Cathay Pacific

Cathay Pacific launches Hong Kong-Seattle flights to shake off competition and fly new routes not served by rivals

Move by loss-making carrier follows an announcement by Delta Air Lines that it will stop flying the route, paving the way for a new entrant

PUBLISHED : Thursday, 19 July, 2018, 10:50am
UPDATED : Thursday, 19 July, 2018, 12:26pm

Seattle will be Cathay Pacific Airways’ next long-haul destination, starting next March, as Hong Kong’s flagship carrier launches more new routes to avoid direct competition with rivals on existing flight destinations.

The loss-making airline teased social media users on Wednesday with a crossword puzzle featuring the names of American cities, accompanied by the question: “Where are we going next?”

Cathay Pacific’s ongoing expansion is designed to boost revenue from new markets. Existing destinations in Europe and the United States have been the subject of intense competition through cheaper air fares offered by rivals.

Seattle, dubbed the “Emerald City”, is home to the headquarters of major corporations including Microsoft, Amazon and Starbucks, and is also a major manufacturing centre for aerospace giant Boeing.

The latest move by Asia’s largest international airline follows an announcement by Delta Air Lines, one of the big three US carriers, that it will stop flying between Seattle and Hong Kong, paving the way for a new entrant.

Seattle is Cathay Pacific’s first destination announced for 2019, and will come hot on the heels of its Washington launch in September, one of nine new routes added this year.

The two routes will raise the number of US destinations to eight. The airline currently flies to Los Angeles, San Francisco, New York John F. Kennedy and Newark, Boston and Chicago.

Cathay Pacific will fly to Seattle four times a week from March 2019 with the Airbus A350 aircraft.

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Transportation expert Geoffrey Cheng, deputy head of research at investment bank Bocom International, said: “Cathay are trying to [minimise] competition on key contested routes by trying some of these new routes, which have proven to be well received, at the expense of cutting some additional frequencies on key routes.

“They’ve looked at their network again and expanded cautiously; it seems to be paying off.”

Cathay Pacific has passed the halfway mark for its three-year restructuring programme. The airline has been losing money since 2016, though it recorded a smaller-than-expected loss of HK$1.25 billion in 2017.

The airline’s restructuring head Alex McGowan was reassigned to manage pilots, the Post revealed on Wednesday, in a bid to revive talks and strike a deal with its disgruntled cockpit crew members. Savings on pilot costs are worth HK$1 billion, a quarter of companywide savings.

In recent years, the carrier has turned to launching new destinations with no rivals, including Barcelona, Christchurch, Dublin, Copenhagen and Cape Town. The routes have been launched with no direct competition and fewer threats from mainland Chinese carriers, which have been hurting Cathay Pacific by undercutting its fares.

The Seattle route will bring the number of destinations launched under Rupert Hogg, who has been CEO since May last year, to 10 – one more than during his predecessor Ivan Chu Kwok-leung’s tenure.

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“We have developed a significant presence in the US, and the launch of Seattle not only reaffirms our commitment to the important North American market but also to strengthening Hong Kong’s status as Asia’s largest international aviation hub,” Hogg said.

Apart from competing for travellers from Hong Kong, Cathay Pacific’s expansion is also an attempt to keep up with rivals in Asia.

The airline flies to 14 European destinations, but Air China connects to 20, while Singapore Airlines is serving 15 routes. Compared with other major Asian carriers in the mainland US market (excluding Hawaii), Cathay Pacific will serve eight airports – more than its mainland Chinese rivals and bettered only by Korean Air, with nine destinations.