Cebu Pacific SWOT Analysis

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Cebu Pacific

Cebu Pacific Air conducts business in the Philippine air transportation sector as a carrier,

transporting people, mail, goods, and freight. It was founded in 1988 and is owned by the

Gokongwei family, with Lance Gokongwei serving as the President and Chief Executive Officer.

The airline operates the majority of domestic flights in the Philippines. It is headquartered at

Manila Ninoy Aquino International Airport, with secondary hubs at Mactan-Cebu International

Airport and Francisco Bangoy International Airport. They also work closely with sibling LCC

Cebgo (previously Tigerair Philippines), which the Cebu Pacific Group purchased from Tiger

Airways Holdings in March 2014. It currently has nearly 3,000 employees and operates, on

average, 340 flights a day, covering 34 domestic and 18 international destinations – this is

equivalent to around 64,000 seats offered in a day.

The company prioritizes the needs of its customers

and responds to them by offering convenient online

booking, punctual departures, a pleasant travel

experience, provides extra services like cancellation and

rebooking choices, in-flight shopping alternatives like the

selling of duty-free goods on overseas flights, and

services for luggage and travel-related goods. They use a

variety of channels for distribution, including the Internet,

direct booking sales, sales offices, call centers,

government and corporate client accounts, and third-party

sales outlets goods. Figure 1 Cebu Pacific Routes

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 The company expanded its operations to Asia-Pacific in 2000 and has kept making its

mark in the Philippine airline market. New aircraft will support their regional expansion plans,

further boosting the network. They operate one of the most modern fleets in the world and expect

delivery of seven brand-new Airbus A321CEOs, and 32 Airbus A321NEOs by 2022.

Cebu Pacific SWOT Analysis

Figure 2 Cebu Pacific SWOT Analysis Diagram

A. Strengths

Quick & Fast Delivery System: Cebu Pacific Air A is preferred for its fast delivery. They supply

shipment in 30 minutes precisely; if the consumer does not get it within 30 minutes, they will

provide "complimentary organization." They never get late.

Goods Return On Capital Expenditure: The more financial investments Cebu Pacific Air A has

made in its services and products, creating great franchisees/stores, and investing in its worker

trainings has returned high revenue streams in past years.

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Customer Services: Social media managers of Cebu Pacific Air A offer 24/7 help on their

websites and social media platforms through which they engage with clients. However, it creates

an excellent relationship between the clients and franchisees.

Quality Meals & Product Innovation: Cebu Pacific Air A is a fast-growing business and has

always valued its clients by offering them quality meals. These corporations are also tailored, and

Cebu Pacific Air A varieties offered by Cebu Pacific Air A. In the last 50 years, they have produced

numerous Cebu Pacific Air A types, like hand-tossed corp, potato wedges, cheesy-garlic bread,

and parmesan bread.

Fuel-efficient and sustainable fleet: Cebu Pacific became the first low-cost carrier in Southeast

Asia to incorporate the use of SAF into its operations when it took delivery of its third A330NEO

in May this year. The airline sustainability goal aligns with global aviation's commitment to

achieving zero carbon emissions by 2050. The company has made various investments that allow

it to become fuel-efficient to keep fares affordable for passengers.

It is the Philippines' Largest Air Carrier: In 2010, Cebu Pacific became the Philippines' largest

airline based on the number of passengers flown on domestic and international routes. According

to Civil Aeronautics Board data, Cebu Pacific flew 2.45 million total passengers in the first quarter

of 2010, nearly 110,000 more than Philippine Airlines, which carried 2.34 million systemwide

during the same period.

Cebu Pacific Air has the most aircraft for a low-cost carrier in the country

Cebu Pacific Air operates one of the youngest fleets in the world

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 B. Weaknesses

Delayed Flights: One of the weaknesses of Cebu Pacific is that it is known for its delayed flights,

especially in the Philippines. Regardless of the major fines imposed by the Civil Aeronautics

Board and the amount of money they have to spend on the compensation provided to passengers,

this problem remains unresolved. It might be reasonable if the causes of flight delays or

cancellations are beyond the airline's control, such as weather or air traffic congestion. However,

most of these causes are within the airline's control, such as scheduled mandatory aircraft

maintenance or extended servicing of aircraft. As a result, customers end up dissatisfied with the

services provided by the airline.

