Greenway, who leads national carrier Saudia’s budget airline flyadeal, was preparing a $1.2-billion order for new Airbus A330neos. But he wanted firsthand insights on operating these jets in a high-density setup that would match their low-cost carrier model.
Aircraft maker Airbus and engine maker Rolls-Royce executives were unanimous in their advice: talk to Cebu Pacific, the Gokongwei family-led budget airline pioneer.
A bold idea in a casual setting
Greenway and his team were soon onboard one of Cebu Pacific’s 11 A330neos, traveling from Dubai to Manila. The technical meeting pushed through, but it was during dinner with Szucs and Cebu Pacific officials when an interesting proposition emerged.
On Wednesday, the two fast-growing carriers unveiled a historic strategic partnership starting with Cebu Pacific leasing to flyadeal two Airbus A320s to help support the latter’s capacity during their peak season from June to August.
This is a wet lease, meaning Cebu Pacific supplies the plane, crew, and maintenance, allowing the airline to earn revenue during the Philippines’ lean season when planes would’ve just been parked.
The planes will essentially be the same Cebu Pacific aircraft and crew but with flyadeal decals.
“To wet lease our own capacity to another airline is extremely rare. We’re testing the waters. We’re kind of the pioneers in many ways of doing this so it will be two aircraft this year,” Szucs said.
“We’re investing in the fleet, and it serves us really well in Q1 [first quarter], Q2, and Q4. But frankly, we end up with too many aircraft in Q3,” he added.
Ramping up in the coming years
For Szucs, this is an opportunity that can scale up as it receives new aircraft in the next few years.
Cebu Pacific, which expects to end 2025 with a fleet of 100 aircraft, sealed a landmark deal last year to buy as many as 150 Airbus planes for $24 billion.
“So what is two aircraft [under wet least] this year could be considerably more in the years ahead and that’s very much the intention,” Szucs said.
Win-win deal: When one slows, the other peaks
Through their initial dinner conversation with flyadeal last February, Szucs quickly realized the lean season for Philippine carriers happens to be the peak season for the Saudi Arabian market, as locals fly to cooler climates to escape the scorching summer months.
“Fleet costs are substantial. These are very expensive assets and therefore [it’s important] if you can find productive ways to use your assets in a time when they would otherwise be unproductive,” he said.
Robust business in Saudi Arabia
Friendly discussions also came about since both Cebu Pacific and flyadeal are strong players in their respective markets and do not directly compete for business.
“The thing is we’re not competitors. It’s not as if we’re in overlapping markets in a huge way. We don’t touch each other at all,” Greenway said.
He said flyadeal is rapidly expanding its fleet with plans to grow from 38 jets to over 100 aircraft in four years. Leasing aircraft during strategic periods allows the carrier to grow efficiently.
Added aircraft helps it serve key routes, including the roughly 1.5-hour Jeddah to Riyadh flights, which could soon be the busiest route in the world, Greenway said.
“We have alone 25 flights a day between Jeddah and Riyadh. There are over 75-80 flights a day just between Jeddah and Riyadh,” he added.
Codeshare talks on the horizon?
What happens with flyadeal’s excess capacity during the rest of the year when business slows down?
Thanks to this strategic partnership, Cebu Pacific can then wet lease aircraft from flyadeal for its busy fourth-quarter trips since the two airlines operate similar fleets and configurations.
With flyadeal looking to expand to Southeast Asia by 2027, their memorandum of understanding opens the door to future joint commercial and marketing deals.
Szucs said this could also involve a potential codeshare agreement, which means both airlines sell seats on each other’s flights.
More than pure luck
Reflecting on their dinner last February, Szucs said opportunities often come when both sides are prepared.
In Cebu Pacific’s case, it was their steady operations during the pandemic, and strong relationships with suppliers and partners, that set the stage for this partnership.
“I think we could often say great things, great strategies and great planning,” he said.
“Sometimes it pays to be fortunate. And I think this is one of those occasions where we just sort of stumbled on it but I think the reason we stumbled upon it was because the two businesses were prepared,” he added.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
