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Aviation

Cathay Pacific won’t sacrifice lucrative cargo business by challenging Singapore Airlines’ ultra long-haul flights, CEO Rupert Hogg says

Qantas reveals more details on 20-hour routes at IATA meeting, but extra distance is not priority ‘at the moment’ in light of brisk freight trade for Hong Kong’s flag carrier

PUBLISHED : Monday, 04 June, 2018, 7:45pm
UPDATED : Wednesday, 06 June, 2018, 2:02pm

Cathay Pacific Airways will not launch ultra long-haul flights just to wrest the limelight away from rival Singapore Airlines, as it would have to sacrifice freight on routes of 17 hours or more, potentially sabotaging its lucrative cargo business.

Going the extra distance “wouldn’t be a move we would make lightly,” Cathay Pacific CEO Rupert Hogg said, when asked if Hong Kong’s flag carrier would compete for the longest flight in the world. The more weight a plane carries, the less its maximum range would be.

Singapore Airlines will claim the coveted title from October with its Singapore-Newark direct flight – spanning 15,300km (9,500 miles) and lasting 19 hours – on the Airbus A350-900 Ultra Long Range plane. It will trump the current 14,500km Doha-Auckland flight by Qatar Airways.

Cathay’s brisk cargo business in recent years rescued it from the deep end amid soaring losses from fuel-hedging contracts, which it made when crude oil prices were hovering at about US$100 (HK$800) a barrel before crashing over three years ago.

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The loss-making airline – in the middle of a three-year restructuring exercise – has taken delivery of 22 fuel-saving Airbus A350 aircraft to reduce fuel consumption.

Hogg, speaking in Dublin as Cathay launched direct flights to the Irish capital last week, made clear the airline would not ignore demand for ultra long-haul flights. “We will continue to expand destinations when markets merit it.”

He also attended the International Air Transport Association’s (IATA) annual meeting in Sydney on Monday.

It’s not obvious that we need to be in the ultra long-haul market particularly at the moment
Rupert Hogg, Cathay Pacific CEO

The carrier will start its longest ever flights – 17 hours non-stop – to Washington from September, and “would love to fly to Miami,” Hogg said. But none of its existing aircraft were suitable for the 18-hour direct route. It also flies to Boston and New York non-stop, which takes about 16 hours.

Cathay’s chief customer and commercial officer Paul Loo Kar-pui said the airline would not be taking delivery of the Airbus 350-900 ULR, which are similar to its current A350s.

“[Those] have a different set-up with extra fuel tanks which we are not going to have. That’s not the option we are taking,” he said.

Cathay is reviewing plans to fly to Mexico City, which would take about 18 hours. For this, flights could be non-stop on a Boeing 777-9X – which have more powerful engines, extra range and better performance – and could start as early as 2021.

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But this will ultimately depend on when the Mexican capital’s new airport can be completed, as it is stuck in political gridlock.

Hogg noted that when the carrier assessed other potential faraway destinations, “it’s not obvious that we need to be in the ultra long-haul market particularly at the moment.”

At Monday’s gathering of airline bosses and industry leaders, worries over global trade rows and higher fuel and labour costs were cited as threats for carriers, with IATA predicting fares could rise about 3 per cent.

The industry body representing airlines which account for about 83 per cent of global flights also cut its profit target for the year. The Asia-Pacific was still the fastest growing sector in terms of passengers, and carriers based in that region were forecast to earn US$8.2 billion, about 25 per cent of global revenue.

Singapore Airlines’ chief Goh Choon Phong, on the sidelines of the IATA meeting in Sydney, said it would consider supply and demand – not oil prices – in expansion plans of its ultra-long haul route network.

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“We are getting these planes because they are the most advanced fuel-efficient planes and we are reasonably hedged for the next four to five years. I don’t think [oil prices] are an immediate concern for now,” Goh said.

With ultra long-haul direct flights now an option, Singapore Airlines was reviewing its US routes, including flights that currently have a stopover in Hong Kong and other Asian and European cities, Goh said.

Qantas Airways at the meeting also revealed more details of its entry into the ring for ultra long-haul flights with its “Project Sunrise” route – Sydney or Melbourne non-stop to London or New York. These flights could last up to 20 hours and the Australian carrier intends to come up with creative ways to improve comfort, offering passengers cocktail bars, social lounges and possibly using up the cargo deck space.

Danny Lee is reporting from Sydney