WITH demand for logistics services seen spiking in the next few years due to the accelerating shift to the digital arena, budget carrier operator Cebu Air Inc. is making its foray into the specialized transport cargo business, partnering with a Swiss company to convert two of its smaller aircraft as cargo planes.
Cebu Pacific President Lance Y. Gokongwei said his group has tapped IPR Conversions Ltd. to retrofit two of its ATR 72-500s—turboprops used for interisland travel—to cargo aircraft capable of carrying more than seven tons of load, including seven-unit load device containers.
“With the freighter aircraft, we will further support the growing needs of the logistics industry, especially as the Philippines’s e-commerce businesses expand rapidly and look for faster delivery schedules,” he said on Monday.
Conglomerates in the Philippines started diversifying their portfolios in 2016 to include logistics in their businesses, as more and more Filipinos shop for their basic needs and wants online.
The e-commerce industry in the Philippines is expected to amount to $1.63 billion by year-end, with a projected annual growth rate of 15.2 percent through 2022, research company Statista said.
However, logistics remain to be “a major pain point for e-commerce players in the Philippine market,” a report published by the Department of Trade and Industry said.
Thus, Cebu Air’s move to convert two of its smaller turboprop planes into cargo aircraft may prove to be a good move, Gokongwei said.
The ATR’s long body, increased wingspan and exceedingly powerful turboprop engines make it the ideal aircraft to transport high-value and time-sensitive commodities, especially given that the aircraft can land in more than 33 percent of airports in the Philippines, he added.
“We will be able to offer cargo capacity that no other carrier in the Philippines can provide,” Gokongwei said.
One of the two aircraft is expected to finish by the end of 2018.
Cargo accounted for only 6 percent of Cebu Pacific’s revenues in 2017, reaching P4.06 billion as of end-December.
Meanwhile, Cebu Air has divested 60 percent of its shares in 1Aviation Ground Handling Services Corp. to Philippine Airport Ground Support Solutions Inc. (PAGSS) and Jefferson G. Cheng, an officer of Philippine International Air Terminals Co. Inc.
The company was incorporated in March.
Gokongwei welcomed this “development as this investment by Cheng and PAGSS brings decades of experience in ground handling for the benefit of airline passengers.”