Airline of the Year 2016


Airlineratings.com Airline of the Year Awards:

Airline of the Year: Air New Zealand

Best Business Class: Singapore Airlines

Best Economy: Air New Zealand

Best First Class: Etihad Airways

Best Low Fare Carrier (Asia/Pacific): Scoot

Best New World Carrier: Virgin Australia

Best Premium Economy: Air New Zealand

Inflight Entertainment Award: Singapore Airlines

Long Haul (Asia/Pacific): Cathay Pacific

Regional Airline Award: Silk Air

 

Emirates & Etihad Increase Frequencies to MNL


Etihad Airways will add three new weekly services between Abu Dhabi and Manila from 1st May 2016 offering a total of 17 return flights per week.

All 17 weekly flights will be operated by a two-class Boeing 777-300ER with 28 seats in Business and 384 in Economy, Etihad said in a media statement.

Code share partner Philippine Airlines places its PR code on the current 14 weekly flights Abu Dhabi-Manila operated by Etihad Airways. From May 1, 2016, the partner airlines will offer a combined total of 22 weekly flights between Manila and Abu Dhabi.

The enhanced flight schedule also provides seamless connectivity over the Abu Dhabi hub; 1085 weekly connections to 58 destinations on the airline’s global network. This includes connections to Bahrain, Dammam (KSA), Doha (Qatar), Jeddah (KSA), Kuwait and Riyadh (KSA) which are in the top 10 destinations for travelers to and from the Philippines.

Meanwhile Emirates has added a new Dubai-Cebu-Clark route starting March 30, 2016.

Services will operate seven days a week from Dubai to Cebu, Cebu to Clark and onto Dubai on a circular pattern, according to the Emirates official.

“We plan to commence operations from March 30, 2016 with a 2-class 777-300ER. I am sure you will join me in welcoming this fantastic new for the Philippines, which should be a hugely positive development for tourism, trade and the ongoing development of the Philippines’ regional economies.”

“We also hope that our desired introduction of the world’s flagship A380 aircraft on one of our daily Manila services will take place soon further adding to the prestige of the airport and underlining the global significance of the city,” Obaidalla said.

 

13 Airlines with the Best Looking Flight Crew (Migme, http://asia361.com/)


On 14 September 2015, Air India announced that they will ground 125 cabin crew if they fail to lose weight and reach the required Body Mass Index (BMI) range. According to TIME magazine, the airline claims that this is due to safety concerns, as they want to ensure the crew are fit enough to handle emergency situations. Male crew have to have a BMI of 18-25, while females are required to meet the range of 18-22.

This follows the 2014 guidelines from the Indian Directorate General of Civil Aviation which states that overweight cabin crew have three months to lose weight or be declared unfit for duties for six months.

A user @susmitsenn on migme, a social entertainment platform, was happy that the “fat aunties will finally be out and make way for sexier air hostesses”, however he was shocked they would be sacked for being ‘fat’.

While Air India shapes up to meet safety standards, migme has put together a list of airlines with flight crew that are very fit— you know what we mean.

1. Emirates Airlines (Dubai, UAE)

Image Source: Emirates

Even though our list is not in order of merit, Emirates deserves to be mentioned first. They received unanimous votes in our casual poll in the migme office.

2. Singapore Airlines (Singapore)

Image Source: Singapore Airlines

Their tagline “Singapore Girl, you’re a great way to fly”, while being somewhat sexist, is not entirely wrong as the airline prides itself on high service standards.

3. Etihad Airways (Abu Dhabi, UAE)

Image Source: Etihad Airways

Excuse me, I need to get an oxygen mask, because you take my breath away.

4. Virgin Atlantic (England, UK)

Image Source: Virgin Atlantic

You don’t need Vivienne Westwood to design your uniforms when you are looking like that.

5. Qatar Airways (Qatar)

Image Source: Qatar Airways

If there’s anything we’ve learnt from this list, it’s that the Middle Eastern airlines have a bunch of pretty good-looking crew.

6. China Eastern Airlines (China)

Image Source: China Eastern Airlines

If you didn’t know the Chinese word for elegance, now you do.

7. Lufthansa (Germany)

lufthansa
Image Source: Lufthansa

Hi Marc, we want a selfie too! Yes, that is his real name. Don’t ask us how we know. *shifty*

8. EVA Air (Taiwan)

Asia361-9461
Image Source: asia361.com, Kat Goh

As if the Hello Kitty Jet isn’t cute enough, the crew members are all pretty darn cute too.

9. Safi Airways (Dubai-based, Afghan-owned)

safiairways
Image Source: Safi Airways

Forgive me if I keep asking for assistance on the plane. I don’t really need water, I just want to look at your face.

10. Asiana Airlines (South Korea)

asianaairlines
Image Source: Asiana Airlines

Does an electronic boarding pass mean we get to see you sooner? Checking in online right now.

