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Aviation History
2000
2000 - 0055.PDF
Dragonairs move towards autonomy could threaten the status quo in Hong Kong (and now has a 25.4% stake), bought a further 38% of the regional carrier. Later thatyear, the Swire/Cathay shareholding grew to 43 %, while CrriC became a 46% stakeholder. In 1991, Dragonair decided to replace its 7 3 7s with Airbus A3 20s, with deliveries starting from March 1993. Two widebodied Airbus A3 30s joined the fleet in 1995. CNAC bought into the company in 1996, taking an initial 35.86% stake in exchange for abandoning plans to set up its own Hong Kong carrier, which was tentatively called China Hong Kong Airlines. OTIC retained 28.5%, Swire and Cathay a total of 25.5%, and the Chao family remained as 5.02% shareholders. Then, when CNAC listed on the Hong Kong stock exchange in December 1997, its share holding was boosted to 43.29%, leaving the OTIC, Cathay and Swire stakes untouched. Dragonair operates an all-Airbus fleet, which comprises five 156-seat Airbus A320s, two 190- seat A32 Is and five 322-seat A330-300s. Athird A3 21 is due for delivery next year. The airline has leased one A320 to Taiwan's TransAsia Airways sincejune this year, and returned a sixth A3 30 to International Lease Finance in September as part of its cost-cutting efforts in the economic crisis plaguing Asia since 1997. "There was no confidence that we had suffi cient need for a sixth A3 3 0," says airline gener al manager Felix Hart. As soon as the sixth A3 3 0 arrived in October 1998, Dragonair tried to lease it out. The carrier was eventually forced to put it into service on routes that did not generate enough revenue to be sustain able, and finally decided to return the aircraft early. Hart says there is still a gap in the fleet between the A321 and the A330-300, and that Airbus Industrie has spoken to the airline about the reduced-capacity A3 3 0-100, being proposed as a replace ment for older A300s and A310s. The 250-seat A330-200 would also be a pos sible contender to fill this size gap. The airline is not contemplating Boeing types. "We are an Airbus carrier, and there's no reason to change our alle giance," says Hart. The first six months of 1999 contin ued to be difficult for the airline, although traffic figures across Asia have shown signs of recovery. According to CNAC, Dragonair's first-half operating profits were 50.3% below the figure for the same period the previous year, despite the fact that overall revenue fell by only 4.4%. At the same time, available seat kilometres (ASKs) rose 7 %. Dragonair does not publish its financial results, but is known to have been highly profitable in the past. One Hong Kong-based analyst concludes: "With revenue holding up pretty well and ASKs quite stable, it's clear that yields are down and their financing charges are up because they've got more aircraft." He says the airline has not done enough to cut its costs over the past few years, unlike Cathay. "The first quarter was not good for us at all," Dragonair concedes. Nevertheless, the carrier says the year to date has been "a reasonable per formance considering the recession". Up to the end of October, passenger traffic on routes in China has risen by 9% (from 1.2 million to 1.31 million people) compared with the same period in 1998, has increased by 18.3% (488,000 to 578,000) on routes outside China, and by 11.6% overall. Airlines all over Asia found 1998 was a depressed year, however. CARGO INCREASE Cargo traffic has shown a more dramatic increase of 50.1%, from 35,OOOt in the first 10 months of 1998 to 52,500t in the same period this year. Dragonair chief executive Stanley Hui says: "Our cargo operation continues to grow at a fast pace, with the amount of cargo we're car rying setting new records every two months on average." The airline set up a dedicated cargo- services team in Shanghai in June as part of its effort to boost its operations, and says similar teams will be operating in Beijing, Xiamen and Hangzhou before the new year. Dragonair set up its cargo department in mid-1997, consolidating all cargo services into the department in March this year. Of the air line's total of 25 destinations, it has cargo traffic rights on 11 mainland Chinese routes and eight other Asia-Pacific routes. With a full passenger Cathay is looking at possible replacements for its 141-400s FLIGHT INTERNATIONAL 22 December 1999 - 3 January 2000 53
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