Claim that CX is about to cut capacity by 10 per cent

[Melburnian1]

An anonymous contribution on the Business Traveller Asia website claims that at the end of August 2016, CX will slash total capacity by 10 per cent, but has yet to announce which routes or flights will go.

The suggestion also is that BKK is affected and that some CX HKG-based staff have been asked to take leave with the business facing 'intense yield pressure.'

As always, these sorts of claimed 'internal' (staff) suggestions require verification. However it was not written in a sensationalist manner so there may be some truth to it. Time will tell.

If I recall there have been occasional media reports that yields for various airlines ex and to Australia have declined: QFi may have been among those mentioned, and VAi is not doing well with the greater competition across the Pacific to LAX. The monthly BITRE reports give us the picture on the percentage of seats filled by each international airline but that does not answer whether or not yields are at what airline beancounters, executives and shareholders regard as 'acceptable.'

 

[Isochronous]

QFi is going gangbusters so to say QF yield internationally is struggling wouldn't appear to be true.

 

[OATEK]

An anonymous contribution on the Business Traveller Asia website claims that at the end of August 2016, CX will slash total capacity by 10 per cent, but has yet to announce which routes or flights will go.

The suggestion also is that BKK is affected and that some CX HKG-based staff have been asked to take leave with the business facing 'intense yield pressure.'

As always, these sorts of claimed 'internal' (staff) suggestions require verification. However it was not written in a sensationalist manner so there may be some truth to it. Time will tell.

If I recall there have been occasional media reports that yields for various airlines ex and to Australia have declined: QFi may have been among those mentioned, and VAi is not doing well with the greater competition across the Pacific to LAX. The monthly BITRE reports give us the picture on the percentage of seats filled by each international airline but that does not answer whether or not yields are at what airline beancounters, executives and shareholders regard as 'acceptable.'

Has anyone done the maths on the QF cutbacks vs new routes over last few years? SYD-LHR was 50% reduced for example? They seem to have off-loaded more planes than they retrieved from JQ.

I have flown ex-SYD with CX several times over the last two years, and the flights look very busy, but sooner or later the expansion of Dragon must make an impact on CX routes in Asia.

 

[Melburnian1]

I have flown ex-SYD with CX several times over the last two years, and the flights look very busy, but sooner or later the expansion of Dragon must make an impact on CX routes in Asia.

OATEK, I too have been on CX flights ex and to Australia that have been full or extremely close to it, but until we know what the yield per available seat-kilometre is, being 'busy' may not be sufficient if average fares in Y or J, or both, have declined.

 

[yohy?!]

A 'cut' of capacity by 10% in a single year would be high for CX but not unprecedented - unlikely to have much to do with intra-Asia capacity as this is important for through traffic onto the lucrative transpacific, european ultra long haul routes.

The pressure on Australian airlines would be more intense given we are at 'the end of the line' so to speak - all the heavy discounting going on would tell you everything you need to know about which routes have poor yields - eg transpacific is stuffed for all carriers with the AUD decline, some Asian routes that have LCC presence, kangaroo route with all the competition from the ME

 

[Melburnian1]

CX is very susceptible to economic conditions from business travel to Europe & the USA on their ultra long haul routes, such capacity changes are not unheard of and would likely be on the London and North America routes. Their cargo business also seems to have grown too fast...

yohy?!, would you expect that any such reductions would only be for the northern winter (which 'officially' tends to begin about a week before the end of October) and then flights will again be built up in frequency in April 2017, or so you suspect it is only when CX is convinced that economic conditions have improved (bearing in mind competitors' air capacity behaviour) that flights will at least partially resume an upward frequency trajectory?

Would the recent strong of Islamic terrorism incidents in Europe have anything to do with CX's alleged decision, bearing in mind that travel to Paris for instance was down somewhat before the Riviera truck terrorist struck, and may be expected to further decline if past leisure traveller behaviour is any indication.

