisition improves the outlook but the merger process has been very slow

PAA tried to improving its position by forging a partnership with Zest Air in Mar-2013, or just one year after it launched operations. The initial deal included PAA, which is 40% owned by the AirAsia Group, taking a 49% stake in Zest Air, with the expectation the airlines would eventually merge.

Zest was a much more established and larger carrier, having served the Philippine market for two decades (originally as Asian Spirit). But Zest was also struggling and losing market share. The PAA-Zest deal kickstarted much needed consolidation in the Philippine market and improved the long-term outlook for both carriers – and the AirAsia Group – in the Philippine market.

But the process of bringing the two airlines together has been extremely slow due mainly to the several layers of approvals required in the Philippines. PAA and Zest continue to operate under their own AOCs although the AirAsia Group has been seeking approval to transition the two affiliates to a single operation. Zest’s original owner, the Yao Group, still currently owns a majority 51% share but is expected to sell part or all of its stake to PAA.

Zest was able to adopt the AirAsia brand in late 2013, resulting in a quasi-merger. All Zest flights have since been sold alongside PAA-operated flights on the AirAsia website and other AirAsia distribution channels.

AirAsia’s passenger numbers in the Philippines have dropped

The AirAsia Group also began including Zest figures under PAA in May-2013. Zest and PAA combined incurred a loss of about USD22 million in 2014. AirAsia Group reported a loss in the Philippines of about USD29 million in 2013, when market conditions in the Philippines were more challenging. (The combined losses of PAA and Zest were higher in 2013 as the USD29 million figure included Zest for only part of the year.)

PAA and Zest combined carried 3 million passengers in 2014 with an average seat load factor of 70%, according to AirAsia Group financial reports. The AirAsia Group stated its Philippine affiliates carried 2.2 million passengers in 2013 with an average load factor of only 63%. But in reality passenger traffic for the two carriers shrank slightly in 2014 as the 2.2 million figure for 2013 only includes Zest for part of the year while the 2014 figure of 3 million includes Zest for the full year.

The passenger traffic reported for 2H2014 compared to 2H2013 is more indicative as Zest figures are included in both sets of data, providing a like for like comparison. For 3Q2014 AirAsia reported a 15% drop in passenger numbers for its Philippine affiliates to 618,000. In 4Q2014 the drop in passenger traffic accelerated to 24% as 594,000 passengers were carried.

Based on Philippine CAB data, Zest carried 2.6 million passengers in 2013 (1.989 million domestic and 617,000 international) while PAA carried 372,000 (157,000 domestic and 215,000 international). In 2012, the last year full year both carriers operated independently, Zest transported 2.4 million passengers (2.061 domestic and 324,000 international) while PAA carried 270,000 (159,000 international and 111,000 domestic). Note that the AirAsia Group reported 311,000 passengers for PAA in 2012 but counts all revenue passengers including no-shows while the CAB excludes no-shows as it only counts passengers that boarded.

Full year 2014 data is not yet available as the CAB has not yet reported international figures for 2014. But Zest’s domestic traffic dropped by 15% in 2014 to 1.7 million, according to Philippine CAB data.

Zest’s share of the Philippine domestic market has been declining

Zest domestic traffic has dropped steadily since reaching a high of 2.2 million in 2011. At that point Zest captured an 11.5% share of the domestic market. In 2014 Zest’s domestic share was only 8.4%.

Zest domestic annual passenger traffic and market share: 2008 to 2014

As CAPA highlighted in the last instalment in this series of reports, the AirAsia Group’s share of the Philippine domestic market dropped in 2014 to only 9.8%. In addition to the 8.4% share for Zest this includes a 1.4% share for PAA.

Zest has cut domestic capacity significantly since it essentially merged with PAA in 2013. After the deal was completed Zest quickly pulled out of regional markets as it grounded its fleet of Xian MA60 turboprops. The AirAsia Group was keen to phase out the turboprop operation as it adheres to a strict single-type model with all its affiliates operating all-A320 fleets.

