THE invasion of long-haul low-cost carriers on routes into Australia is set to continue with Philippines-based Cebu Pacific Air offering $99 one-way fares to mark the start of Sydney- Manila flights from September.
Cebu plans to start services flying 436-seat all-economy Airbus A330-300 aircraft from September 9 and is offering the cheap seats until Thursday. Fares will normally start at $335 one-way, which the airline says represents a discount of about 30 per cent on existing tickets.
The carrier will fly four times a week and is hoping to capitalise a 25 per cent growth in the past two years in Australians visiting the Philippines as well as an increase in Filipinos travelling to Australia.
Cebu Pacific is the biggest low-cost carrier in the Philippines with flights to 34 domestic and 26 international destinations.
It is the latest LCC to fly to Australia and is part of a phenomenon that has claimed a sizeable percentage of the market. LCCs AirAsia X, Indonesia AirAsia, Jetstar, Jetstar Asia, Tigerair and Scoot accounted for 16.1 per cent of total international passenger traffic to and from Australia in March.
Cebu Pacific officials on Monday bared the budget carrier’s plans to fly directly to Sydney, Australia and Kuwait starting September as part of the company’s expansion of its long-haul network.
Cebu Pacific will be the only Philippine budget carrier offering non-stop flights to Kuwait and Sydney, general manager for Cebu Air’s long-haul division Alex Reyes said in a briefing in Quezon City.
Cebu Air Inc. is the airline’s owner and operator.
“Currently there is no low-cost carrier flying direct on the Manila to Sydney route. Cebu Pacific will be the first low-cost carrier flying the Manila-Sydney route,” said Reyes.
“Cebu Pacific will [also] be the only carrier flying non-stop services, low-cost carrying environment between Manila and Kuwait,” he added.
The budget carrier will start its thrice-a-week service to Kuwait on Sept. 2 and to Sydney, initially at four times a week, on Sept. 9.
Reyes said Kuwait and Sydney are underserved markets.
“Low fares stimulate traffic and all of that low fare availability leads to a lot of good things to both countries,” he added.
Based on data from the Philippine Overseas Employment Administration, there are over 180,000 Filipinos in Kuwait and more than 300,000 in Australia.
Some time before turning a profit
Turning the two new routes profitable will take some time, president and CEO Lance Gokongwei said in the same briefing.
“Long-haul routes in general take a long time to promote, and these are not decisions made very quickly by the traveler. They tend to plan their travels way in advance, maybe six to 18 months, so it takes time to build forward bookings,” he said.
“In general, we do expect our long-haul routes to achieve profitability anywhere between six to 18 months after the start,” he said.
Cebu Pacific’s first long-haul route—Manila-Dubai-Manila direct flights, launched last October—Gokongwei said it has turned profitable in just half a year.
“Dubai has done well especially over the last couple of months, in April and May, we have a load factor of 80 plus percent,” he said.
“As a whole, we have achieved our objective of getting to break even in about seven to eight months since we started in October,” he added.
“We learned a lot in that process. We’re applying those lessons to Sydney and Kuwait so hopefully we’ll start much more strongly this time,” Gokongwei said, noting the airline is targeting an 80-percent load factor for both Sydney and Kuwait flights. — BM, GMA News