11. All Nippon Airways (Japan)

ANA
Image Source: ANA

Notice me, senpai!

12. Garuda Indonesia (Indonesia)

Image Source: Garuda Indonesia

You’ve learnt a Chinese word already, so now we will teach you the Bahasa Indonesia word to describe the crew – ‘cantik‘. That means beautiful.

13. Cebu Pacific Air (The Philippines)

Image Source: Cebu Pacific

Bright uniforms and an even brighter smile? You set our pre-flight jitters at ease.

Source: Migme, asia361.com

PH, UAE Expand Air Agreement


IMG_20150425_142701

MANILA, Philippines – The Gulf airlines scored a victory, as the Philippines and UAE agreed to expand their air agreement, increasing the maximum flights per week to 35 from 28.

This means competition in the Philippines-Middle East market may intensify, as both Philippine and UAE airlines can now increase their flight operations between the two jurisdictions – an initiative local carriers sought to block.

Earlier this month, major Philippine carriers Philippine Airlines, Incorporated (PAL)and Cebu Pacific Air asked the Civil Aeronautics Board (CAB) to deny the Gulf carriers’ request for additional flights, saying this will only hurt local airlines.

A380

But after air talks from August 27 to August 28 in Manila, the Philippine and UAE air panels decided to sign a new memorandum of understanding (MOU) on air services, enhancing the exchange of traffic rights between the two countries.

CAB Executive Director Carmelo Arcilla said the two countries “agreed to increase the maximum number of flights per week for each country from the current 28 flights to 35.”

“This is still subject to the condition that the UAE carrier operating such additional flights to Manila is bound to also operate separately to Clark or Cebu within one year from signing of the MOU,” Arcilla added.

philippine-airlines

According to the CAB chief, this condition forces UAE airlines to invest in developmental gateways outside Manila.

Aside from the additional flights, Arcilla said “the Philippines also got on a unilateral basis additional fifth freedom traffic rights to the UK, US and Saudi Arabia.”

This means that local airlines can now fly from Manila to UAE and onward to any country including the UK, the US and Saudia Arabia.

“This will improve Philippine connectivity and also the commercial viability of ourroutes to the UAE,” Arcilla said.

The Philippine and UAE air panels, according to Arcilla, also agreed on co-terminalization, which means that an airline from one country can fly to a city in the other country without picking up passengers in the domestic leg.

“This also improves connectivity and viability. Overall, the talks is a success for Philippine connectivity and network development. The Philippine government panel and our airlines view the exchange as more or less fair, as the increase in traffic rights for both sides, which our airlines opposed, is minimal,” Arcilla said when sought for comment.

But for PAL and Cebu Pacific, the added capacity was not needed and accused the state-owned Gulf carriers to be operating on an advantage.

High stakes chess game

The UAE is the largest Middle East destination from the Philippines, accounting for slightly over half of the 80,000 weekly return seats between the Middle East and the Philippines, according to independent aviation think tank Center for Asia Pacific Aviation (CAPA).

CAPA added that the UAE is now the fifth largest international destination from the Philippines overall after South Korea, Hong Kong, Singapore, and Japan.

“Clearly there is a lot at play – and at stake,” CAPA said in its 2014 report.

“Manila is Etihad’s second largest international market after Bangkok. As an added incentive, Etihad would be able to potentially increase its share of the Philippine market at the expense of Emirates,” the report read.

CAPA said the “best scenario for Emirates – and Filipino consumers – would be an expansion of the UAE-Philippines bilateral.”

Source: Rappler.com

Cebu Pacific, PAL Oppose Anew UAE Air Talks


EMIRATES NOT SUBSIDIZED. Image from Emirates website

MANILA, Philippines – Philippine Airlines Incorporated (PAL) and Cebu Pacific Air are asking once again the Philippine aviation regulator to deny the requested additional United Arab Emirates (UAE) flight capacity, saying this will only hurt local airlines.

The Philippines is set to hold air talks with the UAE at the end of August and possibly increase flights between both countries.

PAL said in a statement on Wednesday, August 19, that many government-subsidized UAE airlines have been lobbying for more flights into the Philippines to carry passengers to destinations beyond the country, to the detriment of Philippine-based carriers.

“We call on the Philippine panel to the PHL-UAE air talks to refrain from giving Middle East carriers undue advantage by granting more capacity and frequency beyond what the market requires,” PAL President Jaime Bautista said in the statement.

Citing an interview with Manila Times in June, PAL said a Cebu Pacific senior executive expressed concerns over the Philippines’ plans to enter a fresh round of air talks with the UAE, given Philippine entitlements have yet to be fully utilized by local airlines.