In 2014 Zest continued to reduce domestic capacity as its fleet of A320 family aircraft reduced from 15 to 13 aircraft. The AirAsia Group ended 2014 with only 15 aircraft in operation in the Philippines, including 13 A320s at Zest and two A320s at PAA. The group reported a 32% reduction in seat capacity for its Philippine affiliates for 4Q2014 as three aircraft were removed from service.

The AirAsia Group stated in its 4Q2014 results presentation that the group’s Philippine-based fleet will shrink to only 14 aircraft by the end of 2015. But capacity could increase as PAA and Zest have been improving aircraft utilisation rates, which had been below LCCnorms. Higher average utilisation rates are one of several initiatives identified by the group as part of an initiative to reduce unit costs.

AirAsia sees encouraging cost and revenue trends with its Philippine operation

The AirAsia Group reported a 24% reduction in CASK for its Philippine operation in 4Q2014. The group is expecting a further reduction in unit costs in 2015 as a cost optimisation project continues to be implemented.

The group also stated that its Philippine affiliates started recording unit passenger revenue and RASK growth in 4Q2014. Exact yield figures were not provided but PAA/Zest did report an 8ppt improvement in seat load factor for 4Q2014 to 72%. The AirAsia Group also stated in its 4Q2014 results presentation that RASK at its Philippine affiliates was up 30% in Jan-2015 while load factor was up 12ppts, giving it the confidence that the turnaround around is nearly complete.

The AirAsia Group’s Philippine affiliates likely remained in the red in 1Q2015 but are expected to be profitable in 2Q2015. This would mark the first profitable quarter for AirAsia in the Philippines.

While a profit for 2Q2015 would be meaningful, the second quarter is typically by far the strongest quarter in the Philippine market. Most of the profits generated by Cebu Pacific and PAL in 2014 were booked during the second quarter.

AirAsia will need to show its operation is profitable for the full year before any turnaround is deemed complete. The group’s Philippine affiliates have so far accrued losses totalling about MYR260 million (USD72 million based on the current exchange rate).

Quarterly net losses (in MYR millions) reported by AirAsia Group for PAA*

Network restructuring improves AirAsia’s position in the Philippine market

AirAsia has clearly benefited from improved market conditions in the Philippines. The two largest carriers in the Philippines, Cebu Pacific and Philippine Airlines (PAL), both posted significant improvements to their bottom line in 2014.

But restructuring initiatives also has been a contributor to the improvement at PAA and Zest. Cost reductions and network changes in particular has put AirAsia in a better position in the Philippine market.

PAA and Zest have suspended several routes. The network changes began in 2013 as PAA dropped its base at Manila alternative airport Clark to focus on Manila International, where PAA was able to expand using slots from new sister carrier Zest.

More changes were implemented in 2014 as AirAsia increased focus on the international market. Several new routes were launched 2014 and 1H2015 while others were suspended.

PAA and Zest combined currently operate 11 domestic and 9 international routes, according toOAG data. This includes nine international and eight domestic routes at Zest and three domestic routes at PAA.

Zest international routes ranked by seat capacity: 4-May-2015 to 10-May-2015

The above chart excludes Manila-Hong Kong, which Zest plans to launch on 8-May-2015 with four weekly flights. Hong Kong, which is made possible by the recent extension of the Philippines-Hong Kong air services agreement, will be Zest’s seventh international destination after Seoul (ICN), Kuala Lumpur (KUL), Kota Kinabalu (BKI), Shanghai (PVG), Busan (PUS) and Macau (MFM).

Seoul, Zest’s largest international destination, is currently served from Manila (MNL), Cebu (CEB) and Kalibo (KLO). Zest also now serves Kota Kinabalu from both Manila and Cebu, having added Cebu-Kota Kinabalu in late Mar-2015. Busan and Shanghai are only served from Kalibo while Kuala Lumpur and Macau are only served from Manila.

Domestically AirAsia operates six routes from Manila and two routes from Cebu. All three of PAA’s domestic routes are also served by Zest.

Zest domestic routes ranked by seat capacity: 4-May-2015 to 10-May-2015

PAA domestic routes ranked by seat capacity: 4-May-2015 to 10-May-2015

PAA and Zest currently provide about 91,000 weekly seats, according to CAPA and OAG data. About 22% of this capacity, or 20,000 seats, is in the international market. But the AirAsia Group overall has about 25,000 weekly seats in the Philippine international market when including flights operated by its Malaysia-based subsidiary.

