CX°/KA°/LD | Swire Group: Cathay Pacific/Dragonair/Air Hong Kong

[Kaitak747]

Originally Posted by aab7772003

It would be interesting to see when CX will launch flights to MUC because CX is very interested in flying into MUC and thinks HKG can sustain more than the daily LH service to MUC.

I have no idea whether CX has intention to launch flights to Munich or not, but since the economy is bouncing back sharply, I reckon this route would be commercially viable if they have good marketing strategy. By the way, I also hope CX would resume services to Zurich asap.

[hkskyline]

[Kaitak747]

Originally Posted by aab7772003

The only possible South American route for CX is to Brazil; CX just has to find out how it could make money on it. Network density (frequency) and network scope (numbers of destinations) determine the maximum profits an airline could make.

Originally Posted by hkskyline

Not really. This super long-haul flight will easily tie up at least 4 aircraft if doing daily service. Is there enough J passenger as Y alone will not likely breakeven. Note that even with a lower cost-base, Chinese carriers are not starting this route, and the Japanese are giving it up. Frequency matters for the established business routes. Whether there is an established market for direct to South America is highly questionable at this point. You increase frequency when you know you are making money and there are prospects for that. Doing codeshare from Australia seems the best solution right now.

Just my rough imagination. No idea whether it could be lucrative


HK - New York - Rio de Janeiro or Sao Paulo
HK - San Francisco - Rio de Janeiro or Sao Paulo

[aab7772003]

Originally Posted by hkskyline

Not really. This super long-haul flight will easily tie up at least 4 aircraft if doing daily service. Is there enough J passenger as Y alone will not likely breakeven. Note that even with a lower cost-base, Chinese carriers are not starting this route, and the Japanese are giving it up. Frequency matters for the established business routes. Whether there is an established market for direct to South America is highly questionable at this point. You increase frequency when you know you are making money and there are prospects for that. Doing codeshare from Australia seems the best solution right now.

Currently, SQ, KE, CA, MH trapsort passengers between Asia and South America direct. I am not talking about daily Hong Kong - South America services. No single airlines provide Asia - South America daily services, nor will there be for a long time. The advantage CX has over Mainland Chinese carriers is its shuttle services to Hong Kong from all major Asian metropolis.

The only possible South America routes from CX are HKG - SYD/AKL/JFK - GRU.

[hkskyline]

Originally Posted by aab7772003

Currently, SQ, KE, CA, MH trapsort passengers between Asia and South America direct. I am not talking about daily Hong Kong - South America services. No single airlines provide Asia - South America daily services, nor will there be for a long time. The advantage CX has over Mainland Chinese carriers is its shuttle services to Hong Kong from all major Asian metropolis.

The only possible South America routes from CX are HKG - SYD/AKL/JFK - GRU.

Do we have 5th freedom to pick up from any of those stopovers for the onward trip to South America?

[aab7772003]

Originally Posted by hkskyline

Do we have 5th freedom to pick up from any of those stopovers for the onward trip to South America?

US West-Coast - South America is not really a high-demand market.

Hong Kong does not want to have the Open Skies with many countries, namely the US.

I do not think the Hong Kong aviation industry and Cathay Pacific need protections these days, especially since CX has been so used to compete with 5,6, 7 carriers on many routes.

Originally Posted by aab7772003

Something to keep in mind before another "we have lost the leadership in this area within the Greater China" déjà vu.

Cathay Pacific is competitive enough.
Hong Kong will not be the only and biggest airport gateway for the Greater China.
The only sustainable solution to reinforce the global competitiveness of HKIA and CX is to increase the number of destinations HKIA serves.

[hkskyline]

Originally Posted by aab7772003

US West-Coast - South America is not really a high-demand market.

Hong Kong does not want to have the Open Skies with many countries, namely the US.

I do not think the Hong Kong aviation industry and Cathay Pacific need protections these days, especially since CX has been so used to compete with 5,6, 7 carriers on many routes.

I doubt HK government can negotiate such 5th freedom, hence the economics will be challenging. It's not a matter of HK's industry willing to do it, but rather whether foreign governments are willing to go along with it.