“Cebu Pacific believes that a new round of air talks with the UAE should not be held until all available Manila-use entitlements are fully utilized by Philippine carriers who are ready, willing, and capable of operating routes to UAE, including Cebu Pacific,” PAL said as it quoted JR Mantaring, officer-in-charge of Cebu Pacific corporate affairs.

According to PAL and Cebu Pacific Air, there are over 700,000 Filipinos working in the UAE.

Unfair competition

PAL said it echoes the sentiment of the US airline industry against tactics of Middle East airlines that are being investigated for “unfair competition.”

The flag carrier said it hopes the Philippine government will safeguard the interests of Filipino air travelers against the negative implications of “additional yet unwanted flights from the Middle East, especially with next week’s air talks between the Philippines and the UAE.”

According to PAL, the US government is looking into allegations of unfair practices of carriers from the UAE and Qatar that are subsidized by their governments by as much as $42 billion.

Allegations not true

PAL’s Bautista said the Philippine air panel should learn from the bitter experience of major US airlines in dealing with their counterparts from the Arabian Gulf, including Emirates and Etihad.

“We hope our own government will promote fair competition and support our airlines who have invested much in re-establishing air links to the Middle East and Europe,” Bautista said.

But according to Emirates, allegations of subsidy and unfair competition leveled by the major US legacy carriers – Delta, United and American Airlines – are completely false.

“The allegations of subsidy and unfair competition is completely false and we have recently released a point-by-point, fact-based response that systematically disproves these allegations,” the UAE-based airline said in a statement.

In December 2014, PAL and Cebu Pacific scored victory after the government penalized Emirates Airlines from using flight frequencies beyond its allocation for the Manila-Dubai route.

The Civil Aeronautics Board has fined Emirates P1.8 million ($38,838.21), and has ordered the airline to stop selling tickets for a third daily flight for schedules beyond December 26, 2014.

PAL said United, Delta, and American Airlines formed a coalition calling on Washington to enforce the open skies agreement, which, they said, is weighted in favor of Gulf carriers.

It asked the US government to put a temporary block on new US-bound services by Etihad Airways, Emirates, and Qatar Airways, PAL said.

Source: Chrisee Dela Paz, Rappler.com

Amazing Race: Qantas Wins Race To Fill Airplane Seats On Route To Manila (Cebu Pacific 50.4%, PAL 70.4%)


When it comes to filling seats on international airline routes, not all carriers are equal.

Budget carrier Cebu Pacific managed to sell just 50.4 per cent of its seats on its new route between Sydney and Manila in the Philippines last year, making it the third-worst performing route by load factor. But on the same route, full-service Qantas filled 88.7 per cent of the seats on its planes, which was the best performance of any carrier on an international route.

Data compiled by aviation consultancy Aspire Aviation based on government filings and analysis of global distribution systems shows routes to Pacific Islands and Papua New Guinea are consistently the lowest performers in terms of load factors. There are, however, reasons why airlines keep those going. They are often used heavily by government and corporate clients and are also used to ferry large amounts of freight between Australia and remote areas.

Thai Airways, which faced political instability in its home market last year, managed to fill only 66.3 per cent of its flights to and from Australia, making it one of the worst performers. Garuda Indonesia was close behind, filling just 67 per cent of its seats from Australia to Bali and Jakarta.

Those poor performances contrasted with US carrier Delta Air Lines filling 86.9 per cent of the seats on its daily flights between Sydney and Los Angeles, which was ahead of the 81.2 per cent filled by its partner Virgin Australia on flights between Australia and Los Angeles.

Cathay Pacific, which has been pushing unsuccessfully to date for more air access to Australia, filled 86.9 per cent of the capacity to its Hong Kong hub last year. Just this week, the airline announced it would upgrade a second of its four daily flights between Sydney and Hong Kong to a larger Boeing 777 from a smaller Airbus A330 from October. It is prevented from adding more flights to the main Australian gateways of Sydney, Melbourne, Brisbane and Perth under the terms of its bilateral air services agreement, but it can add capacity by using bigger planes.

Etihad Airways, which is expanding capacity by placing an Airbus A380 on its Sydney route from June, was also a top performer.  The Virgin partner filled 86.7 per cent of its seats between Australia and Abu Dhabi last year. That was much better than the 73.8 per cent of seats Virgin filled on its own flights between Sydney and Abu Dhabi.

Overall, Virgin filled 74.7 per cent of its seats across its entire international operations, which compared with the 79.7 per cent filled by Qantas.

In the period between July and December, Virgin reported a loss from its international operations, while Qantas reported a profit. Virgin has faced particular pressure on flights between Australia and Bali, where it filled 68.3 per cent of its seats, while Qantas’ budget arm Jetstar filled 75 per cent.

That route will become even more competitive from next month, when Indonesia AirAsia X launches direct flights from Melbourne to Bali. Those flights had been delayed from an initial planned start date of December pending approvals from the Civil Aviation Safety Authority which were granted last week.

