Cathay Pacific looks to increase higher-value cargo carrying

Cathay Pacific Airways aims to replicate its business-class strategy in a cargo trade upgrade. It wants to fly more diamonds and medicines rather than T-shirts.

Nick Rhodes, the airline's cargo director, said: "Similar to the passenger service, we are not a low-cost carrier. We try to be a full-service cargo carrier. That's really our DNA."

The airline, the world's biggest international air-cargo carrier, will start operating its first independently owned goods terminal in Hong Kong later this month, increasing the airport's capacity by half. The airline has spent HK$5.9 billion on a facility it says will help Cathay target an increase of up to 20 per cent in more profitable shipments of high-value goods, perishables and vaccines.

Success with that strategy is critical to boosting profit in a business that accounts for over a fifth of the airline's revenue. Cathay has cut some cargo flights while Middle East carriers such as Emirates boost capacity and increase competition with Asian rivals.

Both Singapore and Korean Air Lines also want to move to higher-value goods even as the global air-freight market declined for a second straight year in 2012, amid a slump in demand across Europe.

Geoffrey Cheng, a Hong Kong-based analyst at Bank of Communications, which has a neutral rating on the stock, said: "Cathay chasing higher-end products will help broaden its cargo sources and boost revenue. It will lose to rivals if it fails to capitalise on the relatively faster-growing seafood and pharmaceutical demand."