[aab7772003]

Originally Posted by hkskyline

I doubt HK government can negotiate such 5th freedom, hence the economics will be challenging. It's not a matter of HK's industry willing to do it, but rather whether foreign governments are willing to go along with it.

The US has been asking for Open Skies with Hong Kong for ages, but the Hong Kong government and CX reject the pact. If Singapore and Korea can enjoy the fifth freedom on their South American airlines, Hong Kong should not have too much trouble to enjoy the same privileges.

It will probably only take a couple of decades for CAN to catch up with HKG in terms of the number of international destinations served.

Originally Posted by hkskyline

HK aims to sustain edge as aviation hub
Chek Lap Kok sees rising air travel traffic as demand from Pearl River Delta grows
4 October 2010
South China Morning Post

...

Guangzhou and Shenzhen airports offer more mainland connections, but Hong Kong beats them in international connections. Hong Kong has air links to 110 international and 40 mainland destinations, according to the Hong Kong Airport Authority. In comparison, Shenzhen International Airport offers flights to more than 90 mainland cities and, according to the airport's website, has traffic rights with 37 countries. About 30 international destinations are actually served, although about half of those are for freight services only. As of the end of last year, Guangzhou Baiyun Airport offered 143 mainland and 54 international flight routes, according to the airport's 2009 annual report.

...

It is time to shake off the "Kai Tak mentality" completely. Back then, it was not optimal to do full hub operations because of the facility constraint. I doubt that there is that much demand between DXB and GRU.

[hkskyline]

Originally Posted by aab7772003

The US has been asking for Open Skies with Hong Kong for ages, but the Hong Kong government and CX reject the pact. If Singapore and Korea can enjoy the fifth freedom on their South American airlines, Hong Kong should not have too much trouble to enjoy the same privileges.

It will probably only take a couple of decades for CAN to catch up with HKG in terms of the number of international destinations served.

But SQ is using Spain to go to South America, and historically Spanish airlines have a very strong Latin America network due to colonial ties. Thus, Iberia is not likely to be threatened significantly from outsiders. This is not the case for other potential stopover markets.

The US wanted HK to give major concessions, including 5th freedoms, but would not reciprocate. That's why HK rejected the proposal.

[aab7772003]

Originally Posted by hkskyline

But SQ is using Spain to go to South America, and historically Spanish airlines have a very strong Latin America network due to colonial ties. Thus, Iberia is not likely to be threatened significantly from outsiders. This is not the case for other potential stopover markets.

The US wanted HK to give major concessions, including 5th freedoms, but would not reciprocate. That's why HK rejected the proposal.

Latin America and deep South America are completely different regions, especially to the airline industry. Then, Brazil is like another world within South America.

US East Coast - South America is another thriving market.

The issue of Oneworld members do not work closely comes up again and again. It is understandable that CX does not work closely with BA and QF, but it is strange that CX and IB do not work more closely at all. CX should launch services to Madrid for access to the entire South America and further European coverage.

When you have the Open Skies, you also deal with the Fifth Freedom. I am sure that CX would gain more Fifth Freedom via the US with the Open Skies. The US carrier hub operations did not kill the dominance of Japan in the Asian airline industry. Japan´s own airline and airport policies did.

Wasn´t CX going to launch daily LHR - JFK services?

[hkskyline]

Originally Posted by aab7772003

Latin America and deep South America are completely different regions, especially to the airline industry. Then, Brazil is like another world in South America.

US East Coast - South America is another thriving market.

The issue of Oneworld members do not work closely comes up again and again. It is understandable that CX does not work closely with BA and QF, but it is strange that CX and IB do not work more closely at all. CX should launch services to Madrid for access to the entire South America and further European coverage.

When you have the Open Skies, you also deal with the Fifth Freedoms. The US carrier hub operations did not kill the dominance of Japan in the Asian airline industry. Japan´s own airline and airport policies did.

How is Latin America and South America different to the airline industry? The two overlap, and many countries speak Spanish, hence the strong aviation connection between them & the US and Spain. Even the West Coast can be easily-connected to Miami for flights southbound.