Virgin plans to deploy its budget arm Tigerair Australia on international flights in the future, with speculation the low-cost-carrier could take over some Bali flights from Virgin.

Etihad Named Airline of the Year by Airline Economics Magazine


Etihad Named Airline of the Year by Airline Economics Magazine

Much to the likely chagrin of U.S. airlines, Airline Economics magazine has selected Etihad Airways as its Airline of the Year.

The announcement was made in Manila, Philippines, at the 2015 Aviation 100 Awards.

Domestic airlines have been running a verbal war with Etihad, and its fellow Middle East carriers Emirates and Qatar. American, Delta and United believe all three have an unfair competitive advantage in international flights by being subsidized by their respective governments.

In 2014 Etihad launched 10 new routes, including three in North America, and injected significant investment into new equity partnerships. Etihad also revealed a brand new look with new livery, uniforms and onboard offerings, with its first-of-kind “Residence by Etihad,” a virtual hotel room in the air.

“We are immensely proud that the achievements we made in 2014 have been recognized by our peers in the industry,” James Hogan, president and chief executive officer of Etihad Airways, said in a statement. “These awards remind us of the significant progress the airline has made in such a short space of time. We are looking forward to future accomplishments in 2015 and beyond as we continue to grow, with support of our employees, our equity partners and the industry.”

Philip Tozer-Pennington, managing editor of Airline Economics, said the Airline of the Year vote “recognizes performance in fleet and financial management and execution of business plan, which in the case of Etihad Airways also takes into account its amazing ability to expand at very little cost into key markets across the globe in 2014.”

Source: http://www.travelpulse.com/Rich Thomaselli

World’s Safest Airlines for 2015


AirlineRatings.com identified the top 10 safest airlines (legacy) in the world, in alphabetical order:

AIR NEW ZEALAND https://i2.wp.com/bestawards.co.nz/media/uploads/2012_7/Air_NZ_Black_Plane_Environmental_Graphics_2_1.jpg

BRITISH AIRWAYShttps://i2.wp.com/cms.travelstart.com/uploads/image/asset/1682/British_Airways_757.jpg

CATHAY PACIFIC https://i0.wp.com/upload.wikimedia.org/wikipedia/commons/f/ff/Cathay_Pacific_Boeing_777-300_Pichugin-1.jpg

EMIRATEShttps://i1.wp.com/cache.pakistantoday.com.pk/emirates_9.jpg

ETIHAD

EVA AIRhttps://i0.wp.com/freeware.aerosoft.com/forum/screenshots/monthly_09_2012/6a7717b07a6fc3292a43b6261a09de88-a320_cfm_eva_air_b-25569-1.jpg

FINNAIR https://i1.wp.com/upload.wikimedia.org/wikipedia/commons/a/a8/Finnair_B757-200_OH-LBS_at_CYYZ_20110605.jpg

LUFTHANSA https://i2.wp.com/www.insidesocal.com/aviation/files/2013/06/lufthansa-747-8.jpg

QANTAS https://i0.wp.com/australianaviation.com.au/wp-content/uploads/2013/08/AIRBUS-A330-200-QANTAS-SYD-SEP12-RF-IMG_6414.jpg

SINGAPORE AIRLINES

Etihad named CAPA Airline of the Year


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MANILA, Philippines – Etihad Airways, the national airline of the United Arab Emirates, has been named CAPA Airline of the Year at the CAPA Aviation Awards for Excellence 2014 in Antwerp, Belgium.

Etihad operates two flights daily between Abu Dhabi and Manila.

The CAPA Aviation Awards for Excellence, the world’s pre-eminent aviation strategy awards, are for strategic leadership in the aviation industry.

The Airline of the Year award is given to the carrier which has had the greatest impact on the development of the global airline industry, as a strategic leader and by setting a benchmark for others to follow.

Peter Harbison, CAPA executive chairman, presented the award to Etihad Airways, citing the airline for its “remarkable strategic partnership model.”

“Recognising that organic growth was not likely to generate the rapid global expansion it needed, Etihad Airways has relied on an extensive network of codeshares and most notably, established its own ‘equity alliance’, cemented by minority holdings in airlines around the world… In a new world of aviation partnerships, Etihad Airways is at the strategic vanguard of equity relationships, as a growing number of airlines – notably in Asia – line up to emulate the success of this truly original model,” Harbison said.

James Hogan, Etihad Airways President and Chief Executive Officer, said receiving Airline of the Year is not just a great honor but also “a powerful endorsement of the Etihad Airways business model.”

“The four-pillars of our strategy – organic expansion, codeshare partnerships, minority investments in other airlines and deep commercial agreements – are more than a new rule book for global aviation they are the keys to a long and sustainable future for the airline and its partners,” he said.

