CATHAY Pacific's response to Virgin Atlantic's intense promotional campaign in the run-up to next Tuesday's launch will be ''to improve its product rather than cut fares''. That's the message from Arthur Bullard, the airline's general manager for European routes. He said the Hong Kong carrier would launch a thrice-weekly day time non-stop service to London on March 31 to complement its daily evening departures. Cathay also intended to re-emphasise its Asian character, which the airline's executives considered a strong component of its high-quality image. In addition, the airline would open a new departure lounge for First Class passengers at the end of April. Mr Bullard said Virgin's media impact had outweighed the actual availability of a new product. The Hong Kong-London market totalled 600,000 round-trip journeys per year, according to Mr Bullard, with a 10 per cent annual growth rate. Currently, there were about 2,000 seats every night to London, on all flights including indirect flights, and Virgin's additional capacity added up to about 13 per cent. ''The natural growth of the market would, therefore, occupy most of the extra capacity Virgin will be putting on,'' Mr Bullard said. Direct flights with Cathay and British Airways each claims one-third of the annual total, with the remainder divided among a dozen airlines offering indirect flights. ''The consumer is obviously interested in the non-stop product and, with three carriers offering that, our aspiration is to ensure that traffic is taken from the airlines offering only indirect services,'' he said. At the same time, Virgin's pricing would further boost the overall market for the route, he said. The ''natural community links'' between Hong Kong and London meant that travellers were normally ''not reliant on hotels, so all that matters is the air fare'', he said, adding that Cathay's approach would be to improve product rather than cut fares. Mr Bullard said there was little point in adding additional evening capacity, particularly since market research showed 30 per cent of passengers would prefer to travel by day, arriving in the late afternoon. The day-time services will be on the peak demand days of Thursday, Friday and Saturday, departing Kai Tak at 10.55, and arriving at Heathrow at 17.25. All will be non-smoking flights. He acknowledged that there was ''absolutely no doubt'' sheer curiosity would tempt people to try Virgin's service which boasted innovative inflight services reflecting the ebullient personality of its chairman, Richard Branson. ''We would expect them to have a share of the market in accordance with their capacity,'' Mr Bullard said. ''Virgin will obviously have some impact because the routing is such that it will draw most of the traffic directly from London or Hong Kong, and not from the markets behind those in the way that we do.'' But he added: ''We have some quite significant product strengths of which it is possible to lose sight in front of on-board tailors, massages, motorbike transfers and things like that.'' He cited the seat pitch - the distance between any point on a seat and the same point on the seat behind. ''In Cathay's economy class, it is 34 inches. I haven't measured Virgin's seat pitch, but our information is that Virgin's is 31 inches. ''That's actually quite a lot of additional leg room on our flights, especially if you are tall.'' Mr Bullard, formerly Cathay's worldwide marketing manager, has much riding on the forthcoming battle with Virgin. Following an 18-month study by management consultants, the company recently reorganised much of its management structure. The airline's worldwide coverage has been restructured into four regional groupings, with route profit responsibility devolved to each regional manager as from January 1. Previously, profitability questions from different sectors only met at the level of the managing director, Rod Eddington. ''My responsibility now includes our response to any new competitive stimulus, such as the arrival of Mr Branson,'' he said. ''Among the issues I now handle are the product itself, scheduling, relations at official levels between ourselves and various governments, and, of course, sales and marketing of the routes.''