Roberto Abbondio, UK head of sales and marketing, talks about how Cathay Pacific plans to attract more business travellers
What’s your reaction to Hong Kong Airlines’ decision to suspend its service from Gatwick in September?
We do not comment on the commercial decision of other airlines. We compete with all airlines and Hong Kong Airlines is one of them. It just shows how difficult the aviation industry is. London-Hong Kong is a very busy route – you have also got British Airways, Air New Zealand and Virgin Atlantic. We are still the biggest player with 50 per cent of the market. What we are concentrating on is doing well ourselves and being better than we were yesterday.
How has your new premium economy seat been received by business travellers and is the product designed to appeal to the corporate market?
It is going very well and from a UK point of view it was much easier to launch as premium economy is already a well-known and established product. From Hong Kong, there was much more of a build-up to the launch as there is not much premium economy on other Asian carriers so it’s not so well-known as a product. From London, premium economy is doing well and currently it’s on two of our four daily services – by the end of the year we will have it on all four flights. From a corporate sales point of view, it’s very useful to have it – especially as a lot of corporates in the UK have policies that only allow premium economy to be booked rather than business class. Previously we found many situations in which we were cut off through not having premium economy.
Where are you in the roll-out of your new business class seats – are they included on all flights from the UK yet?
By the end of August, the new business class will be on two of our Heathrow flights – currently it’s on one-and-a-half, depending on which aircraft is being used. It should go up to three or four by the end of year. It will definitely be on all our London flights by the first quarter of next year. We think it’s very important to still be investing in our product even with all the financial uncertainty so we can become stronger when the economy picks up. We are switching to Boeing 777s on the London route from early next year and hope it will be all B777s by the end of 2013.
How are your business travel sales from the UK so far in 2012 – what sales patterns or trends are you seeing?
There’s no doubt that it’s a tough year with the downturn in Europe and continuing financial crisis. It’s an uncertain time and corporates are being careful with their money. But the reality is that over the last three to five years it’s been very up and down. The business is still there as companies need to travel but maybe they are looking to get more out of each trip, so instead of taking 12 trips a year they can cut it down to nine or 10. But they are still flying in the same cabins and doing fewer trips rather than trading down.
What else are you doing to attract corporate travellers and what innovations have you got planned in terms of mobile apps and social media?
We have been quite active in social media for the last couple of years. We are using both Twitter and Facebook as communication and engagement platforms with our customers. Twitter is working particularly well for communication with customers who are on the move. We are trying to innovate as much as we can – passengers can now connect their own devices including iPads and laptops to the inflight entertainment system. The next big thing is going to be connectivity onboard and we should have wifi by next year – it’s what corporates have been asking for. It will be across all the cabins and will have a big impact for business travellers, particularly as it’s a long flight to Hong Kong and they will be able to get a lot done in those 12 hours when they can stay connected.
How much are cost rises such as the price of fuel and increased taxes (eg: Air Passenger Duty/Emissions Trading Scheme) affecting your UK business?
Costs have been skyrocketing for all airlines and fuel prices have been a killer. While the price has come down a bit recently, if you look over the last eight to nine months the average fuel price has never been higher. We’ve had some very good months with all the cabins full but the costs have been just so high.
That’s one of the reasons we are renewing our fleets as it will cut our fuel bill. We have put a big order in for 48 Airbus A350s which will start coming in two years time. This will also help corporates who are now asking about our green credentials in their RFPs. We will never be carbon neutral but B777s are 23 per cent more efficient and the A350s are even better.
APD has also had a big impact for us because those people who fly with us have to pay £81 for economy or £162 for all other cabins, including premium economy. Then we have ETS on top of that which we will have to pay. It all means that the small margin airline’s make is being squeezed even more. The only things we can do are to try to be more efficient and keep costs under control at the same time as bringing revenue more effectively.
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