Source: ABS-CBNnews.com

Cebu Pacific Long-Haul Low-Cost: New Period of Growth Begins As 5 Destinations Are Added


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Cebu Pacific Air is planning to grow its long-haul network from one to six destinations over the next six months. In addition to the already announced new destinations of Sydney and Kuwait, the Philippine low-cost carrier is close to setting a launch date and beginning ticket sales for Dammam and Riyadh in Saudi Arabia.

Cebu Pacific is also aiming to launch Honolulu in early 2015 and is keen to secure additional traffic rights to the UAE to enable the launch of Sharjah. Cebu Pacific already serves Dubai, its only current long-haul destination which is now performing relatively well following an extremely disappointing initial performance.

The forthcoming network expansion will provide the biggest test yet for Cebu Pacific’s long-haul unit. In the first 14 months of widebody operations Cebu Pacific has mainly used its fleet of A330-300s to operate regional routes.

This is the second in a two part series of analysis reports on Cebu’s now 14-month-old widebody operation. The first part focused on the ManilaSydney route, which will be launched on 9-Sep-2014, and connection opportunities beyond Manila. This report looks at Cebu’s plans for Saudi Arabia and the prospects of a Sharjah service. It will also examine the overall Philippines-UAE market including Cebu’s performance in Dubai.  

Kuwait to become Cebu Pacific’s second long-haul destination

Cebu Pacific’s second long-haul destination will be Kuwait, which will be served with three weekly flights from 2-Sep-2014. Manila-Kuwait will be a unique route for Cebu’s long-haul unit as it is the only route among its first six long-haul routes (including five that have not yet been launched) that is not currently served non-stop by any carrier.

The Manila-Kuwait market is now served on a one-stop basis by several carriers, led by Emirates,Etihad Airways and Qatar Airways. Cebu Pacific is banking on Kuwait having a sufficient Filipino community to support a non-stop service. Kuwait does have a sizeable Filipino community – approximately 200,000 – although it is smaller than the Filipino communities in Cebu’s other initial long-haul markets (the UAE, Saudi Arabia, Australia and Hawaii).

Cebu Pacific began selling Kuwait in Jul-2014 – at the same time as Sydney. Unlike the Sydney market, where Cebu Pacific expects some outbound Australian leisure traffic as well as a significant share of transit traffic, Kuwait will be virtually entirely a point to point Filipino labourer market.    

Cebu Pacific will be the ninth LCC serving Kuwait, according to OAG data. But it will be the first LCC in Kuwait with long-haul services. LCCs currently account for about 30% of total seat capacity at Kuwait International Airport.

Kuwait-based Jazeera Airways is by far the largest LCC in the Kuwait market and its approximately 14% share of total seat capacity makes it the second largest airline in Kuwait after flag carrier Kuwait Airways. Jazeera could emerge as a potential partner for Cebu Pacific as its Kuwait base features 15 routes throughout the Middle East, Egypt and Turkey. But at least for now Cebu Pacific is targeting the local Kuwait-Philippines market and the approximately 200,000 Filipinos living in Kuwait as well as their families residing back in the Philippines.

Cebu Pacific to launch Saudi Arabia shortly after Kuwait

Saudi Arabia is also expected to be almost entirely a point to point market for Cebu Pacific although there could potentially be an opportunity to work with Saudi LCC flynas. Cebu Pacific has not yet set a launch date or begun tickets sales to Saudi Arabia but has been preparing for the last year to serve both Dammam and Riyadh.

Initially Dammam and Riyadh were slated to be Cebu Pacific’s second and third long-haul destinations after Dubai, with a launch anticipated in 1H2014. But Cebu Pacific has encountered several delays in securing approvals from Saudi authorities.

The general manager of Cebu Pacific’s long-haul division, Alex Reyes, told CAPA prior to CAPA’s Australia Pacific Aviation Summit (held in Sydney on 6-Aug-2014 to 8-Aug-2014) that that the final approvals from Saudi Arabia should be secured shortly, allowing for a launch within the next couple of months. “We are about ready to push the button,” he said.

As passengers (or their labor contractors) in the Philippines-Middle East market typically make purchasing decisions with short notice, Cebu Pacific believes it can launch Saudi Arabia within only a few weeks of starting ticket sales. Cebu Pacific is initially planning to operate three weekly flights to Dammam as well as three weekly frequencies to Riyadh.

It will compete against Philippine Airlines (PAL) on both routes, which launched Manila to Dammam and Riyadh services in late 2013. PAL currently serves Riyadh with four weekly A330 flights and Dammam with three weekly A330 flights, according to OAG data. Saudia also serves the Manila-Riyadh market with seven weekly flights and operates three weekly flights from Manila to Dammam, according to OAG data.

