Steve Dicdican, CEO, Mactan-Cebu International Airport: Interview

Interview: Steve Dicdican

Why is it necessary to develop master plans for regional aviation hubs?

STEVE DICDICAN: If the different regions are to develop in a sustainable manner, then it is important to create varied transportation options to connect them without having to travel through Manila. This means that the country needs to develop regional transport hubs that could have a multiplier effect on secondary cities.

To achieve this, stakeholders must develop master plans for these cities: large, long-term projects, so that they can expand organically as demand increases. Taking Cebu as an example, the airport’s largest constraint in becoming a major international hub is its passenger capacity. The terminal was originally built for 4.5m passengers per year, but in 2017 it handled 10.2m, which is why a second terminal is being built and is scheduled to open in June 2018. After the terminal addition, capacity will be around 13m passengers, with the potential to double, and this is projected to suffice until the late 2030s.

Currently, the majority of Cebu’s passengers are domestic, with only 3m passengers coming from abroad per year. However, this additional capacity will create opportunities to attract more overseas routes. New airports throughout the region, such as the Panglao Island airport under construction in Bohol, will serve a complementary function in solidifying Cebu’s position as a major aviation hub.

How do you assess the impact of improved connectivity with China on the tourism industry?

DICDICAN: Since the Chinese government has taken a more liberal stance on its citizens travelling overseas, Chinese airlines have become more aggressive in expanding their routes to the Philippines. Chinese demand for travel to Cebu is growing to the extent that sometimes the airport must turn Chinese flights away due to overcapacity. Indeed, Chinese demand is one of the main reasons for adding a second terminal. We anticipate that China will overtake South Korea and Japan to become Cebu’s primary source of overseas tourists in the coming years, although South Korea is currently the leader by a significant margin.

How are low-cost carriers shaping the developDICDICAN: In the eyes of airports, all passengers – from first class to economy – pay the same terminal fee, so any traffic is positive. This is why airports will continue to support low-cost carriers. Air travel is unique in that consumer decisions are generally motivated by cost; even passengers who can afford higher-end carriers are choosing low-cost carriers, so higher-end carriers are being used more often for long-haul flights, while low-cost carriers are playing an increasingly significant role in short-haul flights and domestic travel. Ultimately, it is the low-cost carriers that have made Cebu a financially viable destination for domestic and regional travellers.

What is required in terms of stakeholder coordination to ensure increased tourist arrivals are sustainably managed by destination airports?

DICDICAN: In Cebu, the local government already effectively coordinates throughout the region, hosting committees with members of the airports and local government units of destination cities. There are already many infrastructure projects under way or in the pipeline to improve airport accessibility, though construction creates short-term traffic congestion. The largest infrastructure projects take about three years to complete. Construction is in the planning stage for the third bridge from Mactan to Cebu City, and there is talk of a fourth bridge connecting directly to the airport to be constructed soon thereafter. There is also a lot development happening around Lapu-lapu, which is poised to be a prime and sustainable tourist destination within the next several years.