Malaysia AirAsia currently operates three routes to the Philippines including Kuala Lumpur-Kalibo (daily), Kuala Lumpur-Clark (four times per week) and Kuala Lumpur-Cebu (three times per week). Zest does not serve any of these routes but serves Kuala Lumpur from Manila with two daily flights. (PAA served the Kuala Lumpur-Clark route until it dropped its Clark base in 2013.)

AirAsia builds up its international operation at Cebu and Kalibo

Manila continues to be the main hub for Zest and PAA, where the group has been keen to use Zest’s slot allocation fully. But AirAsia has been expanding its international operations from secondary cities in the Philippines, where it sees opportunities to stimulate growth in underserved markets.

For example total AirAsia capacity at Cebu, the second largest city in the Philippines, has increased over the last year by 45%. The AirAsia Group currently has about 30,000 weekly seats at Cebu compared to slightly over 20,000 seats in May-2014, according to CAPA and OAG data. The group now has three domestic and three international routes at Cebu.

AirAsia has said further expansion at Cebu is planned for 2015 including new international routes to Hong Kong, Japan and Singapore. There is plenty of room for the group to grow at Cebu as it currently only has about a 14% share of total seat capacity at Mactan-Cebu International Airport. But AirAsia will have to overcome stiff and intensifying competition as Cebu Pacific and PAL have also been pursuing expansion there.

The AirAsia Group is also planning to pursue further expansion at Kalibo and is looking at potentially operating international routes from emerging Philippine tourist destinations such as Puerto Princesa. AirAsia currently only serves Puerto Princesa, which is located on the island of Palawan, from Manila.

The AirAsia already links Kalibo with four international destinations – Busan, Kuala Lumpur, Seoul and Shanghai. Manila-Kalibo is also the group’s second largest domestic route after Manila-Cebu.

AirAsia currently accounts for a leading 38% share of total seat capacity at Kalibo (includes PAA, Zest and Malaysia AirAsia). Cebu Pacific has about a 35% share (includes Tigerair Philippines) while the Philippine Airlines Group (includes PAL Express) has about a 24% share, according to CAPA and OAG data.

Kalibo capacity share (% of seats) by carrier: 4-May-2015 to 10-May-2015

Kalibo expansion plans may need to reviewed ahead of an IPO

AirAsia is bullish on further growth at Kalibo, which recently completed an expansion project. But the Kalibo market could be impacted by the upcoming completion of an airport expansion project at Caticlan, which is located opposite Boracay. Kalibo is about 70km from Boracay and the journey from the airport to the island typically takes at least two hours compared to less than a half hour for the ferry from Caticlan to Boracay.

Caticlan can only currently accommodate turboprops. But the newly extended runway, which is expected to be open by the end of 2015, will be able to handle narrowbody aircraft. The terminal is also being upgraded to handle international flights.

The anticipated launch of international services at Caticlan could impact AirAsia’s position at Kalibo just as PAA tries to complete a turnaround and pursue an initial public offering (IPO).

PAA has begun preparing for an IPO in 2016. But potential investors will likely prefer to see consistent profitability at AirAsia’s Philippine affiliates and some evidence that the multiple challenges AirAsia has faced since establishing its joint venture in the Philippines have been completely overcome.


CAPA: Cebu Pacific’s Long Haul Operation. Part 2, Australia & Hawaii

Cebu Pacific is preparing to launch services to Hawaii by the end of 2015 and is also interested in launching Melbourne if it is able to secure additional traffic rights for Australia. Honolulu and Melbourne would be Cebu’s sixth and seventh long-haul destination, joining four in the Middle East and Sydney.

Cebu Pacific is also planning to start using its A330-300 widebody fleet to operate some of its flights to Hong Kong, Taipei and Tokyo. It currently uses the A330 on one of its daily Singapore flights and plans to add a second widebody frequency on ManilaSingapore, which is already its largest international route.