Cebu Pacific has sufficient traffic rights to operate up to seven weekly flights to Riyadh and has unlimited access to Dammam, which has been designated by Saudi Arabian authorities as an open skies airport. Cebu Pacific could also potentially use some of its seven weekly Philippines-Saudi Arabia rights for Jeddah but earlier ruled out Jeddah as it sees a larger market in Riyadh and Dammam. (PAL also initially planned to serve Jeddah but prior to launching services to Saudi Arabia in late 2013 decided to only enter the Dammam and Riyadh markets.)

Cebu Pacific to take fifth A330 in late Aug-2014

Mr Reyes said that Dammam, Riyadh, Kuwait, Sydney and Dubai will use the equivalent of three A330s. That will leave the equivalent of two A330s for short-haul routes.

Cebu Pacific plans to take its fifth A330-300 at the end of Aug-2014 (prior to the launch of Kuwait and Sydney). Cebu Pacific sees leaving two aircraft for short-haul flights as ideal given the success it has had over the past year in operating A330s on short-haul routes.

Mr Reyes told CAPA TV in a 6-Aug-2014 interview that Cebu Pacific has discovered the A330 is efficient for shorter sectors, enabling the airline to lower its cost per seats in thick short-haul markets.

Cebu Pacific plans Manila-Honolulu service

The sixth and final A330-300 from Cebu’s current commitment with leasing companies is slated to be delivered in 1Q2014. This aircraft will support the launch of services to Honolulu, which Mr Reyes says will initially be served with three weekly flights.

Cebu Pacific is now working on securing FAA authority to operate flights into the US. Previously the carrier was unable to even seek such authority as the Philippines had a Category 2 safety rating. Philippine authorities secured a Category 1 rating in Apr-2014, enabling Philippine Airlines (PAL) to pursue expansion and gauge changes in the US market and enabling Cebu Pacific to begin preparations to enter the US market.

As previously outlined by CAPA, Cebu Pacific’s first US route will be Honolulu-Guam. Cebu Pacific plans to launch Guam by the end of 2014 using its A320 fleet. Honolulu will take slightly longer to launch as Cebu Pacific first needs to secure extended range twin-engine operations (ETOPS) approval for its A330 fleet. (Cebu Pacific is not seeking ETOPS for its A320s, which will necessitate a slightly longer routing to Guam in order to meet diversion airport requirements.)

Cebu Pacific looks to lease two more A330s but South Africa, Russia and NZ are not likely

While Cebu Pacific is only committed to one additional A330 beyond the fifth aircraft it will take at the end of Aug-2014 the business plan for its long-haul unit has always envisioned a fleet of eight A330-300s. Cebu Pacific is now looking at potentially leasing two more A330s in 2015 (in addition to the one aircraft already committed for 1Q2015), giving it a fleet of eight aircraft by the end of 2015.

The two additional aircraft will enable further expansion of the long-haul network beyond Honolulu, which is expected to become Cebu Pacific’s sixth long-haul destination after Dubai, Kuwait, Sydney, Dammam and Jeddah. One option under consideration as Cebu Pacific’s A330 fleet expands to up to eight aircraft in 2015 is Sharjah, which the carrier served briefly from 1-May-2014 to 20-Jul-2014 during the runway repair project at Dubai.

Other new long-haul destinations including South Africa, New Zealand and Russia have been mooted but ruled out as Cebu Pacific is focusing on markets with large Filipino expatriate communities. The Middle East continues to be the main focus as it has the largest overseas Filipino population outside North America, which is not within range of Cebu’s A330s with the exception of Hawaii. (Of the approximately 4 million Filipinos residing in North America about 350,000 live in Hawaii.)

Air Arabia partnership is key to potential Cebu Pacific Sharjah service

Cebu Pacific does not want to rely significantly on inbound tourism although in markets such as Australia inbound traffic is being pursued (along with transit traffic) to help make the market viable. Sharjah is a more traditional Cebu Pacific market as it will cater to Filipino workers with the added benefit of being an LCC hub, enabling connections to destinations throughout the Middle East (as well as parts of Eastern Europe, Central Asia and Africa) which have Filipino populations but may not be large enough to support non-stop service.

Air Arabia’s Sharjah hub currently consists of almost 1,000 weekly flights to about 60 destinations. Air Arabia currently accounts for an overwhelming 83% of total capacity at Sharjah, according to CAPA and OAG data. In terms of seat capacity Air Arabia’s Sharjah hub is about four times the size of Jazeera’s Kuwait hub and about double the size of flynas’ hubs in Riyadh and Jeddah.

The Dubai hub of the Middle East’s other main LCC, flydubai, is about 50% larger than Air Arabia’s Sharjah hub. But a Cebu Pacific-flydubai relationship is unlikely given flydubai’s ties to Emirates, which competes against Cebu Pacific in the Manila-Dubai market. Emirates is also a large one-stop carrier in other Manila-Middle East markets (such as Kuwait and Saudi Arabia) that Cebu Pacific is now preparing to enter.

