Cathay Pacific CEO Tony Tyler was interviewed for the September issue of Australian Aviation Magazine and based on excerpts posted to other sites, he feels that the A380 is unlikely to be a big part of CX's fleet. He also feels that the A380 would have a higher CASM in a CX configuration, even with lower seat-mile costs.

Right now CX is focusing on RASM and he feels the 77W is the best plane for CX in that regard at this time, which is why their focus is on making it the core of their long-haul fleet. He's evidently keeping an eye on the 748, as well, to see how it might do in terms of RASM.

Something I found of serious importance is that he favors frequency over per-flight capacity. Much of the justification for the launch of the proposed A380-900 is that it would allow an airline like CX to consolidate two of their 77W flights into one A389 flight. So it looks like that idea may now be out the window, as CX would prefer to fly two smaller planes (which makes sense from a revenue-generation perspective).

Negotations have apperently started.

I'll believe it when I see it.

Agree with him - its quality and not quantity...

Key word here - time channels

I have always felt that the A380 would be a hard sell for CX. It has experienced so many ups and downs, and yet is still considered a premier airline. I think the way it sees things is that, even assuming it could combine two 777 flights into one A380, during periods of economic distress it might be lucky to fill up only one 777 thereby making the unfilled A380 more expensive to fly. This is something that SQ has experienced to some degree lately. Also, the number of passengers willing to pay for for the luxuries marketed with the A380 is decreasing, as we are now living in a world where customers are not as willing to pay for luxury products. It is not just about CASM, but also about trip costs. Whether it goes for the 748 is hard to say right now. I suspect it depends on how well the world economy recovers and how well the 748 performs. The best possible news for Boeing right now, after getting the 787 on track and up in the air, would be to find that the 748 exceeds performance expectations by at leat 3%. There appears to be a chance of this happening.

Well if CX's focus is on RASM and not CASM, then the 77W makes the most sense. The 77W can take any seating an A380 can (including SQ's Suites Class) and the lower overall seat count would drive fares up (supply vs. demand) and having multiple frequencies on smaller aircraft would allow you to schedule flights during peak demand periods throughout the day which also raise fares.

That's basically what Tyler is saying....

Sadly, the problem for CX is not quite as 'simple' as it seems ..

If you are flying a prime route (such as HKG-LHR-HKG) up against the likes of BA, QF, NZ and VS .. then the act of raising fares .. isn't quite as easy as it would appear.

All these competitors are quality airlines offering quality product - and in order to be able to demand a 'premium' on fares, your service / product needs not to be superior - but, indeed, exemplary.

However, on routes such as HKG-LAX-HKG where the competitor product is inferior, there may be some scope or range for your idea to succeed. Similarly, on a route such as HKG-YVR-HKG, there may be some advantage in being the predominant carrier on the route.

I would say that CX should consider itself * extremely * lucky that competitor Oasis Hong Kong ended up in bankruptcy. Had it not, CX would be facing considerably more difficult times thatn it is right now .. and that would be a competitive landscape that could have had the potential to drive CX almost to the wall.

Your post is a powerful argument for NOT buying the A380.

Well that describes CX, so what the problem again?

Also, never underestimate the advantage of being "the home team" on a market even as saturated as HKG-LHR. They can leverage their connections to the home market to push the "best" customers to their product, especially when that product is widely considered to be exceptional.

And as BeauNG notes, by offering a smaller plane, CX needs only a smaller segment of the "high revenue" market. When you only have 200 seats on a 77W to sell during peak demand, Yield Management should be a bit simpler than when you have 400 seats to sell on an A388.

"Quality product" is rather subjective. There is the "hard product" as well as "soft product"......

Economics come first. If you can't sell enough seats and not enough passengers are coughing up the big bucks to fly premium, then that makes the tough times even worse.

NZ's flying HKG-LHR now?
...if so, do they still have their LAX rotation as well??

IIRC, HKG-LHR is with a B772 (NZ-38/39-6x/weekly) and LAX-LHR is still a B744 (NZ 1/2-daily).

I appreciate your comment and it's validity, but there are issues that affect CX other than the pure 'economics' of the flight.

HKG is a particularly mature market. Further, it is also a market that relies internationally (rather than regionally) very heavily on long-haul traffic to small (and smaller) long haul markets, such as HKG to YVR, SYD, BNE, ADL, PER, AKL, JNB, SIN etc.

HKG-LHR, HKG-FRA, HKG-FCO, HKG-CDG and HKG-LAX are the exceptions here.

Recently, CX was operating 4 daily flights on HKG-SYD, where QF was operating 2 daily. While CX was seeking to address a frequency-driven model, the results simply didn't justify it. It has now been pulled back to 3 daily .. and may possibly revert to 2 daily .. using larger aircraft (B747-400's instead of a mix of B747's and A330's). That type of issue is network / route driven, rather than frequency-driven, I'm afraid.

HKG-LHR-HKG is another good example of this. And it's crucial to watch what your competitors are offering, product-wise - or that 'home-team' advantage can easily disappear. HKG-CDG-HKG will be an interesting market to watch .. when AF dumps an A380-800 into the mix.

Kim, conversely, while I appreciate your comment and its general validity, I think there are some specifics of CX's route structure that you're overlooking here. Yes, the markets you've listed are long haul and usually considered small. However, of those routes:
- YVR has HUGE volumes of traffic to HKG. The population of immigrants who came to YVR prior to the Hong Kong handover in 1997 is such that YVR is often referred to by locals as Hongcouver.
- JNB, while seemingly a thin route, is the financial hub of Africa, and has non-stop connections to 4 destinations in Asia (SIN, KUL, HKG and DEL/BOM - can't remember which). Given the economic ties between China and South Africa (China is officially Sth Africa's largest trading partner), and the level of Chinese investment in Africa generally, this market strong even if its is on the small-ish side
- ADL/AKL/BNE/PER - CX has no competition on these routes (only BNE is given token competition by QF). The market from these destinations for connections to points in Asia and Europe is strong enough to be one of EK's key focuses (you said so yourself in another thread).

So yes, CX relies heavily on intercontinental long-haul traffic (and to a certain extent, intercontinental connecting traffic), but that traffic is more or less solid (barring shocks like SARS etc).

Your explanation sounds like pure economics to me.