Cathay Pacific Airways Ltd (國泰航空) expects profitability on seats sold on Hong Kong-Taipei flights to narrow because a new air agreement will increase frequencies and the number of competitors on the route.
"We're expecting yields to fall, but we'll keep profits up because we have a big network and get flights to Taipei from Europe, North America, and South Asia," said Tony Tyler, Cathay's director of corporate development.
Hong Kong and Taiwan carriers last weekend reached a new five-year accord that will increase the number of airlines flying between the city and the island to six from four, and add more flights. Hong Kong-Taipei flights are among the most profitable for Cathay because direct flights between mainland China and Taiwan have been banned for five decades.
Cathay secured the right to operate 103 flights a week to Taipei from July 1, up from 100 before. That will rise by an unspecified number later in the term of the new contract.
Hong Kong Dragon Airlines Ltd (
Dragonair will start three daily passenger flights and twice-weekly cargo services between Hong Kong and Taipei this month. It's the first time Dragonair competes head-on with Cathay on passenger flights.
EVA added 24 new flights a week under the new contract, and will start another nine flights in the summer of 2004, the Mainland Affairs Council said in a statement on Sunday. Under the old agreement, EVA had 16 flights a week.
Mandarin Airlines (華信航空), owned by China Airlines Co (中華航空), Taiwan's largest carrier, has started operating eight flights a week on the route and will add eight more from the summer of 2004.
Under the old accord, the only Taiwan airlines flying the route were China Airlines and EVA. China Airlines didn't receive any extra flights after it had its fifth fatal crash in 11 years in May.
Air Hong Kong (華民航空), Cathay's wholly owned cargo subsidiary, will fly 400 metric tons of cargo a week, according to the new accord. The freight carrier had no flights under the old agreement.
Tyler said Cathay doesn't plan to order more planes in the next two years because it recently ordered six aircraft.
Cathay has three Airbus A340-600 planes being delivered later this year and in early 2003. In addition, it in May ordered three Boeing Co 777-300 planes and three Airbus SAS A330-300 aircraft to serve short-haul and medium-haul routes in Asia. The new orders will be delivered by early 2004.
"We wouldn't be ordering new aircraft if we weren't taking an optimistic view of future prospects," he said.
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