Cathay eyes 20% rise in MidEast passenger traffic

Hong Kong’s flagship carrier sees new Abu Dhabi route boosting business travel
Cathay eyes 20% rise in MidEast passenger traffic
By Shane McGinley
Sun 12 Jun 2011 10:32 AM

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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