Cebu Pacific chief Mike Szucs has ruled out venturing into long-haul operations, despite acknowledging that the “best fare growth” has been seen on these routes in the post-pandemic operating environment.
Speaking during a results briefing on 10 May, Szucs points out that because of under-capacity on some of these routes, which include trans-Pacific flights from the Philippines to North America, yields have gone up, allowing operators like compatriot Philippine Airlines to reap profits.
“There is that temptation to go in there and get some high yields. But we feel at some point there will be inevitable [market] correction,” he says.
“It is not what we do… it is not our DNA,” Szucs adds.
The low-cost carrier will focus its operations on what Szucs calls a “four-hour circle” from the Philippines, which refers to flights of about 4h from the country, offering it a catchment of over 2 billion people.
“We’ve got plenty of addressable markets… very close to home that doesn’t stretch or challenge the business model that we have been accustomed to,” he says.
Szucs was responding to a question on whether Cebu Pacific was eyeing the long-haul market, especially as other low-cost operators like India’s IndiGo step up to widebody long-range operations.
IndiGo in late April announced a commitment for Airbus A350 jets, comprising 30 firm orders and purchase rights for another 70. IndiGo chief Pieter Elbers said the order will allow IndiGo to “connect to the world” from India’s metro cities.
While Cebu has widebodies in its fleet – in the form of A330s – and a small long-haul network comprising points in the Middle East, Szucs says these are “very much outliers” to its business model. Furthermore, the airline utilises its widebodies to provide extra capacity on its short-haul network.
“One can anticipate that we will stick to our guns. We see a huge opportunity in this part of the world,” he adds.
The airline saw its first-quarter profit double as a jump in revenue – driven by strong passenger travel demand – outpaced an increase in costs.
