Cathay Pacific sales and marketing manager Australia Julie Reid, speaking at the CAPA Australia Pacific Aviation Summit, identified (09-Aug-2013) Qantas and Singapore Airlines as its key competitors in the corporate travel sector.
Cathay Pacific: Qantas and Singapore Airlines key competitors in the corporate travel market
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Qantas achieves financial sustainability, now takes on Singapore Airlines and Cathay Pacific
Qantas on 24-Aug-2016 delivered its second consecutive AUD1 billion annual profit, indicating that the long restructuring under the tenure of CEO Alan Joyce has not only worked but created a stronger Qantas. The group has weathered the boom and bust of the Australian resource economy and times with Asian LCC JVs; has turned Gulf and Chinese competitors into partners; and has risen above a key competitor's influx of foreign shareholding, which fuelled an unsustainable capacity and product war.
The question for Qantas is what next. Domestic has returned to a comfortable duopoly and growth is on the wane, while international partners will contribute higher growth by putting passengers onto the domestic Qantas network. Loyalty, a stable business, is growing and profitable but does not capture Mr Joyce's passion. Internationally, North America is Qantas' anchor. The continent accounts for one third of Qantas' now profitable international capacity. Qantas and its proposed partner American Airlines dominate, holding 42% of the Australia/New Zealand-North America market. It is a profitable but not very emotional business, although it could move to new 787-9 routes to Dallas or Chicago. Where Qantas remains strategically keen is to Asia and Europe, where its historical deficiency helped rivals Singapore Airlines and Cathay Pacific to rise to their powerhouse status.
The competition with SIA and Cathay is longstanding but reinvigorated: SIA has reiterated its desire to operate between Australia and the US, while Qantas blames Cathay for squashing the proposed LCC Jetstar Hong Kong. Qantas may not be able to beat SIA and Cathay entirely, but for the first time in its history Qantas believes it can compete with them on cost. Qantas seeks mainline and Jetstar growth to and within Asia. Qantas is weighing a European restructuring that could result in the launch of 787-9 flights between Perth and London – the first nonstop flight between Australia and Europe. Qantas may not be as big as it used to be, but it is smarter, more agile and more profitable. Qantas has evolved, but its competitors appear less stable. This is a time to seize momentum and rebuild Qantas' flagship status.
Asia-Europe slowest-growing major market but dynamic: AF-KLM and SIA shrink as oneworld, China grow
Asia-Europe, which is one of IATA's big four international markets, has become the slowest-growing. The market underwent RPK expansion of only 1.5% in Jul-2016, the latest data available. Uncertainty in Europe and terrorism fears mean that some Asian travellers choose Australia and North America or, as IATA has flagged – travel within Asia, which has expanded by nearly double digits.
Although market expansion was slow in the first part of 2016, so too was capacity. Yet this changed in Jul-2016 as capacity increased more quickly, perhaps as airlines expected a stronger summer. Despite slow passenger growth, dynamics are highly varied – except for yield declines. The combined RPK growth of IAG (7.2%) Cathay Pacific (3.7%) and Finnair (8.7%) was not enough to offset the contraction of the largest airline in the market, AF-KLM (7.9%).
From the reported geographic data by all major airlines, load factors are falling.