AirAsia X and Cebu Pacific: Setbacks in Long-haul Markets (2)

AirAsia X is not the only long-haul budget carrier struggling to define a network’s strategy. Cebu Pacific was among Southeast Asia’s  low cost airlines to pioneer the development of a long haul network to the Middle East.

However, the expansion in extra-long haul markets has been risky: the Filipino low-cost carrier is withdrawing almost all of its Middle East flights because of rising competition on these routes, announced recently the carrier.

By early July, Cebu will then suspend services from Manila to Doha, to Kuwait City and to Riyadh, Saudi Arabia. Kuwait was already suspended last week, Doha will follow on July 1st, Ryadh on July 3. The competition from Middle East carriers explain the airline’s struggle. Cebu Pacific announcement follows the decision by Philippine Airlines (PAL) to suspend its Manila-Abu Dhabi route in July.

“The entry of Cebu Pacific into these markets benefitted passengers with lower fares and more choices. Of late, other carriers have aggressively added more flights, which has resulted in substantial oversupply of seats and fares that are so low, hence making the routes unsustainable,” explained in a statement Atty JR Mantaring, vice president for corporate affairs of Cebu Pacific.

“We have to continuously review our routes to ensure their viability. At this point, it makes more sense for us to re-deploy the aircraft used for our Riyadh, Doha and Kuwait service to routes where we can further stimulate demand and sustain our low fare offers.”

The airline will only retain its other long-haul services to and from Dubai, Sydney and Guam for the time being, all the routes being served out of Manila by a high-density Airbus A330-300 with over 400 seats. The airline already announced to increase frequencies to those destination in the near future and is looking to eventually serve Melbourne as well as Honolulu.