The new A330 flights will increase the utilisation rate of its widebody fleet, which is now low for LCC standards, and drive a 30% surge in total ASKs for 2015. The capacity growth is being achieved despite Cebu Pacific only expanding its fleet by three aircraft in 2015, including a single additional A330 as the carrier has shelved plans for adding two more A330s for a total of eight.

Cebu Pacific is eager to make Manila-Honolulu its next long-haul route

Cebu Pacific has been keen to launch services to Honolulu since the US FAA upgraded the Philippines to a category 1 safety rating in Apr-2014. The US prohibits the launch of any new services from airlines registered in countries with category 2 safety ratings.

Cebu Pacific initially had to wait to secure Extended Diversion Time Operations (EDTO) certification of 120min, which is needed to use the most direct and efficient routing for Manila-Honolulu. Cebu Pacific secured the certification in early Apr-2015 and is now waiting for final approval from the US TSA, which has to complete an assessment of Manila Terminal 3 before Cebu Pacific can serve the US.

Cebu Pacific remains optimistic it will be able to launch services to Honolulu by the end of 2015. It is also aiming to launch service from Manila to the US territory of Guam but this shorter route will be operated using Cebu’s A320 fleet.

Hawaii’s Filipino community will be the main target market for the planned Honolulu service. Manila-Honolulu is only currently served non-stop by Philippine Airlines (PAL) with five times weekly A330-300 frequencies. Hawaiian Airlines pulled out of the Manila market in 2013, leaving a potential opening for a second carrier.

But the upgrade to Category 1 has enabled PAL to expand in the Hawaii market ahead of Cebu Pacific. PAL has more than doubled seat capacity to Honolulu over the last year, according to CAPA and OAG data.

Total capacity in the Philippines-Hawaii market is now back to the early 2013 levels (prior to Hawaiian’s withdrawal). Cebu Pacific is banking it can stimulate demand and grow the market by breaking PAL’s monopoly and providing a new low-cost option.

Cebu Pacific expansion in Australia hinges on expanded bilateral

Honolulu is a key route as it will allow Cebu Pacific to diversify its long-haul network, which now relies heavily on the Middle East. Cebu’s only current long-haul route outside the Middle East is Sydney, which it launched in Sep-2015.

Cebu Pacific launched Manila-Sydney with an initial four weekly frequencies and added a fifth weekly frequency in Dec-2015. The increase to five weekly flights, which fully utilises its current allocation in the Philippines-Australia bilateral, was planned when it first announced the Sydney route and began sales in Australia in Jun-2014.

Since launching its long-haul unit in 2013 Cebu Pacific has pushed for an expanded air services agreement between the Philippines and Australia which would provide sufficient traffic rights to support a daily service to Sydney as well as Melbourne. Cebu Pacific is confident a new round of talks between the Philippines and Australia scheduled for 28-Apr-2015 will result in a significant increase in the current cap.

As CAPA has previously outlined, the capacity/frequency limit only applies to Sydney, Melbourne, Brisbane and Perth. All other Australian airports,  including Melbourne alternative airport Avalon, can be served by Filipino carriers without counting towards the cap. But Cebu Pacific is only interested – at least at this point – in serving Melbourne Airport, which also has been lobbying Australian authorities to forge a new air services agreement with the Philippines. The usually liberal Australian authorities have been in turn pushing Philippines officials to allow Australia beyond rights, for use by Australian airlines.

Cebu Pacific already has over 30% of seat capacity in Philippines-Australia market

Cebu Pacific is currently allocated 2,200 of the 6,000 available weekly seats for Filipino carriers while Philippine Airlines (PAL) is allocated the remaining 3,800. Based on the current five weekly flights schedule Cebu Pacific currently has 2,180 weekly seats to Australia as its A330-300s are in 436-seat single class configuration.

PAL also currently serves Sydney with five weekly flights using A330-300s but in 368-seat three-class configuration with economy, premium economy and business. PAL and Cebu Pacific compete in the Manila-Sydney market against Qantas, which operates four weekly flights on the route using A330-300s in 297-seat two-class configuration.

PAL is currently the only carrier operating non-stop flights from Manila to Melbourne, which it serves three times per week with A330-300s. PAL also serves Darwin with three weekly A320 flights that continue on to Brisbane.

