Qatar Airways deal could help Cathay Pacific regain Europe traffic

Partnership with the Doha-based airline is aimed at winning back passengers from deep-pocketed Middle Eastern rivals such as Emirates

PUBLISHED : Thursday, 13 March, 2014, 11:15am
UPDATED : Friday, 14 March, 2014, 12:03am

Cathay Pacific Airways' new partnership with Doha-based Qatar Airways could help the Hong Kong airline reclaim some of the Europe-bound passenger traffic poached from it by Middle Eastern rivals such as Emirates.

Cathay and Qatar Airways will jointly operate a twice-daily pair of flights between Hong Kong and Doha from the end of this month.

The carriers will share the route's costs and profits and will align their services, including sharing lounges at the airports.

It is Cathay's third partnership of the kind in recent years. It has jointly operated six mainland routes with Air China since 2006 and the Hong Kong-Auckland route with Air New Zealand from last year.

Qatar gives us access to a large and growing Middle East network

The deal with Qatar Airways comes at a time when Cathay is being battered by Middle Eastern airlines on several routes from Asia to Europe - including the "kangaroo route" from Australia to Britain via Hong Kong, on which Qantas Airways and Dubai-based Emirates co-operate.

"Qatar gives us access to a large and growing Middle East network," Cathay chief executive John Slosar said.

"We like the fact that Qatar could connect us to more places in the Middle East."

However, analysts said the co-operation between Qatar and Cathay could go beyond the Middle East.

"It's likely that Cathay would code-share on Qatar's flights to North Africa and Europe," said Will Horton, an analyst at Capa, a Sydney-based aviation consultancy. He said sources at global booking systems said Cathay would code-share on Qatar's flights to Athens and Geneva.

When two airlines code-share a flight, one flies the plane but both can sell seats on it.

"We would certainly be looking at ways to make the partnership function and help us to serve the market better," Slosar said. But he said it was too early to say exactly what shape the partnership would take.

Middle Eastern airlines led by Emirates, Abu Dhabi-based Etihad Airways and Qatar have massively expanded their fleets recently. Emirates has amassed an order book of 385 aircraft including 200 ordered at the Dubai Air Show in November.

The carriers' aggressive expansion of their fleets and networks have succeeded in drawing passengers to route their flights through the airlines' hubs in the Middle East.

Cathay flies to fewer than 10 cities in Europe, compared with 34 destinations there served by Emirates.

Now, Cathay may be able to tap into Qatar Airways' network of 31 European destinations, depending on commercial agreements reached between the two carriers.

But some analysts are doubtful about the benefit of the partnership to Cathay.

"I don't think Cathay would transfer more Europe-going passengers to Doha than it does now to London, Paris and Frankfurt," said Kelvin Lau, an analyst at Daiwa Capital Markets.

The farther that Cathay flew passengers on the linked routes, the more revenue it would gain from the code-share agreement, he said.