Cathay Pacific has been telling us recently how difficult times are but a little reflection suggests that this airline is not really doing so badly at all. For what was undoubtedly a very difficult year, it still announced this week an operating profit of $397 million for last year. The fact that the bottom line showed a net loss of $542 million can be put down to retiring some old aircraft and parts and making a provision of $837 million against them. The latest issue of Cathay's in-house magazine, CX World, also notes that this year started on a relatively high note with revenues 4 per cent above budget and last month expected to show even better results. It is in line with the latest government figures showing a recovery in visitor arrivals. Let us put it into perspective. In the same issue of CX World there is another article which starts off with the complaint that 'even in the best of times, airlines operate in a low margin industry with average profit margins of less than 3 per cent'. It is noteworthy that the writer of this piece refers to 'airlines' rather than to Cathay Pacific itself. Cathay's average net profit margin since it was listed in 1986 has been 12 per cent and this takes last year's loss into account. Take the figures to 1997 only to match the 'even in the best of times' referred to in this article and you get more than 13 per cent. Did someone forget to insert the numeral 1 in front of the numeral 3 when talking about 3 per cent? Now contrast this with the profit and loss, mostly loss, experience of airlines in the United States as reported by the Air Transport Association of America. As the accompanying chart shows, between 1991 and 1996 they averaged a net loss margin of slightly over 1 per cent and this was in a time when Cathay averaged a net profit margin of 11.2 per cent. The simple fact is that Cathay could be expected to run into a difficult patch in a year when its Asian markets suffered a financial crisis and a deep recession. It's a wonder that the airline could actually post an operating profit in such times. Its employees undoubtedly deserve plaudits for it. But it does not operate in quite the same 'open skies' environment that has brought the earnings of US airlines so low and it is highly unlikely that last year sets the tone for future earnings. The odds are good that within two or three years we'll see 12 per cent profit margins again. It all makes some of Cathay's complaints seem a little sour. In the same article in CX World, for instance, there is a gripe about the Terminal Building Charge at Chek Lap Kok of $39 per passenger regardless of whether the passengers are visiting Hong Kong or simply transiting to another location. Why it should make a difference that they are transitting is hard to fathom. They use the terminal. They can help pay for it too. What value is tourism to us if the taxpayer has to pay the fixed costs of bringing them here, particularly if they are only transitting and not spending a cent outside the departure lounge? And if it is the belief of Cathay's directors that this small charge deters visitors they may do well to remember that the airport departure tax used to be $100. It is now $50. Do they consider this a bad trade? Grin and bear it like the rest of us have done in these troubled times, gentlemen. Your protests sound a jarring note. You don't have to do this.