IB has been preoccupied with their BA merger of late. Don't think Asia was ever big on their plate, since they had a big Latin America operation going, and CX was quite happy with codesharing with BA and feeding into their Europe network. If the economics were better, then perhaps we would've seen more collaboration within the alliance. It all boils down to is there profit to be made?

[aab7772003]

Originally Posted by hkskyline

How is Latin America and South America different to the airline industry? The two overlap, and many countries speak Spanish, hence the strong aviation connection between them & the US and Spain. Even the West Coast can be easily-connected to Miami for flights southbound.

Actually, exchanges between Latin America and South America are NOT as intensive as they should be, considering the fact that the populations there all speak Spanish.

Airlines offer completely different service solutions to their Latin and South American markets. The fleet, the food, cabin services, etc. are all different. Yes, even the Spanish used for various destinations is different depending on the countries and sub regions. You do not offer the exact same cabin services to the Chinese speaking Chinese from Taiwan, Hong Kong, Mainland China and Singapore.

[hkskyline]

Originally Posted by aab7772003

Actually, exchanges between Latin America and South America are NOT as intensive as they should be, considering the fact that the populations there all speak Spanish.

Airlines offer completely different service solutions to their Latin and South American markets. The fleet, the food, cabin services, etc. are all different. Yes, even the Spanish used for various destinations is different depending on the countries and sub regions. You do not offer the exact same cabin services to the Chinese speaking Chinese from Taiwan, Hong Kong, Mainland China and Singapore.

But Iberia clearly has the advantage of a huge South America network, so they will not likely be threatened by SQ doing Barcelona - Sao Paulo. I recall seeing they already fly this route from a schedule search.

The Americans won't let CX do 5th freedom out of the US. Even if yes, there is a huge barrier of entry as there is a large Spanish-speaking population in the US and they also have good connectivity to South America.

[urbanfan89]

Originally Posted by hkskyline

But Iberia clearly has the advantage of a huge South America network, so they will not likely be threatened by SQ doing Barcelona - Sao Paulo. I recall seeing they already fly this route from a schedule search.

The Americans won't let CX do 5th freedom out of the US. Even if yes, there is a huge barrier of entry as there is a large Spanish-speaking population in the US and they also have good connectivity to South America.

Why not HKG to GRU via YYZ? The latter leg may see strong high-yield demand by minerals/oil traffic, and the allure of avoiding transfers in the US altogether may be strong. Just an idea.

The Canadian government seems to be more receptive to fifth freedoms than the US. It's still too protective of AC, though.

[hkskyline]

Originally Posted by urbanfan89

Why not HKG to GRU via YYZ? The latter leg may see strong high-yield demand by minerals/oil traffic, and the allure of avoiding transfers in the US altogether may be strong. Just an idea.

The Canadian government seems to be more receptive to fifth freedoms than the US. It's still too protective of AC, though.

AC is trying to make Toronto a hub for its South America expansion. They will lobby the government to death to derail any 5th freedom proposal. Besides, there is very little for Canada to gain in return. Even if HK grants Canadian airlines 5th freedom, I don't think AC is interested in doing more than what they have now. They probably would prefer increasing frequencies to existing destinations than to do a 1-stop additional flight. I do recall CP used to fly from HK to Bangkok though.

[hkskyline]

Boeing delay to affect Cathay cargo operation
Test glitch in new freighter causes delivery setback
5 October 2010
South China Morning Post

Cathay Pacific Airways will be forced to operate a smaller freighter fleet for several months next year because of delays in the delivery and the need to transfer four aircraft to a new cargo joint venture in Shanghai.

The carrier will seek compensation from the manufacturer and talks will be held at an appropriate time, a Cathay spokesman said.

"We are naturally disappointed by the delay but pleased that we now have clarity on the revised delivery schedule," the spokesman said.

The recent delay of the Boeing 747-8F, of which Cathay has ordered 10, will probably give rise to a small reduction in its cargo capacity from May to July, the spokesman said.

The carrier has planned to take delivery of six freighters next year. It is obliged to transfer four B747-400BCF to the cargo joint venture with Air China in the first half of next year, resulting in a net decrease in Cathay's freighter operation.