Additional Costs for Passengers: As a low-cost carrier, Cebu Pacific can offer cheap ticket

prices; however, this has its cons for the passengers. The airline can only make up for its loss in

revenue by charging additional fees for meals, seat allocation, baggage allowance, and

merchandise. Anything that the passenger wishes to avail of aside from their airfare has an extra

charge.

Limited International Network of Flights and Destinations: Less expenditure on research and

development activities can weaken the company's performance due to poor international market

knowledge. Most of the routes offered by Cebu Pacific are only on a local scale. In contrast, on

the global scale, it is limited only to South East Asia and Australian Region.

Poor Customer Service: Like their flights, Cebu Pacific's customer service response also takes

hours of waiting for the passengers. They are often deemed inefficient customer complaint

handling, which may trigger negative word of mouth and affect business growth. Their inability to

understand and respond to customers' needs and expectations will lead to an ineffective strategic

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decision-making process and difficulty in determining the potential improvement-seeking areas in

their services.

Franchise Related Issue: Disloyalty of franchise staff members. According to Philstar Global,

Speaker Pantaleon Alvarez threatened on Thursday to cancel the franchise of an airline company

if it would not transfer its domestic operations from the Ninoy Aquino International Airport Terminal

3 to its Terminal 2. — The challenge for Cebu Pacific is about the control of their employees who

cheats.

Operational Difficulties: Cebu Pacific only has limited operations due to the needed

improvements in their on-time performance. This resulted in cancellations that affected thousands

of passengers.

Need for high technology: Cebu Pacific lacks high-technology equipment compared to other

airlines. This makes the airline company stand out in the competitive market.

Net Income: The airline company's financial estimations and predictions do not match the

company's net income, which means that Cebu Pacific needs improvements in sales to increase

its net effectiveness and revenue.

C. Opportunities

High Growth rate for Air Cargo Market: Cebu Pacific had an increase of 27% in their revenue

for the first half of 2021 compared to the same period of the previous year amidst the pandemic.

This is due to the more robust demand for cargo since the COVID-19 cases are gradually

decreasing. The cargo market is a key component for importing essential commodities such as

electronics, automotive parts, and medical goods. Moreover, the largest airline carrier in the

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Philippines implemented hybrid flights carrying both passengers and cargo to boost its cargo

operation. The demand for cargo domestically and internationally is increasing, making it

profitable.

New Airbus Neo Fleet: Cebu Pacific has a total order of 16 A330neo, 16 A320neo, and 22

A321neo. The three aircraft variants are much more efficient and environmentally friendly than

the previous generation. The Airbus neo aircraft consume 25% less fuel, reduce C02 emission,

and ensures compliance with current and future sustainability requirements regarding noise and

emission. With the acquisition of the new aircraft, Cebu Pacific can now use Sustainable Aviation

Fuel or SAF, which can result in an up to 80% reduction in carbon emissions. Currently, Cebu

Pacific has 50 Airbus aircraft, comprising 43 A320 and 7 A330neo, while waiting for the remaining

of its order to Airbus.

Emerging technology: Looking at aviation broadly, the Cebu Pacific is challenged with various

new problems. Airports are in a period of hyper-competition, which means that an expanding

number of airports are fighting for a limited amount of resources. Digital technology has the

potential to provide real and concrete benefits to passengers. With improvements to flight

management operations, they should experience fewer delays and higher rates of baggage

reconciliation. Transitioning through the airport will become a much better experience for the

passenger with end-to-end biometrics, where you simply walk into the airport, and it's a smooth

and touch-free process aboard the plane.