PAL launched Darwin in Jun-2013 with seven weekly frequencies – including four that continued to Perth and three to Brisbane. But PAL quickly dropped the Manila-Darwin-Perth service in Sep-2013. PAL currently has about 3,400 weekly one-way seats to Australia compared to the 2,180 for Cebu Pacific and 1,188 for Qantas.

While PAL is currently not fully utilising its allotment for Australia it typically adds capacity during peak periods. For example PAL operated daily flights to Sydney in late 2014 and early 2015. PAL also has used a wide variety of aircraft types in recent years on the Melbourne and Sydney routes, including A340s and 777-300ERs.

Cebu Pacific seeks daily traffic rights for Sydney and Melbourne

Cebu Pacific executives said during the carrier’s 4Q2014 results presentation that it is keen to secure capacity entitlements to support 14 weekly frequencies to Australia. This would enable Cebu Pacific to operate daily flights to both Sydney and Melbourne, resulting in 6,104 weekly one-way seats in the Philippines-Australia market.

Assuming the current level of capacity from PAL and Qantas, total one-way weekly seat capacity in the Philippines-Australia market would increase to about 10,700, which represents nearly a 60% increase over current levels and about a doubling of capacity compared to Aug-2014 (prior to Cebu’s initial entrance). Cebu Pacific would capture a 57% share of capacity under such a scenario – but that assumes no competitive response by PAL, which could increase to capacity to Melbourne as it did when Cebu Pacific started to Sydney.

Cebu Pacific is optimistic such a large surge in capacity can be supported as its low fares stimulate demand and grow the total size of the pie. Cebu Pacific executives point to a 42% increase in total Manila-Sydney traffic from Sep-2014 through Dec-2014, the first four months it was competing in the market. The growth in the Sydney market “convinces us that this is a market worth investing over time,” Cebu Pacific CEO Advisor Garry Kingshott said during the carrier’s 4Q2014 results presentation in late Mar-2014.

Under the previous PAL-Qantas duopoly the market would have never grown at such a fast rate but the entrance of an LCC competitor has succeeded in driving down fares and stimulating new demand. Australian airports experienced similar growth in other Southeast Asian markets as other long-haul LCCs entered, including Scoot in the Sydney-Singapore market and AirAsia X in the Melbourne-Kuala Lumpur and Melbourne-Sydney markets.

Cebu Pacific sees an even bigger potential opportunity to stimulate demand in Melbourne because Manila-Melbourne is currently only served by one carrier rather than two. Both Sydney and Melbourne have large Filipino communities, making both markets attractive to Cebu’s long-haul division. Cebu Pacific’s long-haul business plan mainly targets ethnic and expatriate or labour traffic although in the Australia market it also expects a growing segment of inbound leisure traffic as the Philippines emerges as a popular alternative tourist destination for Australians.

Maintaining year-round daily flights to Sydney and Melbourne will be challenging

Cebu Pacific’s aspirations for two daily flights to Australia, however, could prove overly ambitious. The Philippines-Australia market is extremely seasonal and at least for the short to medium term is unlikely to support such a large amount of capacity (over 10,000 weekly one-way seats) except during the peak periods.

Most Filipino expatriates as well as students return home during holiday periods due to their work or study schedules. It will be hard to stimulate sufficient demand from Australia’s Filipino community to fill up a 436-seat aircraft daily from Sydney or Melbourne on a year-round basis.

Cebu Pacific should be able attract some Australian outbound holiday traffic as well as connection traffic beyond Manila to destinations such as Hong Kong, South Korea and Japan – by offering significantly cheaper fares than the non-stop providers. But demand from such sectors also varies significantly depending on the time of the year. And competition in the one-stop Australia-North Asia market is extremely intense.

Even with the current Australia schedule of five weekly flights Cebu Pacific has been struggling during off peak and shoulder months. For example after a strong January Cebu Pacific saw a decline in its Manila-Sydney load factor in February, which is typically a relatively weak month for the Australian market as it falls between the southern summer holiday period and Easter.

