‘Oversupply’ forces Cebu Pacific to suspend 3 flights to Middle East

CEBU PACIFIC on Wednesday said it will suspend its long-haul service from Manila to three Middle Eastern cities, citing “oversupply” amid intense competition from Gulf carriers.

In a statement, the Gokongwei-led budget carrier said it will end its Manila-Riyadh service on June 13, while the last KuwaitManila flight will be on June 14.

Cebu Pacific’s Manila-Doha-Manila route will mount its last flight on July 1. On the other hand, the last Manila-Riyadh flight will leave on July 2, while the final RiyadhManila flight will depart on July 3.

“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,” Cebu Pacific Vice-President for Corporate Affairs Paterno S. Mantaring, Jr. was quoted as saying in a statement.

Mr. Mantaring said the airline has to continue reviewing its 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,” he said.

The airline said it will continue to fly long-haul services to Dubai, United Arab Emirates and Sydney, Australia, “with a view to increasing frequencies to these destinations in the future.”

On Monday, Philippine Airlines said it is temporarily suspending its Manila- Abu Dhabi flights starting July 8.

The Lucio C. Tan-led carrier said the suspension of the ManilaAbu Dhabi service is to allow PAL to undertake route assessment.

PAL continues to fly to Dubai, Doha, Jeddah, Riyadh, Kuwait and Dammam.

Aside from stiff competition from Gulf carriers Emirates, Qatar and Etihad, Cebu Pacific and PAL have also been affected by higher fuel prices and a weaker Philippine peso against the US dollar in the first three months of 2017.

Cebu Air, Inc.’s net income plunged 68% to P1.28 billion in the first quarter, dragged by a 20% rise in operating expenses to P14.302 billion. Revenues went up 5% to P16.86 billion.

PAL, on the other hand, posted a net loss of P1.12 billion in the January to March period, reversing a P2.9-billion profit during the same period a year ago. Revenues jumped 14% to P33.32 billion, but expenses rose at a faster pace of 32% to P34.35 billion on higher fuel spending, and aircraft lease charges.

Shares in Cebu Air closed 0.15% lower to P99.25 each, while PAL shares added 2 centavos to close at P5.38 apiece. —