Hit by Japan earthquake-tsunami, Cathay Pacific expands in Gulf

Manila Bulletin
By PRAVEEN MENON
June 16, 2011, 3:01am

ABU DHABI, June 15 (Reuters) – Cathay Pacific's revenue from Japan will remain low in 2011 after the devastating earthquake and nuclear meltdown continue to keep passengers away, its chief operating officer said.

Ivan Chu said revenue from Japan, which accounts for about 7 to 8 percent of the airline's total revenue, has dropped by about 2 percent so far, with passengers cancelling travel plans indefinitely over fear of a nuclear spillover.

''We have seen a major dip in the business and we have adjusted our capacity to align with the demand .... Tokyo is very much affected,'' Ivan Chu, the chief operating officer said in an interview in the United Arab Emirates' capital Abu Dhabi.

The airline, the world's biggest international air cargo carrier, which normally operates 7 daily flights to Tokyo, operated only 3 to 5 daily flights in June.

''We have seen a 1 to 2 percent drop in revenues but we expect the market to be slow for a while. We hope there will be an upturn in the last quarter.''

Chu said the passenger load factor to Japan at the moment is about 60 percent, compared with 75 to 80 percent before the earthquake.

The International Air Transport Association (IATA) cut global airlines' 2011 profit forecast by more than half to $4 billion this week as high oil prices, the earthquake in Japan, and political unrest in North Africa and the Middle East weigh on the industry's recovery.

''Fuel price is definitely a negative for us,'' said Chu.

Last year fuel prices accounted for 36 percent of Cathay Pacific's cost. He said the company will continue to hedge fuel to shield from the impact of fluctuating prices.

''All in all, I believe this is like the normal year for the airline industry. We are seeing a return to normal years and not a fantastic growth like we saw last year.''

The airline launched a four-times-a-week direct service from Abu Dhabi to Hong Kong on June 2, its fifth destination in the Middle East, as it eyes a double-digit growth in the region.

Chu said the political and social unrest in the region, especially in Bahrain, has impacted its business but the airline will continue to push to expand its reach in the Gulf.