Mr Reyes said Cebu Pacific is now looking to add Sharjah on a permanent basis to leverage the connection opportunities with Air Arabia as it was pleasantly surprised by the transit traffic generated during its time in Sharjah. Air Arabia in particular promoted connections to Manila from the Saudi Arabian cities of Dammam, Riyadh, Gassim and Hail with one-way through fares starting at SAR1250 (USD333) including checked bags and a meal.

Cebu Pacific returned to Dubai International Airport in Jul-2014 after the recent completion of the runway renovation project. Cebu Pacific is not considering moving its Dubai International flight to Sharjah (or Dubai World Central) and remains committed to Dubai, where its load factor has improved significantly after a dismal start. But it believes there is sufficient demand in the Philippines-UAE market to support separate services to both Dubai and Sharjah.

Cebu Pacific keen to expand in Philippines-UAE market

Cebu Pacific originally was looking at supplementing Dubai with Abu Dhabi but now sees more potential in Sharjah, partly because of the connection opportunities with Air Arabia. There is also a sizeable Filipino community in Sharjah and in the part of Dubai that is close to Sharjah.

Cebu Pacific however first needs to secure additional UAE traffic rights before a service to Sharjah can be added. Cebu Pacific has long pushed Philippine authorities to adopt a policy of prohibiting Filipino carriers from loaning their traffic rights to UAE carriers. As part of codeshare deals PAL over the years has been able to loan its traffic rights for the UAE to Emirates and Etihad, which lacked the ability to expand as they were fully utilising their own traffic rights.

Etihad is no longer using PAL rights but Emirates is still using seven weekly traffic rights allocated to PAL to support one of its three daily flights to Manila. These rights are expected to be returned and could potentially be reused by PAL or partner Etihad to expand in the Manila-Abu Dhabi market. If they are not reused by PAL the rights could be reallocated to Cebu Pacific.

The UAE also has been seeking an extended air services agreement with the Philippines. This could enable Emirates to maintain three daily flights without having to use PAL’s rights for one of the flights as well as potentially support a new service from Cebu Pacific if it is unable to secure the Filipino carrier rights now used by Emirates.

There are currently 28 weekly flights allocated to both sides under the Philippines-UAE air services agreement. Of the 28 weekly flights available to Filipino carriers in the UAE market 26 are currently used, including seven from Cebu Pacific (to Dubai), seven from PAL Express (to Dubai), five from PAL (to Abu Dhabi) and seven by Emirates on behalf of PAL (to Dubai). Of the rights available to UAE carriers, 14 are currently used by Etihad (from Abu Dhabi) and 14 by Emirates (from Dubai).

There are currently no services from the Philippines to Sharjah or any other point in the UAE. In the Philippines all services to the UAE originate in Manila. (Emirates from Oct-2013 to Apr-2014 also operated one daily flight to Manila alternative Clark, which is an open skies airport. But demand from Clark is limited and Emirates is unlikely to return to Clark.)

See related report: Philippines-UAE market suffers from overcapacity, impacting Cebu Pacific, PAL, Emirates and Cathay

Cebu Pacific optimistic Philippines-UAE market can support even more capacity

Operating two (likely daily) routes to the UAE seems rather ambitious given the initial challenges Cebu Pacific faced in the Manila-Dubai market. But Cebu Pacific is confident it has overcome the initial setbacks and believes the Philippines-UAE market is growing rapidly and can support more LCC flights, particularly given the stimulation effect of low fares.

Mr Reyes says the total number of passengers travelling between Manila and Dubai has grown by 30% over the last year (includes passengers flying via other cities such as Hong Kong). Some of the growth was driven by stimulation as lower fares in the market have enabled more frequent trips home for Filipinos as well as visits from friends and family living in the Philippines.

The number of Filipinos working in Dubai and the UAE also has continued to grow more than anticipated. Dubai is now the largest outbound Filipino market, giving Cebu Pacific confidence it can maintain a daily Dubai service as well as add a second destination in the UAE.

Sharjah also offers connection opportunities as Cebu Pacific is keen to pursue an expanded and potentially more formal relationship with Air Arabia. With Filipinos spread across the Middle East, using Sharjah and Air Arabia to serve the rest of the region is logical.

Cebu Pacific has looked at other potential non-stop routes in the Middle East including Bahrain, Omanand Qatar. A more sensible approach would be to serve these and other smaller Filipino worker communities via Sharjah and not growing the Middle East network beyond five destinations (and three countries).

Cebu Pacific sees encouraging improvement on Dubai route

Cebu Pacific is also confident recent improvement on its Manila-Dubai route, which Mr Reyes says is now “doing quite well,” shows more capacity to the UAE and Middle East can be supported. While Cebu Pacific is keen to diversify its long-haul network with Australia and Hawaii the Middle East remains the main focus of its long-haul strategy.

