Cathay Pacific to boost passenger, cargo capacity in India with bigger planes

NEW DELHI (Reuters): Hong Kong’s Cathay Pacific Airways, under pressure from mainland Chinese carriers, plans to increase its passenger and cargo business in India where yields are holding up better than at home, a senior company executive told Reuters.

Cathay, which can only operate a limited number of flights to India due to bilateral constraints, plans to fly bigger planes between Mumbai and Hong Kong to boost its passenger and cargo capacity, Mark Sutch, regional general manager for South Asia, Middle East and Africa, said in an interview.

“The Indian economy is pretty vibrant and the growth here is significantly higher than many countries,” said Sutch, adding India and China were two markets where Cathay saw a big future.

In recent years, Cathay has seen its market share on international routes eroded by rapidly expanding mainland Chinese and Gulf airlines. This, with poor fuel hedges and lack of a budget arm, have hurt its competitiveness.

India is among the top 10 markets for Cathay in terms of revenues. Its Indian revenues grew 5% in 2016 to 12.58 billion rupees ($197 million), when overall the airline reported its first full-year loss since 2008.

But competition in India, one of the world’s fastest-growing aviation markets with domestic passenger traffic rising at more than 20%, is on the increase and yields are under pressure.

“Our yield year-on-year is certainly not strengthening in India. It is very much under pressure but not as much under pressure as some of our other key home markets,” Sutch said.

Boosting capacity

Bilateral constraints allow Cathay to operate only 48 weekly flights to India and to boost capacity it plans to replace Airbus A330 planes with bigger aircraft.

From the end of October, it will fly Boeing’s 777 aircraft between Mumbai and Hong Kong, which will lift passenger capacity by 21% and cargo by two-thirds, Sutch said, adding Cathay planned to do this in more cities going forward.

The increased capacity will help grow its passenger business in India, which has stagnated due to the restricted number of flights, by as much as 5%, he said.

Sutch also plans to increase the load factor of passenger flights – a measure of how full they are – to about 85% from 70-80%.

But it is on the cargo side, which is growing annually by 5%, where Sutch is most bullish because, unlike the passenger side, there are no restrictions on the number of flights.

Cathay has 25 freighter flights a week to India that bring in consumer electronics such as mobile phones and take garments and pharmaceuticals out of the country.

“India is a great market but it is a slightly unbalanced market in that the yields you can get on inbound cargo into India tend to be higher than outbound,” said Sutch.