Cebu Pacific temporarily cuts capacity to Sydney

Cebu Pacific seems concerned it could see similar drops during other off-peak periods as it has cut one weekly frequency from its Manila-Sydney schedule for Jun-2015, Aug-2015 and Sep-2015. Cebu Pacific will only operate four weekly flights during these three months but plans to operate the normal five weekly flights in Jul-2015 as well as in Oct-2015, Nov-2015 and Dec-2015, according to its online booking engine.

The temporary reductions to Sydney are sensible but are an indication of the challenges in maintaining a frequent service on a year-round basis.

Cebu Pacific obviously is keen to secure enough traffic rights for daily to Sydney and Melbourne, as this would give it the flexibility to gradually expand in the Australia market if market conditions warrant. But Cebu Pacific could end up with a schedule that only offers daily – or close to daily – services in both Australian markets during the peak periods.

Cebu Pacific continues to expand A330 short-haul flying

Quickly expanding to 14 weekly flights to Australia would also not be in line with Cebu’s generally conservative approach to expansion. Cebu Pacific has slowly expanded its long-haul operation since taking its first A330 two years ago and instead has been using a portion of its A330 fleet to operate short-haul routes. The use of the A330 on routes such as Cebu, Davao, Seoul and Singapore have been profitable and significantly reduce the overall risk that comes with launching a long-haul widebody operation.

Cebu Pacific is keen to add capacity to both Australia and the UAE, where it is also seeking more traffic rights which would support the potential launch of services to Sharjah. But such expansion would require that the A330 be removed from some profitable short-haul routes.

Cebu Pacific currently uses the A330 to operate three short-haul routes including 17 weekly flights on Manila-Davao, four weekly flights on Manila-Cebu and one daily flight on Manila-Singapore (based on OAG schedule data for week commencing 20-Apr-2015). Mr Kingshott said Cebu Pacific has secured approval to up-gauge a second daily Manila-Singapore frequency to the A330 and is also planning to start using the type on some flights to Hong Kong and Taipei.

Cebu Pacific currently operates 25 weekly flights on Manila-Singapore, 28 weekly flights on Manila-Hong Kong and 10 weekly flights on Manila-Taipei. Manila-Singapore is Cebu’s largest international route, slightly ahead of Manila-Hong Kong, as the A330 is already used on seven of the Singapore frequencies.

Manila-Taipei (TPE) and all four of Cebu’s current long-haul routes – Manila to Dubai (DXB), Sydney (SYD), Kuwait (KWI) and Riyadh (RUH) – are also among Cebu’s 10 largest international routes.

Cebu Pacific top 10 international routes ranked by weekly seat capacity: 20-Apr-2015 to 26-Apr-2015

Cebu Pacific to use A330 to add capacity to Hong Kong, Taipei and Tokyo

The use of the A330 on Hong Kong and Taipei is made possible by new air services agreements that significantly increase the total capacity available to Filipino carriers in both markets.

Deploying A330s on some Hong Kong flights is particularly logical given the slot constraints at Hong Kong. Cebu Pacific was previously unable to up-gauge any of its Hong Kong flights to A330s without sacrificing an existing slot because the Philippines-Hong Kong bilateral has seat capacity (rather than frequency) limits. Cebu Pacific has previously only operated a very small number of ad hoc A330 flights to Hong Kong during peak periods.

Cebu Pacific also has been keen to add capacity to Taipei for some time as demand in the Philippines-Taiwan market has been growing rapidly. Following the new bilateral agreement between the Philippines and Taiwan, which was forged in Mar-2015, Cebu Pacific is now free to add frequencies to Taipei. But the market is big enough to support A330s during peak periods.

Cebu Pacific is also planning to again use the A330 on some flights to Tokyo Narita, which it currently serves with one daily flight. Cebu Pacific operated the A330 on some of its Tokyo flights in 2014 during the peak northern summer months. In addition Cebu Pacific previously operated the A330 on some flights between Manila and Seoul, which it currently serves with one daily A320 flight.

