Cebu Pacific and Scoot to retime Manila-Singapore flights as their JV is finally implemented

Cebu Pacific and Scoot plan to adjust their Manila-Singapore schedules, finally leveraging the anti-trust immunity (ATI) they have had on the route since 2015.


 Summary:

  • Cebu Pacific and Scoot plan to introduce a new joint schedule on the Manila-Singapore route, resulting in a better spread between their combined five daily flights.
  • Some Cebu Pacific and Scoot flights currently operate wingtip to wingtip despite the two airlines having antitrust immunity to coordinate Manila-Singapore schedules since 2015.
  • The two airlines combined have a 36% capacity share on the Manila-Singapore route.

Cebu Pacific and Tigerair (now Scoot) have been partners since 2014. However, they never implemented joint sales and a coordinated schedule after securing ATI in 2015.

Cebu Pacific, Tigerair and Scoot are also founding members of the Value Alliance, which was established in 2016. Scoot and Tigerair merged last year.

Cebu Pacific has operated three daily flights on the Manila-Singapore route in recent years while Tigerair/Scoot has had two daily flights. Both Scoot frequencies and one of the Cebu Pacific frequencies are currently operated with 180-seat A320s, while two of the Cebu Pacific flights operate with 436-seat A330-300s. Cebu Pacific currently has about a 27% share of Manila-Singapore seat capacity while Scoot has around 9%.

Two of the Cebu Pacific and two of the Scoot/Tigerair flights have surprisingly continued to operate at nearly identical timing the last three years despite the two airlines having the ability to coordinate their Manila-Singapore schedules.

During the airline’s 2Q2018 results call, Cebu Pacific chief executive advisor Mike Szucs told analysts that the two airlines have agreed to a new joint schedule on the Manila-Singapore route and are now more actively working their strategic partnership. He said the five daily flights operated by the two airlines will be spread out better, benefitting Cebu Pacific, Scoot and consumers. “Currently we fly wingtip to wingtip on two,” he acknowledged.

In the current northern summer schedule, Cebu Pacific and Scoot both operate a 515am departure from Manila. Scoot’s other Manila-Singapore flight departs at 1030pm, or just 50min after Cebu Pacific’s 940pm departure. Cebu Pacific also has a Manila-Singapore flight departing at 130pm.

In the winter schedule, there is only 35mins between Cebu Pacific’s early morning departure at 530am and the Scoot’s departure at 605am. In the evening the flights from Manila are 25mins apart, with Scoot departing at 935pm and Cebu Pacific departing at 10pm.

From Singapore, the overlap is not as bad but still far from ideal. Scoot currently has a Singapore-Manila flight departing at 550pm, or only 50 mins before a 640pm departure for Cebu Pacific. Scoot’s other Singapore-Manila flight departs at 1255am while Cebu Pacific’s other two flights depart at 315am and 1035am.

In the winter schedule, Scoot’s evening departure is 520pm, or 90mins before a 650pm departure for Cebu Pacific. Scoot’s other Singapore-Manila flight departs in winter months at 150am, or 1hr40min before Cebu Pacific’s 330am departure.

Cebu Pacific and Scoot are still currently selling the same Manila-Singapore flights for winter 2018/2019 and summer 2019. A new schedule will likely be announced shortly.

It is surprising Cebu Pacific and Scoot/Tigerair did not try to coordinate their Manila-Singapore schedules in the initial three years after securing ATI. Cebu Pacific and Tigerair forged a strategic alliance in early 2014 and began interlining. In Sep-2014, the two companies applied to the Competition Commission of Singapore (CCS) for approval to operate jointly, and to sell and market routes between Singapore and the Philippines.

The CCS approved the alliance in Sep-2015, after Cebu Pacific and Tigerair agreed to revise their agreement to remove the Cebu-Singapore and Clark-Singapore routes. The airlines were cleared to coordinate prices and schedules on the core Manila-Singapore route, which the CCS deemed was competitive enough to support a JV between two airlines without impacting consumers.

However, Cebu Pacific and Tigerair/Scoot until now never coordinated prices or schedules. Their alliance instead has only included interlining, which is relatively insignificant and does not require CCS approval. The volume of tickets sold on their interline arrangement also has been very low, partially because a lack of initiative or marketing.

CAPA stated in a Jan-2018 report that “Cebu Pacific and Scoot are optimistic about growth prospects in the Singapore-Philippines market, but are expanding independently. The outlook for both airlines would be brighter, and the prospects for Singapore-Philippines growth bigger, if they fully exploited the partnership opportunities”.

See related report: Singapore-Philippines aviation market: rapid growth, but Cebu Pacific and Scoot JV still unfinished 

Mr Szucs said earlier this month that Cebu Pacific and Scoot are now preparing to use ATI “more effectively”. He said Cebu Pacific’s performance in the Singapore market has been good – and has improved over the last year – but should become even better as it finally starts to work more closely with Scoot.

In addition to the three daily flights from Manila, Cebu Pacific serves Singapore with five weekly flights to Cebu, five weekly flights from Clark, two weekly flights from Davao and two weekly flights from Iloilo. However, Cebu Pacific does not have ATI with Scoot on the four smaller routes. Scoot also serves Cebu-Singapore (four times week) and Clark-Singapore (daily) but does not serve Davao or Iloilo. Scoot plans to resume Kalibo-Singapore, a route Cebu Pacific does not operate, after Boracay island reopens following a six month closure in Oct-2018.

It would make sense for Cebu Pacific and Scoot to reapply for ATI to coordinate their other Philippines-Singapore routes although for now there are no such plans. It would also make sense for Cebu Pacific and Scoot to cross-sell their Manila-Singapore flights. Currently they only offer their own flights on their respective websites.