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Discussion in 'Cathay Pacific | Asia Miles/Marco Polo Club' started by rwoman, Mar 13, 2013.
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More airline woes...
BBC: Cathay Pacific reports 83% plunge in annual profit
I knew they were not doing all that well, but that's a pretty huge downturn. Kinda surprised.
It's a sad reality, we see the decline of the full service carrier and the rise of the low cost carrier, especially with Air Asia. Price trumps everything else it seems. On the one side I can understand passengers, in fact I'm one of them, when there's an attractive price point, I like this very much, but not at every cost. Having said this, as flying gets more expensive [ higher fares, taxes, add-on costs ], we have decided to look after quality over quantity, this includes hotels too.
Once Qatar and Emirates report some numbers, we will know if either they are trumping other carriers or if the general airline trend is towards the air Greyhound service.
Qatar and Emirates, plus Etihad and some others still add capacity, so there's a certain demand out there, but only at the right price, I presume. It's clear, there numbers will make for some interesting reading.
Cathay should be flexible with their rate instead of staying on the same price for their biz n f class, if they lower like other maybe this will make some money,bottom lin, flexibilty is the key in pricing.
The reduction in Cargo yields and volumes was apparently the biggest single factor, down 5.5%, with load factor down 3%. Decreased premium passengers looks like next. if they did not have all those 744's and 74F's but had their new A350-1000's, 748's and 777's they'd have weathered this storm much better. They did still make money, a good accomplishment. However they seem to have waited a bit too long with all those old aircraft. If they'd junked the 744's in favor of 777 we would not have the same issues.
Premium seat competition and reduced premium travel are a fact of life. I do not think Cathay has done a poor job of dealing with that. if I fault them it is in delaying fleet renewal too long.
Nevermind that CX, at least from a US-based perspective, seems to be the "where I burn my miles" carrier, and I have no idea how the economics of that deal work - but I can imagine that the percentage of passengers in that category overall is very, very small.
Probably so. I know CX is among my favorite three, but as much as I loved the B747 I wish they had new aircraft. SQ and EK are my preferred options now, primarily due to the aircraft, if truth be known.
I've heard rumors that Qatar and Emirates are heavily subsidized by their country governments. Is there any truth to these allegations?
I'm very curious to see how the Asian market will shake out. For a long time I wondered how they were able to keep quality of service so high vs the race-to-the-bottom in the US. Perhaps they were just a few years behind.
There are strong views and positions on this topic. Both Qatar and Etihad are growing rapidly and still being supported by their shareholders, in effect, governments. However, they appear to have commercial terms for most of their agreements, if not all.
Emirates pays their own way IMO. However, there are no income taxes and few otehr taxes for any of them to worry about, just as apply to any business in those places. All three pay for much of the infrastructure to support themselves, especially EK. Once they leave their home markets they pay as anyone pays. They all must also support mostly expatriate staff, so often have costs as high as industrialized world carriers.
There probably will be people quite ready to dispute these points. One of the key arguments is that EK and the others are subsidized by the airplane financing terms they get through Boeing and Airbus. IMO that is silly. They pay as others pay, but airframers, engine makers and servicers all love them because they are growing and buy lots of things.
Disclosure: I lived and worked in the UAE and have seen it from the perspective of a resident banker. That may make me subject to a different perspective than those who have not be so afflicted.
To your point, LH is promoting F and C in most markets, EK does as well but only through some TA's and corporate accounts. CX will not budge. My current trip GIG-HKG-JFK-GIG is ending out on LH or EK because the CX portion makes OW a non starter. A RTW can work but is a trifle inflexible for this quick trip.
To be clear, I wasn't trying to star a flame war or something about Qatar/Etihad/EK. Just curious. I'm sure the answer is insanely complex.
For me at least I did not see it so, and I hope nobody will. Subsidies are never easy issues.
I'm not sure I understand the connotation of allegation here. Is it alleged that being financed by a nation state or government is illegal, immoral or unethical? What, exactly, is being alleged?
Just look at NH who has high cost base, LCC invading Japan, and bad economy in Japan but still achieved record profits in the first 3 quarters in the FY.
Burning miles is the key for us but for Cathay they prefer the paying customer to offset those losses.
From what I read here, they get paid for mileage redemption tickets.
Sent from my iPhone using milepoint
True, but as you pointed out in another thread, they both have eliminated the B747's.
actually NH still has 744D but will soon get rid of them. But the point is CX has no one but themselves to blame for not getting rid of their 744 earlier
Exactly! Considering their current situation it is implausible that fuel costs and increased competition on diminishing premium traffic were surprises. All that was clearly foreseen five years ago or more. The story of JAL and rising China and Middle East competition were known events too. This was a simple failure of planning, albeit with sad consequences.
and yet they still don't seem to have any new strategy to react to the current situation after all these years.
Don't you imagine they might have been distracted with all the change of control issues and Chinese politics? I certainly have no inside information, but I share your sense of disbelief, if I am not inferring too much from your words, that Cathay and the Swire Group basically forgot to keep renewing their capital assets.
CX has been really tight in releasing premium seat award inventory.
They usually release it very close to departure when they can't sell the premium seats.
Which makes sense as they are trying to maximizing their profit by selling revenue tickets.
True, but good revenue management systems do help immeasurably in predicting probability of a given flights sales, allowing for earlier release of lower-yield space (e.g. awards and upgrades) when there is low probability of selling for higher yield. Such systems are far from perfect although they're far better than carrying an empty premium seat (or a Y one for that matter) at no yield at all.