Dragonair CEO Patrick Yeung, in Dragonews Aug/Sep-2012 issue, noted (Aug-2012) "all of us are aware of the current difficult operating environment the aviation industry is facing. The extent of the challenge was borne out by the Group’s recently released interim results which, while disappointing, were not unexpected". He continued: "Despite the pressure we are facing from the combination of global economic uncertainty, high fuel prices, softening passenger yield and weak cargo demand, there are some bright spots – most notably the relative strength of the China and Asia Pacific markets. This has enabled us to expand the Dragonair network, with six destinations already launched or resumed so far in 2012, Haikou and Kolkata services beginning this winter, and another destination due to be announced soon." [more - original PR]
Dragonair notes difficult operating environment, benefits from relative strength of China
You may also be interested in the following articles...
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.
Cathay Pacific 1H2016: market squirms at 80% profit drop. Cathay not in crisis; but must cut costs
The public did not react well to Cathay Pacific 1H2016 group profits dropping over 80%. Ironically there was little attention that the airlines have returned to being unprofitable amid factors ranging from strong competition to a USD576 million fuel hedging loss, greater than a year ago. Growth for the year is turning out to have only a minor adjustment: Cathay does not consider itself to be in crisis.
Despite squirms of supposed displeased investors and their questions about the future of CEO Ivan Chu, the actual two investors that matter are majority owners Swire and Air China. Their vision is one for the long term. Unlike airlines in the US or Europe, Cathay does not answer to the market and does not need to produce quarterly improvements. If the shareholders retain their vision and believe overcapacity is necessary to hold market share for the long term, then yield declines and unprofitability are uncomfortably accepted. The balance sheet is strong enough.
So the question is not if Cathay should address sagging yields and hedging losses, but rather whether Cathay can achieve its long term goal of being not just a premium airline but more importantly – a travel and lifestyle brand. There may not be an answer in this decade. Cathay may have the greatest self-assurance measured against the potential risk of traffic being siphoned from competitors. What is certain is that cost-cutting is needed, but remains elusive.