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Cathay Pacific eyes India to lift sinking growth

The airline which reported its worst loss in two decades has introduced larger aircraft on Mumbai-Hong Kong route, will also re-introduce the premium economy class

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Hong Kong-based airline Cathay Pacific is looking at India for reviving its growth which has dipped in recent years on onslaught from low-cost rivals in mainland China and costly fuel hedging contracts.

The carrier recently reported a loss of $262 million in the first half of the year; its worst in two decades.

Cathay Pacific on Thursday announced the introduction of a larger aircraft - Boeing B777-300 - on the Mumbai-Hong Kong route. The airline, which commands over 45% market share in air traffic between India and Hong Kong at present, flies Airbus's A330 on this route.

Besides, it will also be re-introducing the premium economy class, which the management claims is seeing a popular demand on the sector.

Mark Sutch, general manager for South Asia, Middle East & African markets, Cathay Pacific, told DNA Money that the change to B777-300 aircraft will not only help in increasing the passenger capacity but also provide for up to 67% more cargo capacity under its belly.

“We see potential in the Indian aviation sector. To be the third largest aviation market by 2026 is a tremendous goal, and it is a testament to the potential that the market beholds. Likewise, at Cathay Pacific, we see significant opportunities in the growing Indian economy,” said Sutch while revealing the company's new strategy as part of its three-year turnaround plan which was initiated a few months ago. “We want to be at a wide range of destinations with multiple frequencies,” he added.

According to the aviation analysts, Cathay Pacific has seen its market share and profitability on international routes shrinking due to the onslaught of no-frill airlines from mainland Chinese and Gulf airlines. Costly fuel hedging contracts added to its problems.

Cathay Pacific and its subsidiary Cathay Dragon currently operate 48 weekly departures from six cities in India to Hong Kong. The carrier is also among one of the biggest air cargo operators in India. The Indian operation of the airline saw passenger revenue of Rs 1,250 crore during the year 2016, an increase of about 5% over the previous year.

According to Sutch, the losses in recent times have not discouraged the airline from investing for long term. The airline has a firm order for 53 wide-bodied aircraft, which includes six A350-900 planes, 26 A350-1000 planes and 21 B777-9X. On whether India will see some of these ordered A350 aircraft, he said, “Some of these A350 aircraft may come to India.”

Bengaluru-based Aviation analyst Devesh Agarwal said that the connectivity of India to China, Japan and Korea is very limited and airlines like Cathay Pacific through its base at Hong Kong can leverage on that.

...& ANALYSIS

  • The carrier recently reported a loss of $262 million in the first half of the year; its worst in two decades
     
  • It commands over 45% share in air traffic between India and Hong Kong
     
  • Change to B777-300 aircraft will also provide for up to 67% more cargo capacity
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