Cathay mulls low-cost venture as Jetstar Hong Kong's approval loom
 

Cathay Pacific believes that there must be "fair and reciprocal" opportunities for all airlines when an application from a proposed Hong Kong-based low-cost carrier is considered by the authorities.

The Oneworld alliance member has also not ruled out setting up a low-cost venture itself if Jetstar Hong Kong - a joint venture between Shanghai-based China Eastern Airlines and Australia's Qantas Airways - gets the go ahead, its chief executive John Slosar said in a wide-ranging interview with Flightglobal publication Airline Business.

Jetstar Hong Kong's application is being studied by regulators, and some believe that it may require a change in the laws, or at least a fairly liberal reading of them, to obtain approval as both China Eastern and Qantas are not designated carriers in Hong Kong.

In most Asian countries, only an airline that already has a presence in the country can set up a new carrier. A foreign carrier would usually need a domestic partner and is restricted to a maximum stake of 49% in the joint venture.

"We have made our views known - there has to be fair and reciprocal opportunities for all airlines. A scenario where one side gets things and the other side gets something in return, I don't know where that leads to," says Slosar.

"Every place has designation criteria for airlines. Australia has it, China has it, everybody has it at the moment. Airlines are not a 'go where you please' kind of business. It is still highly government-regulated."

While Slosar would not elaborate or directly confirm the crux of Cathay's opposition to the proposed joint venture, the Oneworld alliance member is believed to have brought up the fact there are restrictions on airlines that wish to set up an operation in places like China and Australia.

If Jetstar Hong Kong does get the green light, however, it will provide stiff competition to Cathay and its regional subsidiary Dragonair on the highly lucrative short-haul routes.

Slosar, however, says that Cathay "competes every day" with low-cost carriers such as AirAsia, Jetstar Asia and Tiger Airways on services to multiple points in Southeast Asia and soon, on services to Japan. It has held its own and in some cases, even won market share against the new entrants.

"Nobody is obligated to buy Cathay or Dragonair tickets. I have to give you great reasons to choose Cathay Pacific for your travel. One of the very complicated things in the business is that you have to be a fine dining restaurant, providing fabulous beds and great service in first and business class, and then something in between in premium economy, and back in economy, giving people fabulously great fares to get them to climb into your aircraft," he adds.

Industry sources say that Qantas first approached Cathay about the possibility of setting up a low-cost joint venture, but Slosar says that those discussions did not result in his airline "getting anywhere near to" becoming an investor in Jetstar Hong Kong.

He adds that Cathay will always keep a close watch on developments as it is about keeping the airline "more competitive in the market place", and that he and his colleagues are "out there knowing that we have to attract customers".

When asked if that could be an impetus for Cathay to get into the low-cost business, Slosar says: "It could be."

Well how about applying this to your employees Mr Slosar... :yuk:

They've already got their 'low cost carrier'...it's called Cathay Pacific. New hire pilots on meager salaries and no housing. How exactly can you get more low cost than that?

There's a little more to the low cost concept than just getting cheap pilots!!

How about having no IFE to save weight, leather type seats which last longer and require less cleaning, having cabin crew clean aircraft, having short turn-arounds of 20-30mins or so, no food but drinks/snacks for sale, high seat count with less legroom and seat width so you can pack more pax into each plane, cheaper headquarters in some older office building somewhere cheap, non-branded stationary for office staff, fewer staff benefits (for ground staff anyway - they would still be willing to work for the company), less travel benefits, no 13th month, no profit sharing scheme, no free/subsidised staff transport, single class cabin, no frequent flyer programme, no airport lounges...these may be little things on their own but they all add up to additional cost which although allows you to charge more in ticket price ultimately does not fit the low cost model.

CX does have low costs in some areas and does offer some cheap tickets which can rival LCCs in price but at the end of the day we are a full-service premium airline which occassionally sells cheap tickets.

Yep - this. Plus no interlining/ on line baggage transfers, tickets sold pretty much exclusively via internet only, much less complex IT systems, no night stops by crew (all flights start at home base). It is saying that an aircraft is a bus at 30,000 feet, and stripping away anything that isn't about getting from A to B at lowest cost

Cathay Pacific response to Jetstar Hong Kong looms | Plane Talking

b.

CX will set up a low cost airline soon. It will be called.....Cathay Pacific. You've been warned.