Aviation Recovery: Travel restrictions in the region are gradually being lifted, allowing carriers

such as Cebu Pacific to resume international flights. As they optimize protocols to aid recovery,

Cebu Pacific anticipates increased demand for airline services in the Philippines and

internationally. Cebu Pacific would then operate at 88% pre-pandemic capacity this month as part

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of a network-wide uplift that sees its domestic power surpassing pre-pandemic levels. The

excellent progress has allowed the firm to carry more people and expand its freight services. Cebu

Pacific's earnings during the time more than tripled, reaching over P20 billion, due to an increase

in passenger numbers and cargo handling. However, overall expenditures for the carrier in the

first half of 2022 climbed, reaching P28 billion, up from P18 billion the previous year.

MRO Digitalization: The backbone of the general, commercial, and defense aviation industries'

smooth operation is MRO, which is an ecosystem of interconnected supply chains and repair

facilities for heavy maintenance, line maintenance, aircraft completions, interiors, paints,

component repairs, part-out, teardown, and recycling. Cebu Pacific, considering buying such

software, may have many opportunities if they adopt the most advanced MRO Digitalization. With

the most up-to-date MRO Digitalization, Cebu Pacific can have complete traceability in all

operations and produce large volumes of data that can be reviewed and arranged into blockchains

to enhance their services. Digitization facilitates paperless workloads while improving operational

efficiency. As such, a program aids in predictive maintenance to lower expenses and aircraft

downtime, it will assist them to have a faster turnover.

D. Threats

Oil Price Hike: The fuel price increase leading to higher costs and a lower profit margin makes it

difficult for the airlines to drive revenue.

A Decline in Economic Growth: The deteriorating economic conditions of the Philippines affects

the business performance of companies because of how it directly influences the customers'

spending patterns and purchasing power (how frequently they fly). (Depreciating value of the

Philippine Peso and increase in fuel prices also contribute to the purchasing power of people)

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Changes in Rules and Regulations: Possibility of change in the regulatory framework and new

stricter regulations. (It makes compliance with legal standards more complex and challenging for

the business organization. Inability to comply with the said changes in laws increases the risk of

expensive lawsuits.)

Increasing Competitors: The growing number of direct and indirect competitors affects the

organization's ability to sustain and expand its customer base. (Air Asia is one notable competitor

in the domestic market, which also caters to a larger pool of destinations. Smaller competitors are

also present, such as Sky Pasada, which caters to Northern Luzon, Air Juan, Sky Jet Airlines,

and the like.)

Negative Publicity and Criticism from Environmentalists: The growing environmental

sustainability trends constitute a significant threat when offered products/services are not

environmentally friendly. (Airliners generally contribute to a large amount of CO2 emissions. It

draws negative publicity and criticism from environmentalists and affects the brand image in a

competitive market.)

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REFERENCES

Amojelar, D. (2022, July 18). Cebu Pacific Receives new Airbus A320 adapted to
Renewable source. Retrieved from https://manilastandard.net/business/transport-
tourism/314244779/cebu-pacific-receives-new-airbus-a320-adapted-to-renewable-source.html

Aviation Week Network (2022, August 24). Cebu Pacific Eyes Further MRO Digtalzation.
Retrieved from http://aviatioweek.com/mro/emerging-technologies/cebu-pacific-eyes-further-
mro-digitalization

Cebu Pacific Airline Profile | CAPA. (n.d.). Retrieved October 12, 2022, from
https://centreforaviation.com/data/profiles/airlines/cebu-pacific-5j

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retrieved from https://swotanalytica.com/darden/cebu-pacific-air-a.php

SWOT PESTLE.com. (2019.) Cebu Pacific Air Inc. SWOT & PESTLE Analysis, Retrieved
October 11, 2022, from https://www.swotandpestle.com/cebu-pacific-air/

Scribd. (n.d.). Cebu Pacific Swot Analysis. Scribd. Retrieved October 11, 2022, from
https://www.scribd.com/doc/272832971/Cebu-Pacific-SWOT-Analysis

Soni, P. (2020, November 9). Digital Transformation: Defining the Present and Future of
the MRO sector. Retrieved from https://coppermobile.com/blog/future-of-the-mro-sector/

Yang, O. (2021, August 24). Philippines' Cebu Pacific Air Reports Growth In Cargo
Revenue. Retrieved from https://www.smartaviation-apac.com/2021/08/philippiness-cebu-
pacific-air-reports-growth-in-cargo-revenue/

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