Cebu Pacific chose a “wait-and-see approach” for its plan to purchase new wide body aircraft to serve Australia and Middle East markets, the Center for Aviation (CAPA) said on Monday.
“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,” CAPA said in a report.
“Now is not the time to rush into acquiring additional wide-body aircraft. Meanwhile, the outcome of the late Apr-2015 bilateral talks with Australia will be an important factor in that planning,” it said.
Cebu Pacific’s original business plan involved purchase of eight A330s for long-haul flights.
But the company’s long-haul operation has been unprofitable. It can improve its capacity by maximizing use of its six aircraft. The carrier also planned to use its A330-300 wide-body fleet to its flights to Hong Kong, Taipei and Tokyo.
“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,” CAPA said.
The carrier uses the A330 on one of its daily Singapore flights and plans to add a second wide-body to its Manila-Singapore, which is its largest international route.
“If Sharjah, Melbourne and other potential new route opportunities become available Cebu Pacific will need to revisit acquiring the two additional wide-body aircraft in the original business plan,” CAPA said.
Cebu Pacific secured the certification in April 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.
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.
CAPA said Hawaiian Airlines pulled out of the Manila market in 2013, leaving an opening for a second carrier.
Total capacity in the Philippines-Hawaii market is now back to the early 2013 levels. Cebu Pacific is banking it can stimulate demand and break PAL’s monopoly by providing low fares.
Honolulu 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 September 2015.
Cebu Pacific is preparing to launch services to Hawaii by the end of 2015 and it is also interested in launching Melbourne if it is able to secure additional traffic rights for Australia. Honolulu and and Melcourne would be Cebu Pacific’s sixth and seventh long-haul destination, in addition to four in the Middle East and Sydney.