Cathay Pacific

Cathay Pacific and Air Astana announce partnership, boosting links between countries in new Silk Road plan

From this month, the city’s flagship carrier and Kazakhstan’s national airline will sell tickets and market flights on each other’s routes across Asia and Australia

PUBLISHED : Tuesday, 06 March, 2018, 7:04am
UPDATED : Wednesday, 07 March, 2018, 4:27pm

Hong Kong’s flagship carrier on Monday announced a partnership with the national airline of one of Central Asia’s economic pioneers – Kazakhstan – giving it a stronger foothold in a region integral to the “Belt and Road Initiative”, China’s global trade development strategy.

Starting this month, Cathay Pacific Airways and Air Astana will sell tickets and market flights on each other’s routes across Asia and Australia under a code-share agreement.

The deal gives Cathay Pacific access to the resource-rich emerging economy associated with some of the largest Belt and Road projects, including the Khorgos Gateway dry port on its border with mainland China, rail links to London and Iran and the mega Central Asian gas pipeline.

The five main projects of the Belt and Road Initiative

For Air Astana, it means riding on Hong Kong’s flagship airline to offer passengers from Central Asia greater and smoother access to Southeast Asia and Australia.

“The real commercial value is the network,” Air Astana vice-president of marketing and sales Richard Ledger told the Post in an interview.

To partner with Cathay, Air Astana will drop its existing commercial code-share deal with the city’s third-largest carrier, Hong Kong Airlines.

Hong Kong Airlines seeks Belt and Road partners amid plans for expansion

“We are after the best partner in each hub for distribution. Clearly Cathay are the best,” Ledger explained, adding that the Hong Kong Airlines arrangement did not give the airline what Cathay could.

Under the deal, the CX code will be added to Air Astana’s non-stop flights between Hong Kong and Almaty, Kazakhstan’s largest city, and flights between it and the capital Astana, from the middle of this month.

Cathay will also code-share Air Astana’s flights from Almaty to Bangkok and Seoul. In return, Air Astana will add a third weekly service between Almaty and Hong Kong from March 25 and place its KC code on selected Cathay flights between Hong Kong, Singapore and major Australian cities.

“We are delighted to join with Air Astana,” Cathay Pacific commercial director Ronald Lam Siu-por said in a statement. “With its vibrant economy, which is set to grow as a result of its integral role in the Belt and Road Initiative, and beautiful natural landscapes, Kazakhstan has many attractions for both business and leisure travellers alike.”

Mind the gap – Standard Chartered steps up with US$20 billion pledge for Belt and Road projects

Initiated by Beijing in 2013, the US$900 billion initiative envisions a modern-day Silk Road with maritime and land networks connecting China with Asia, Africa and Europe to boost trade and economic growth.

Cathay had previously used code-share flights as a means of accessing harder-to-reach destinations which would not be financially viable as new and independently operated routes. The Astana deal complements an identical arrangement signed with MIAT Mongolian Airlines last year.

Air Astana carried 4.2 million passengers last year on its fleet of 32 single- and twin-aisle aircraft. Its strategy has been to fly smaller aircraft to keep costs down and target transit passengers travelling around Central Asia. It has 60 domestic and international routes, mainly in Asia and Europe. 

Kazakhstan eager for business with China’s ‘Belt and Road Initiative’

Cathay Pacific and sister airline Cathay Dragon operate 175 passenger aircraft and 20 freighter planes flying to almost 200 destinations in 49 countries and territories. They carried 34.8 million travellers in 2017.

Transport equity analyst Corrine Png described the deal as “win-win”, as both carriers could benefit from each other’s competitive advantages, even though the financial impact would be “marginal”. 

“China Southern Airlines, Air China and Hainan Airlines already operate flights to Kazakhstan so Cathay is already slightly late in the game to leverage on the growing Belt and Road traffic longer-term,” she said.

In the interview, Ledger spoke of Air Astana’s future plans, confirming a dual listing in Kazakhstan and London next year. While Hong Kong was previously considered a potential venue for a secondary listing, Ledger did not want to say why plans had changed.

The Kazakh airline has produced healthy profits in every year of its operation, starting in 2002, except for its first ever full-year loss in 2016. It recorded an operating profit of US$39.1 million (HK$306 million) last year on revenue of US$754 million.