Cathay Pacific Airways is shifting the focus of all-cargo subsidiary Air Hong Kong to intra-Asian operations, while in talks to acquire a fleet of Airbus A300-sized freighters for regional operations.

From July, Air Hong Kong will stop serving Brussels, Manchester and Dubai but continue serving Osaka and Seoul. Cathay currently leases three Boeing 747-200Fs to Air Hong Kong but two will be operated in future by Cathay itself, which now has four 747-200Fs and five 747-400Fs, in addition to 66 passenger aircraft. Cathay will, after taking back the two 747-200Fs from Air Hong Kong, add Manchester and Brussels to its own cargo network. It already operates to Dubai.

The changes represent cuts for Air Hong Kong but the moves are thought to be related to plans by Cathay to acquire smaller freighters for use on intra-Asian services. This would result in the growth of its subsidiary, most likely through an expansion of its partnership with DHL.

Industry sources say Cathay is in talks to add between five and 10 A300- or Boeing 767-sized freighters in a move that will make it the first major Asian airline to operate medium-size all-cargo aircraft. Rival Singapore Airlines, for example, has said many times over the years that it does not see any need for what it calls "baby freighters".

Cathay has since March 2000 had a novel three-year arrangement with DHL under which it carries express freight overnight to four Asian points on Boeing 777 and Airbus A330 passenger aircraft that would otherwise remain parked at airports. The tie-up has been considered highly successful for both Cathay and DHL, and since its launch the two have considered expanding it with dedicated freighters. Air Hong Kong is seen as the ideal vehicle for the tie-up with its lower cost-base compared with Cathay.

Until February, Cathay owned 75% of Air Hong Kong but now has full control after buying the remaining 25% from Shun Tak Holdings in a deal worth HK$194 million ($25 million). Air Hong Kong chief operating officer David Saechiu says: "This is a positive step for Air Hong Kong and enables us to focus our efforts on taking advantage of future opportunities within the region. The integration of our long-haul cargo operations within Cathay Pacific's worldwide network will generate greater economies of scale within the group."

Source: Airline Business