The magnitude of the reduction will largely depend on when the venture gets the final approval from the mainland government.

The first BCF has been taken out from Cathay's fleet and repainted in the joint venture's colour and registration.

Cathay expected to take delivery of the first five of six 747-8Fs from January but the first freighter would not arrive until August, an executive from Cathay said.

"All of the six freighters next year would be delivered by September and come in quite a rush," the executive said. "It is fortunate that the freighters would be ready for the peak season starting in October."

The 747-8F can carry up to 134 tonnes of cargo, compared with 90 tonnes by the B747BCF.

Boeing last week announced the latest delay of the 747-8F and postponed the first delivery to the middle of next year.

The freighter has received 76 orders from worldwide clients with Cargolux as the launch customer.

The delay was due to a low-frequency vibration in certain flight conditions, which will lead to disruptions to certification testing. But the manufacturer stressed that the problem is not a structural one and is confident of the delivery schedule next year.

In order to resolve the expected shortfall in the freighter fleet, Cathay is looking for short-term leases.

The carrier does not want to commit to long-term leasing contracts because of the big increase in capacity expected from the freighter fleet from 2012.

However, the short-term leasing rate would be higher than normal leasing contracts. The delay of the 747-8F also would cause a spur in demand and jack up leasing rates for freighters in the short term, market observers said.

In addition to leasing from the market, Cathay will also bring forward planned maintenance of freighters and increase aircraft utilisation to maintain the cargo schedule next year.

Shares in Cathay rose 3.8 per cent to close at HK$21.85 yesterday.

[aab7772003]

Originally Posted by hkskyline

But Iberia clearly has the advantage of a huge South America network, so they will not likely be threatened by SQ doing Barcelona - Sao Paulo. I recall seeing they already fly this route from a schedule search.

The Americans won't let CX do 5th freedom out of the US. Even if yes, there is a huge barrier of entry as there is a large Spanish-speaking population in the US and they also have good connectivity to South America.

Since when I said that Iberia does not fly to Brazil? Iberia has been flying to Brazil for a long time.

CX will not experience any difficultly to do one daily flight to GRU; it can make money on Asian passengers, Brazilian passengers and cargoes.

[hkskyline]

Originally Posted by aab7772003

Since when I said that Iberia does not fly to Brazil? Iberia has been flying to Brazil for a long time.

CX will not experience any difficultly to do one daily flight to GRU; it can make money on Asian passengers, Brazilian passengers and cargoes.

I'm doubtful whether they can even make money. But then, making money alone is not enough. Is it worth putting all those planes on this route when they cannot board more passengers along the way to reduce risk, when they can be used on other even more profitable routes?

[aab7772003]

Originally Posted by hkskyline

I'm doubtful whether they can even make money. But then, making money alone is not enough. Is it worth putting all those planes on this route when they cannot board more passengers along the way to reduce risk, when they can be used on other even more profitable routes?

Again, CX would have a better idea because it is sure watching how KE and SQ are doing. Opening up new markets means more than just starting flights to very obviously popular destinations.

[hkskyline]

Originally Posted by aab7772003

Again, CX would have a better idea because it is sure watching how KE and SQ are doing.

Meanwhile ...

JAL says farewell to 30 years of Narita-Sao Paulo route
28 September 2010
Kyodo News

SAO PAULO, Sept. 28 -- A ceremony to mark a farewell to Japan Airlines Corp.'s Sao Paulo-Narita services was held at Guarulhos International Airport in Brazil Monday evening before the last flight left for Japan.

Since JAL, now under the state-backed rehabilitation process, launched the longest flight service from Japan in 1978, many Japanese-Brazilians have come and gone between the two countries.

A 63-year-old woman who emigrated from Nagasaki Prefecture to Brazil at the age of 15 and now lives in Rio de Janeiro, said, ''I miss it...I felt at home whenever I got on board a JAL airplane.''

At the ceremony, a JAL official told the 250 passengers of the last flight, ''We will be back to Sao Paulo after reconstructing our company.''