By Siva Govindasamy
January 3, 2011
Philippine low-cost carrier Cebu Pacific will consider starting long-haul low-cost services if it sees strong demand for certain point-to-point routes.
"We are looking at the opportunity," Cebu Pacific president and CEO Lance Gokongwei told Flightglobal Pro's sister publication, Airline Business, in an interview.
"There are certain point-to-point markets we would have to look at. The Middle East has 2.5 million Filipinas; the USA has four million Filipinas. These are quite underserved."Gokongwei said the airline will go ahead only if it can achieve a sustainable unit-cost advantage and potentially make money for its shareholders.
"I need to be personally convinced that there is a market, and I think there is a market only if you are very selective about which routes you go into with this," said Gokongwei. "Once we feel that we have the capability to do so, we will."
The airline, which operates Airbus A320-family aircraft and ATR 72-500s, has orders for the A321neo. It has not ordered any widebodies, which will be needed for long-haul operations, but Gokongwei said there have been discussions about widebodies.
"As part of our business plan, we need to know the operating cost of all aircraft. So we've had discussions about widebodies with all the major suppliers," Gokongwei said.
If the company goes ahead, the long-haul low-cost operation is likely to have a separate management team. This would be similar to Singapore Airlines' subsidiary, Scoot, and AirAsia X, an associate of Malaysian low-cost carrier AirAsia.
"It is difficult to do because whenever you bring in new aircraft, it adds complexity. You need management and technical capability, the distribution channels are important," Gokongwei said.
"It can enhance the brand, just like what AirAsia X has done for AirAsia, but it adds complexity. So if you want to do it, you need to make sure you have completely different teams. Don't confuse the management by having them do both," Gokongwei added.