(MENAFN- Khaleej Times) Cebu Air, the Philippines' biggest budget carrier, plans to get 33 per cent of sales from long-haul flights within five years as AirAsia and Tiger Airways Holdings challenge its grip on the domestic market.
The airline, which operates as Cebu Pacific, will begin the push in the second half of 2013 by adding flights to the UAE and Saudi Arabia, president Lance Gokongwei said in an interview in Manila. It will target the more than three million Filipino workers employed in the Middle East, who generally fly there via Singapore or Hong Kong.
"Our key project next year is the long-haul expansion," Gokongwei said. Singapore Airlines and Cathay Pacific Airways "will be my main competitors" on Middle East routes as no Philippine carriers fly them, he said.
Cebu Air intends to get 25 per cent of the 50 billion peso ($1.2 billion) Philippine-Middle East market by 2015, Gokongwei said. The carrier has also said it may fly to Australia, the US and Europe as its 45 per cent share on domestic routes is threatened by Philippine Airlines and low-cost carriers.
"This expansion to the Middle East can give Cebu Pacific an edge because its rivals don't fly there," said Edmund Lee, an analyst at COL Financial Group. In the domestic market, "I don't see competitive pressure easing anytime soon," he added.
Tiger Air, part-owned by Singapore Air, entered the Philippine market this year by buying a 40 per cent stake in Southeast Asian Airlines. AirAsia's Philippine venture began flights in March and it plans to have a fleet of 16 planes in five years. Philippine Air and its low-cost affiliate Air Philippines are also expanding after winning investment from San Miguel.
The increasing competition has contributed to Cebu Air dropping 12 per cent this year in Manila trading, compared with a 24 per cent gain for the benchmark Philippine Stock Exchange Index.
The budget carrier has probably "seen the worst" in its share price as it is addressing the risks from greater competition, Gokongwei said.
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