 

[yohy?!]

yohy?!, would you expect that any such reductions would only be for the northern winter (which 'officially' tends to begin about a week before the end of October) and then flights will again be built up in frequency in April 2017, or so you suspect it is only when CX is convinced that economic conditions have improved (bearing in mind competitors' air capacity behaviour) that flights will at least partially resume an upward frequency trajectory?

suspect they will be playing a waiting game to see how things look after the christmas-chinese new year period

 

[trippin_the_rift]

Retiring of 747 and 340s would have this impact....

747s are going in a couple months

 

[wandering_fred]

I suspect it would not be a great surprise if I said I prefer transiting Asia to get to the USA rather than SYD. However at the moment if I am willing to fly in the Y cabin, I would suggest CX cannot compete on price, even though they fly to a better selection of destinations in the USA and Canada.

OTOH with a bit of judicious positioning PEY or J through Asia can still be the better choice.

Happy wandering

Fred

 

[Limewood]

I suspect it would not be a great surprise if I said I prefer transiting Asia to get to the USA rather than SYD. However at the moment if I am willing to fly in the Y cabin, I would suggest CX cannot compete on price, even though they fly to a better selection of destinations in the USA and Canada.

OTOH with a bit of judicious positioning PEY or J through Asia can still be the better choice.

Happy wandering

Fred

Right on there Fred.

Mrs Lime and self both go in J and have found with the stingy release of award seats from QF and their outrageous fees we go direct to Canada and USA we go the long way around via HKG using AS miles mostly, have also done 2 in J to Europe out of HKG too using QF points but for some reason without the hefty fees. Also, we have long time ex pat Aussie friends in HK we have a great time if not in transit.

 

[andmiz]

There's a lot of misinformation being spread here. The 10% reduction in capacity is due to a new Air Traffic Control system being implemented by HKATC and operators have been requested to assist in lightening the load to allow the system to cope. As a result, landing slots have been slashed and with Cathay being the largest airline operating out of HKG, they're copping the brunt of it.

HKG, as amazing as an airport hub as it is, suffers from the 'air wall' directly to the north, where PRC airspace creates severe limits in handling air traffic.

It's clearly only a short term reduction in CX capacity given the number of new airframes being delivered over the coming years.

 

[moa999]

Has anyone done the maths on the QF cutbacks vs new routes over last few years? SYD-LHR was 50% reduced for example?

Not as simple as looking at SYD-LHR numbers. SIN carried substantial capacity itself, hence the number of A330 services that QF continues.

DXB had far less direct traffic.

I can only assume the growth of LCCs around HKG (in Singapore, Malaysia, Japan, Korea) combined with larger Chinese airlines with direct flights from many Chinese cities to o/s destinations is hurting CX

 

[yohy?!]

There's a lot of misinformation being spread here. The 10% reduction in capacity is due to a new Air Traffic Control system being implemented by HKATC and operators have been requested to assist in lightening the load to allow the system to cope. As a result, landing slots have been slashed and with Cathay being the largest airline operating out of HKG, they're copping the brunt of it.

HKG, as amazing as an airport hub as it is, suffers from the 'air wall' directly to the north, where PRC airspace creates severe limits in handling air traffic.

It's clearly only a short term reduction in CX capacity given the number of new airframes being delivered over the coming years.

HK ATC are shockingly bad generally - have been that way for years, used to fly long haul monthly when living in HK and every return leg would be delayed 20-30 mins due to their mismanagement

 

[amaroo]

Results aren't good - the OP source maybe correct! Nocookies | The Australian

Cathay Pacific Airways says its profit tumbled in the first half of the year as economic weakness in China and other important markets cut passenger demand.Hong Kong's biggest airline on Wednesday posted interim net profit of 353 million Hong Kong dollars ($A59.12 million), down 82 per cent from the same period a year earlier.

The airline said its earnings were hurt by "economic fragility and intense competition" in the January-June period, putting sustained pressure on revenue, which fell 9.2 per cent.

The company, which also operates regional carrier Cathay Dragon, said passenger numbers rose 2.7 per cent but the money it earned from them fell 10 per cent.

Cathay said it expects business conditions to remain challenging for the rest of the year.