As CAPA previously analysed, Cebu Pacific’s average load factor on Manila-Dubai was a dismal 36% in the first month of operation, Oct-2013. But the load factor started improving in late Nov-2013 and after still struggling in 1Q2014 was above 80% in Apr-2014, May-2014 and Jun-2014. Cebu Pacific has not provided data on July but it likely dipped due to low demand during Ramadan despite a temporary reduction to four weekly flights during the fasting month.

Mr Reyes is confident in the future success of the Dubai route as the carrier has made adjustments in its sales and distribution approach after learning about the nuances of the Philippines-Middle East market. While Cebu Pacific was disappointed with the new initial performance Mr Reyes points out new routes typically take a year to mature. For example the airline had even lower initial load factors on some regional international routes launched in recent years – although obviously the losses were significantly lower as they were shorter routes operated with narrowbody aircraft.

Cebu Pacific still faces challenges as long-haul operation matures

Cebu Pacific’s long-haul operation seems to have gotten over the hump and is on the path to an improved performance. But it still faces huge challenges and a relatively sceptical investment community.

Cebu Pacific’s stock dropped by about 40% in the last seven months of 2013 – the first seven months of the A330 operation – as the new long-haul operation dented its profitability. The stock has recovered partially so far in 2014 but is still trading almost 30% below May-2013 levels.

Even with the Dubai route performance improving, Cebu Pacific has not yet proven its version of the long-haul model can be successful. The adjustment to focus more on transit traffic, starting with the pursuit of North Asia connections on the Sydney-Manila route and to potentially be followed by a partnership with Air Arabia at Sharjah, should help. But Cebu Pacific still has a long road ahead.

Australia will be particularly challenging as Cebu Pacific faces stiff competition and potentially overcapacity as PAL is increasing its Manila-Sydney service from four weekly flights to daily in Dec-2014. Cebu Pacific also plans to add a fifth weekly frequency to Sydney from Dec-2014 while Qantas maintains its Manila service at four weekly flights.

Cebu Pacific faces intensifying competition from Philippine Airlines

Honolulu will also be challenging from a competitive standpoint as PAL is increasing Manila-Honolulu from four to seven weekly flights ahead of Cebu’s expected entry into the Hawaii market. PAL’s response thus far to Cebu Pacific’s long-haul expansion has been extremely aggressive. PAL also launched Dubai and Abu Dhabi at about the same time as Cebu Pacific entered Dubai and also has launched Dammam and Riyadh ahead of Cebu Pacific.

Virtually everywhere Cebu Pacific has turned with its long-haul operation PAL has fought back with new flights and requests for more traffic rights. But Cebu Pacific is prepared to weather the storm. If anything PAL is more likely to retreat as questions again surface over PAL’s future ownership structure.

Already the PAL Group has adjusted its Middle East expansion plan by deciding against taking another five A330-300s in single class configuration. Initially six A330s from the group’s A330 order had been allocated to regional subsidiary PAL Express for use on routes to the Middle East in 414-seat single class configuration. PAL Express now operates only one A330-300, which it uses to compete against Cebu Pacific on the Manila-Dubai route, but is no longer planning to expand this operation to other Middle Eastern markets.

Cebu Pacific considers acquiring new generation widebodies

Cebu Pacific’s long-haul unit clearly faces a critical juncture over the next six months as it launches five routes. How the five new markets perform and how well Dubai does in its second year – as well as what happens with the PAL Group – will be key drivers in determining the pace of future Cebu Pacific widebody expansion.

While the current business plan envisions only eight A330s a phase two featuring new generation widebodies has always been a possibility – and a necessity if Cebu Pacific is to keep up with Asia-Pacific’s other rapidly growing long-haul LCCs.

Cebu Pacific is now evaluating the A330neo, which AirAsia X signed up for in Jul-2014 as the launch airline customer with 50 commitments. Cebu Pacific was already evaluating the A350, 787 and the 777X. The latter is still several years away but would enable flights from Manila to the west coast of the US, which have traditionally been PAL’s largest and most lucrative long-haul markets. Cebu Pacific does not see the A350 or 787 as a possibility for California (as the variants that may have the range are too small for Cebu’s requirement) but could use either type or the A330neo to pursue growth to the Middle East and Australia and replace current generation A330-300s.

Cebu Pacific certainly will have several options as it looks to grow its long-haul fleet and network. But first it needs to get the basics right and make sure it has the right long-haul low-cost model for its market.

Adjustments will be necessary as the long-haul low-cost sector is evolving rapidly and the Southeast Asian market is extremely dynamic. Cebu Pacific is now barely scratching the surface. Cebu Pacific is still too new to the long-haul low-cost game to determine if it will be a winner.

Source: CAPA, Centre for Aviation