Cathay Pacific, in the Dec-2011 issue of CXWorld, stated the carrier is optimistic regarding the future despite current economic conditions continuing to "make life difficult for the aviation industry in 2012". The carrier conceded that the "global uncertainty has bitten deeply into business this year, particularly on the cargo side". The carrier expects to increase passenger capacity (ASKs) by 7% in 2012 with cargo capacity growth of 10%, down from a previously anticipated 17%. CEO John Slosar stated the carrier needs to be "mentally flexible" to meet "whatever challenges might be thrown the airlines' way" in 2012. He continued: "Aviation is what it is and it will take a lot of grit – things are not going to come our way easily next year." COO Ivan Chu warned one of the big challenges in 2012 will be to keep costs under control. "We cannot afford to allow costs to grow faster than revenue and capacity growth," he said, adding all departments within the airline have been asked to minimise discretionary spending in 2012.
Cathay Pacific: Current economy making 'life difficult for the aviation industry in 2012'
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Cathay Pacific to Christchurch: contentious Air New Zealand JV as Cathay seeks greater "agility"
As Cathay Pacific is being forced to undergo a competitive metamorphosis it is exploring all options. The latest example is an expected announcement of a new Cathay Pacific route from Hong Kong to Christchurch in New Zealand's South Island. The service is expected to be seasonal (for the New Zealand summer), and is only Cathay's second seasonal long haul route after the Jan-2017 announcement of northern summer service to Barcelona.
New Zealand is a small network component for Cathay but one of its last strongholds, due to a joint venture with Air New Zealand. The New Zealand government reluctantly extended approval for the JV despite Cathay and Air NZ reneging on an offer to use it to link Hong Kong with Christchurch, as well as Auckland. This would thereby have extended the JV to benefit more of New Zealand – a sensitive local matter based on the assertion that Auckland was receiving disproportionate air service benefit.
Air NZ's JV with Cathay arch rival Singapore Airlines has resulted in SIA growing its presence in Christchurch. Cathay has been more frugal, and the NZ government determined that although the JV reduced competition, there was no prospective third competitor, so no harm done.
But now that Hong Kong Airlines has entered Auckland, and then expanded, the Cathay-Air NZ JV faces disbanding. By finally committing to a Christchurch route Cathay appears to be bidding to keep the JV in play. But the New Zealand government will still probably withdraw approval of the Air NZ-Cathay JV.
Hong Kong Airlines becomes larger in Japan than in China: overlap with sister HK Express
The rapid growth of mainland China's HNA Group is resulting in companies being added ahead of integration. HNA's two Hong Kong-based airlines, Hong Kong Airlines and HK Express, are increasingly overlapping with each other. That their roles are undefined and uncoordinated risks the two fighting each other – rather than combining their different propositions to address multiple segments of the markets.
Hong Kong Airlines is rapidly growing in Tokyo and Osaka, and launching a new service to Seoul Incheon – its 11th new destination in 2016. These are strong O&D markets and present a change from Hong Kong Airlines' previous staple of connecting traffic from mainland China over Hong Kong, or competing mainly against Cathay Pacific in key regional Asian markets from Hong Kong.
Following Hong Kong Airlines' entry to Tokyo and Osaka it will further increase services to the point where Japan becomes a larger market for it than mainland China. This is of some concern given Hong Kong Airlines' still evolving strategy for Japan, and weakening of the market through the appreciation of the yen.