Cathay sees no need for low-cost arm

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Cathay Pacific Airways sees no need for a low-cost arm at present, as it continues to thwart the launch of Jetstar Hong Kong.

In a recent interview, Flightglobal asked Cathay's chief operations officer Rupert Hogg about its LCC plans.

“We’ve looked at that (LCC) business model, we believe our business model is right for us, that we’re going to stay with our business model," he says. "That means when people travel on business or travel for holiday, we always have to have competitive fares otherwise we go out of business. We’re not in any way supported other than our shareholders and our results.”

Cathay had previously said it could set up a low-cost unit if Jetstar Hong Kong gets the go ahead to launch operations. The joint venture between Qantas Airways, China Eastern Airlines and Hong Kong’s Shun Tak holdings applied for an AOC last year, but faced objections from the onset with Hong Kong carriers arguing that it does not meet regulatory requirements since ultimate control of the carrier lies in Australia.

“We maintain that this is not an airline where the key decisions are going to be made in Hong Kong. It’s a franchise operation where key decisions will be made in Melbourne and under Hong Kong law, we maintain they won’t qualify. That’s the issue for us,” says Hogg.

Cathay has benefited from Hong Kong passengers’ relative lack of low-cost options. Capstats data shows that in 2005 Cathay and its subsidiary Dragonair provided 13.9 million seats, or 46.4% of total capacity that year. In 2013, it has grown that figure to 18.7 million seats, representing 48.2% of total capacity.