Cathay eyes 20% rise in MidEast passenger traffic

Hong Kong carrier sees new Abu Dhabi route boosting business travel.
Cathay pacific, NEWS, Aviation


Cathay Pacific Airways expects double digit growth in passenger traffic from the Middle East this year after launching a direct route between Abu Dhabi and Hong Kong, its COO said.

Asia's No.4 carrier by market value expects passenger traffic to jump by 10 percent globally as it recovers from falling air travel after the financial crisis, chief operating officer Ivan Chu said.

“[But] with Abu Dhabi we would like to see double digit growth in this part of the world… It will be close to 20 percent,” he told Arabian Business in a telephone interview.

The Abu Dhabi route marks Cathay’s fifth in the Gulf, following services to Dubai, Bahrain, Jeddah and Riyadh. The route will be serviced by wide-body Airbus 330-00 and A340-300 aircraft and will operate four times a week between the UAE capital and Hong Kong.

The airline said earlier this year it would spend more than HK$1bn on new business-class cabins to compete with rivals such as Emirates Airline and Singapore Airlines, and capitalise on Hong Kong’s strength as a financial centre.

“Abu Dhabi is the fifth destination in the Middle East. We believe that Abu Dhabi will be good [for] business travel and corporate travel between the two places,” said Chu.

Cathay Pacific Group posted a record full-year profit of HK$14.04bn ($1.8bn) in 2010, a year-on-year increase of nearly 200 percent. The group, which includes Cathay Pacific and fellow Hong Kong carrier Dragonair, carried a total of 26.8m passengers last year.

But Cathay is facing rising competition, higher fuel prices and slower demand in quake-hit Japan, which accounts for up to eight percent of revenues. The airline has looked to its links with China, the world’s second largest economy, as a significant opportunity.

Looking forward to 2011, Chu said he was forecasting a “great year” for the airline, but was concerned about growth levels in the cargo sector.

Cathay is the world’s biggest international air cargo carrier and said earlier in June it was forecasting growth of five to six percent year-on-year in the second half of 2011.

“Load factor has come down a few percent so number of passengers is less,” Chu said. “ But yields are up and growing strongly. Air freight, which is a major contributor of our performance and 30 percent of our revenue, is softening in the second and third quarter as well so we worry about that.”

Rising oil price remains a concern for the airline as the single biggest and most volatile cost for carriers, Chu said.

“It is our single biggest cost. Last year it was 36 percent of our cost, so we are naturally concerned with the increase. It is something we are watching very closely and we are trying to mitigate some of the negative cost impact.”

Widespread political unrest in parts of the Arab world has hindered revenues for a number of international airlines, with Lufthansa forecasting a 10 percent decline in 2011 revenues.

Chu said Cathay would see little impact as it did not reduce its scheduled flights to the region.

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