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Wednesday, June 1, 2011

Cathay cool on budget plan

CATHAY Pacific has played down the prospect of following Qantas and Singapore Airlines in setting up a low-cost offshoot as it steps up its expansion into the fast-growing Chinese travel market.

Singapore Airlines last week announced plans to launch a long-haul budget carrier within the year, in a direct challenge to Qantas budget subsidiary Jetstar and Malaysia's long-haul airline, AirAsiaX.

And Qantas has rapidly increased its focus on Jetstar since it was established in 2003.

Cathay Pacific is expected to expand into the growing Chinese travel market. It has a 19 per cent stake in Air China.

But Cathay Pacific's new chief executive, John Slosar, said the airline was unlikely to set up a low-cost offshoot because its key goal was to expand its network and passenger traffic ''through the Cathay brand''.

''I don't see Cathay going in that direction very much at the moment,'' he told a business lunch in Sydney yesterday.

''One of the things that is always under-said about aviation is how much of your traffic is repeat traffic.''

Mr Slosar, who replaced Tony Tyler in April, refused to answer questions about whether Cathay was interested in forming a joint venture with Qantas, but said: ''We never say never to anything.

''We have certainly not to date had any specific discussions [with Qantas] that I can report.

''The one thing you never say in this industry is 'never', because things are always changing. For a long time we said we were loath to join a global alliance like Oneworld.''

Cathay Pacific has long been seen as a likely partner for Qantas.

The Hong Kong airline has access to the rapidly growing Chinese market, which has been forecast to grow from 267 million annual passenger trips to 1.5 billion by 2030. Cathay has a 19 per cent stake in Air China, and last year formed an air-freight venture with the mainland carrier.

''The aviation sector in China is growing at an astonishing rate,'' Mr Slosar said. ''I am sure Qantas would be very interested in expanding their operations into China, especially given the amount of traffic there.''

Qantas has previously highlighted its interest in building a base in mainland China - most likely the financial capital of Shanghai - as part of a launch pad for flights to Europe.

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