Cathay cautious of year ahead

Cathay cautious of year ahead
By admin

Cathay Pacific remains cautious for the year ahead, with no clear signs of an upturn.

Tom Wright, general manager South Asia, Middle East and Africa, told Travel Today that 2012 had "definitely not been easy", with the Hong Kong-based airline bracing for more tough times on the back of persistently high fuel costs and a troubled world economy.

"Things are not looking great," he admitted. " Front end corporate travel is down generally worldwide. The message from our bosses is that we need to tighten our belts until we see that front end start to move, because that is the indicator that business deals are being done again."

Cargo makes up a significant portion of Cathay's business, and also acts as a "bell weather" for the industry as a whole, he explained.

"The cargo market always seems to lead a downturn and it seems to also pick up before the passenger side", Wright said. "Are we seeing things start to pick up on the cargo side? No, not really."

The industry's cyclical nature has seen Cathay learn to manage its operations in the "good times" on the assumption that the environment could deteriorate at any given moment, Wright said.

"You've got to be continually looking at your costs, running the most efficient operation because the good times can mask a lot of problems that airlines might have."

Meanwhile, Cathay confirmed it will cut capacity in 2013, although Wright insisted the airline remains committed to keeping its network intact.

He said "trimming" is the "right start" for the carrier in such a difficult operating environment until more fuel efficient aircraft arrive.

"Very sadly, with fuel where it is, the great 747-400s which used to be our mainstay have become unsustainable," he said. "So until we have sufficient long haul aircraft that can do those jobs, we've decided to cut down the long haul and instead increase our regional flights."

The airline, along with subsidiary DragonAir, recently started services to Indian cities Hyderabad and Kolkata and is looking at new destinations in China and across Asia "because we can make money flying those routes".

The airline is also committed to working closely with aircraft manufacturers Boeing and Airbus to enhance fuel efficiency for newer generation aircraft, both for economic and environmental reasons.

Wright said innovation and product development remains a priority despite the high costs involved.

"One of the things we could be cutting is product and innovations because a lot of that stuff is expensive," Wright admitted. "But we need to keep being competitive in terms of our product offering."

He highlighted the long lead times involved in implementing product changes, meaning the carrier cannot afford to wait for an improvement in conditions to evolve.

The airline is in the process of rolling out lie-flat beds across all its regional services.

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