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Cathay flies victory flag for Hong Kong

The airline virtually stands alone in its efforts to enhance the international reputation of the city, proving its mettle in the wake of the Sars crisis

The content of the judging panel's deliberations over the International Award in the DHL/SCMP Business Awards 2003 is a matter of speculation, but it is a fair guess that Cathay Pacific Airways was an easy choice.

One criteria is that the winning company's activities should 'enhance Hong Kong's international reputation' and it is difficult to think of an organisation that did as much as Cathay to bolster our global standing in the wake of the Sars crisis.

As deputy chairman and chief executive David Turnbull points out, Cathay Pacific is perhaps Hong Kong's best-known brand name.

The letters HSBC may be more ubiquitous overseas than CX, but outside Asia the bank's initials are by no means universally known for what they represent.

For the thousands of people flown here by the carrier in the wake of Sars, the airline and the city are synonymous. Cathay proved its mettle as our flag carrier.

But for Sars - the consequences of which Cathay got over remarkably quickly - the airline would probably have had a vintage year. Amid the crisis the Skytrax global poll of 4.4 million travellers voted it the 'World's Best Airline'.

At the time there was little opportunity to capitalise on this remarkable coup, but an advertisement prominently placed in a 'newspaper' wrapped around Two International Finance Centre reminds people that this was 'High praise indeed!'

Not that Mr Turnbull or his staff consider that accolade in any way unmerited, particularly regarding the hardware and service levels in the front sections of its planes.

'We have certainly upgraded our product over the past few years. I think we have the best first-class in the sky, and that took a lot of development,' Mr Turnbull says.

'The first prototype we produced the public never saw because after a year's work we scrapped it and started again. It was already finished and mocked up, but it wasn't good enough and there was no point in introducing something that wasn't good enough.'

The concepts were rethought and a more spacious cabin design introduced. This version of Cathay's first-class has proved highly popular for various reasons, some to do with comfort, food and wine, entertainment and onboard technology. But the most important area is undoubtedly service, a field in which Cathay - if not quite unrivalled - is probably unsurpassed.

'We've upgraded our business class and we have a number of quite good innovations. We have video on demand. If you're at the front of the aircraft in first or business class you don't have to wait for the reel to go round any more.

'We've got in-flight e-mail. We've got some very good ground product, particularly our lounges. You can do your own internet booking, which is popular. You can get details of whether a flight is delayed or on time on your mobile phone - automatic messaging. These are pretty innovative products,' says Mr Turnbull.

The emphasis is very much on Cathay's premium classes, possibly because the nature of competition in international aviation is changing. The success of budget carriers in Europe is leading most airlines to re-examine the money spent on extras in economy in view of the fact that what consumers now seem to want is mostly lower prices, for which they are willing to accept fewer frills.

'We've now got to balance where we position ourselves. It's changing across the world. I think it's inevitable over the next few years that there will be more low-cost competition - mainly on the short-haul routes. There are long-haul charters, but it's a pretty spartan way to go,' says Mr Turnbull.

Another industry shift in recent years has been the growth of alliances between carriers, and the increasing use of code-sharing arrangements.

Cathay is a member of the oneworld alliance and has code-sharing arrangements with several carriers. This adds flexibility to its international schedules, but does risk disappointing some Cathay ticket holders who find themselves suddenly booked on another airline.

'It's important to us that if we do code-share we do it with someone of comparable quality. That's pretty key, but we're also very determined to keep Cathay's brand name. Code-share is a way of improving frequency and connectivity, expanding the market reach. If it's done with carriers of good quality those sort of problems can be overcome,' says Mr Turnbull.

A key event for Cathay this year was the resumption of its flights to China after a courtroom battle with Dragonair. On December 2 Cathay resumed its services to Beijing after a 13-year hiatus.

'It's only three times a week so it's not exactly a thumping return, but we're rather hoping that it will be just a start. The problem with not flying to China is that it's a big hole in our network.

'Passengers tend to want to fly direct through on the same carrier. It's better for us and it's better for the Hong Kong hub, because at the moment we're losing out a little bit to the Singapores and Seouls from which it's quite easy to get to China,' says Mr Turnbull.

A strong recovery since Sars has reinforced Cathay's determination to expand its fleet, now one of the youngest in the sky for a carrier of its size. A new Boeing 777-300 has been added to the fleet and another two will follow.

Cathay has also recently taken delivery of two Airbus A330-300s, with a third due soon. Mr Turnbull also recently announced that Cathay is considering buying up to 15 Boeing 747-400s on the second-hand market.

'We are now looking at what we should do for the future. In the next three or four years we are going to need quite a number of aircraft.

'We have 83 now and we have six Airbus freighters coming at the end of next year for our joint venture with DHL, so it won't be long before we're up to close to 100 aircraft. If you're growing at 6 per cent or 7 per cent per year you need six or seven new aircraft, and aircraft don't last forever. Let's say they last 20 years - you need five every year just to replace them,' says Mr Turnbull.

The airline is also considering new routes for its growing fleet.

'We're looking at a variety of destinations in the Middle East. We'd like to restart back to Istanbul but every time we look at it something seems to go wrong over there. It's a wonderful destination and it would be nice to find a way to make it work.'

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