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CEB needs to operate at 50% capacity to survive

In order to be sustainable for the longer term, Cebu Pacific (CEB)  has to operate at 50 percent capacity, according to Candice Iyog, Vice President for Marketing and Distribution.

Before the government reverted to more strict lockdowns the other day, again placing the metropolis under modified enhanced community quarantine (MECQ), CEB has been operating at  only 10 per cent of its network capacity.

The airline cannot survive at this level, she confirmed.

Prior to the reimposition of MECQ this week, CEB rotated about half of its fleet of 76 planes to serve 40 to 50 flights daily.

Now, the airline cancelled all its domestic  flights to and from Metro Manila from August 4  to 18, 2020.

It also cancelled flights between Manila and Taipei, along with all other international flights except Manila-Dubai, Manila-Seoul (Incheon) and Tokyo (Narita)-Manila, as well as Osaka-Manila and Manila-Singapore.

It will continue to operate its domestic flights from  Clark-Cebu-Clark and Cebu-Davao-Cebu, along with its all-cargo flights to ensure transport of essential goods across the country. 

Already, CEB has sent nine of its planes for indefinite safekeeping at the Asia Pacific Aircraft Storage in Alice Springs, Australia to cut costs.

The planes in storage include seven Airbus A321CEOs and two  A330s. 

“The desert is the best place to store aircraft,” she noted by way of explaining the choice of Alice Springs. “They have to be in a dry place to minimize damage.”

CEB plans to put more of its aircraft on indefinite storage, considering the volatility in market demand and travel restrictions.

“We do not know how long this will be drawn out,” the VP conceded.

“We used to base our forecasts on historical load factors depending on the season. Now, everything’s out of the window.”

“We are still finding our feet in terms of judging where to base the demand,” she pointed out.

Before the pandemic, CEB was mounting 400 to 450 flights per day.

But prior to the second round of MECQ,  they are down to 40 to 50.

And they usually fly half-empty. 

Their load factor ranged between 50 to 60 per cent, depending on the route.

“The ball hasn’t settled,” she admitted. “We do a lot of trials. The schedules are fluid.”

In pre-pandemic times, their schedule was fixed 12 months in advance.  Operating in the pandemic changed that to 2 months and as short as 2 weeks.

It does not help that the Local Government Units (LGUs), who determine where their planes can land, who will be allowed to disembark and who will be denied entry, have no standardized requirements and regulations to date.

“It’s challenging ” Iyog underscored. “It will be great if they’ll have standard requirements.”

Only 32 airports in the archipelago have re-opened for business.

However,  the the Ninoy Aquino International Airport (NAIA) is now closed for domestic flights under the reimposed MECQ although international flights are still  allowed, subject to restrictions.


Source: Manila Bulletin (https://mb.com.ph/2020/08/06/ceb-needs-to-operate-at-50-capacity-to-survive/?utm_source=rss&utm_medium=rss&utm_campaign=ceb-needs-to-operate-at-50-capacity-to-survive)

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