Cebu Pacific to boost A330 utilisation rates

Cebu Pacific will continue to take a flexible approach to using the A330 on short-haul route, making several adjustments depending on the time of the year and market conditions. As a result it is unlikely to use the A330 on Cebu, Davao, Hong Kong, Taipei, Tokyo and Singapore all at once. But the A330 deployment plans for the remainder of 2015 show a general increase in the number of short-haul flights even with Cebu Pacific launching a fifth long-haul route, Manila-Doha, in Jun-2015.

Cebu Pacific should be able to achieve this as it is currently only using its A330 fleet an average of 11hrs per aircraft per day. This will increase slightly, to about 11.5hrs, in early Jun-2015, when Cebu launches two weekly flights to Doha but reduces Sydney to four weekly flights.

Cebu Pacific current A330 network and weekly utilisation levels

Route  Apr-2015



block time

per flight

Total weekly

block time

per route

Manila-Dubai-Manila Daily 9:00/8:30 122:30
Manila-Kuwait-Manila 4 times weekly 10:40/9:40 81:20
Manila-Sydney-Manila 5 times weekly 7:50/7:55 78:45
Manila-Riyadh-Manila 3 times weekly 10:30/9:55 61:15
Manila-Davao-Manila 17 times weekly 1:45/1:45 59:30
Manila-Singapore-Manila Daily 3:30 /3:30 49:00
Manila-Cebu-Manila 4 times weekly 1:15/1:15 10:00
TOTALS 47 weekly flights 462:20 = 77hr per aircraft

Higher utilisation rates will reduce unit costs and also enable Cebu Pacific to meet its capacity targets for 2015 without significant fleet expansion. Cebu Pacific is projecting a 15% increase in seat capacity for 2015 and a 30% jump in ASKs.

The ASK increase is driven partially by the full-year effect from Kuwait, Riyadh and Sydney – which were all launched in the latter half of 2014. Even with the relatively low utilisation levels the A330 fleet currently accounts for about one-third of total Cebu Pacific ASKs (but only about 10% of total seats).

Cebu Pacific system-wide weekly ASKs by aircraft type: 20-Apr-2015 to 26-Apr-2015

The Cebu Pacific Group (includes subsidiary Tigerair Philippines) is expanding its A320 family fleet in 2015 by only two aircraft from 32 to 34. Two A319s are exiting in 2015 as part of a recent sale of six aircraft to Allegiant Air while four new A320s are being delivered.

Cebu Pacific also only added two A320 family aircraft in 2H2014. But Cebu Pacific has been able to free up A320s by using its new A330 fleet to take over short-haul flights previously operated by A320s.

Cebu Pacific Group fleet plan: end 2014 to end 2017

As Cebu Pacific expands its long-haul operation, particularly if Melbourne and Sharjah are launched, it will need to relook at expanding its A330 fleet or pulling A330s off short-haul routes. Pursuing the latter is unlikely as the A330s have been profitable on short-haul routes and Cebu Pacific needs this capacity given the relatively limited expansion of its narrowbody fleet.

Cebu Pacific holds off on expanding its A330 fleet beyond six aircraft – for now

Cebu Pacific’s original business plan for the long-haul unit envisioned a total of eight A330s. But Cebu Pacific never committed to the seventh or eighth aircraft, which Cebu Pacific was initially looking to lease from 2015. Instead Cebu Pacific recently decided to stop – at least for now – at six aircraft.

Taking a break from widebody fleet expansion is a sensible approach. Cebu’s long-haul operation has so far been unprofitable, as highlighted in the first part in this series of reports, and there are opportunities to squeeze out more capacity by improving utilisation of the existing six aircraft.

With the current A330 fleet it is hard to imagine the airline operating more than six long-haul routes, which Cebu Pacific will be operating once it launches Honolulu. If Sharjah, Melbourne and other potential new route opportunities become available Cebu Pacific will need to revisit acquiring the two additional widebody aircraft in the original business plan.

For now Cebu Pacific is wisely taking a wait-and-see approach while in the meantime seeking additional traffic rights and working to improve its performance in the Australia and Middle East markets. Now is not the time to rush into acquiring additional widebody aircraft. Meanwhile, the outcome of the Apr-2015 bilateral talks with Australia will be an important factor in that planning.

Source: CAPA,