HONG KONG: Cathay Pacific’s purchase of rival HK Express was an inevitable plunge into the no-frills market as the premier marque belatedly faces the reality that it can no longer ignore the budget sector, analysts say.
The move allows Cathay to take over the city’s only budget carrier and gifts it much needed slots at one of the world’s busiest transport hub – prompting many to ask why it had taken the airline so long to make such a move. Asia-Pacific is now the world’s largest market for low-cost carriers, accounting for nearly 600 million seats in 2018, according to CAPA Centre for Aviation.And thanks to the region’s booming middle classes, seat capacity has quadrupled over the past decade.
By March 2017 Cathay reported its first annual net loss in eight years and announced a three-year overhaul to cut costs and improve efficiency. “It’s in their home market, they have to look at it, and quite frankly they’d be silly not to do it,” he told AFP. Shukor Yusof, the founder of aviation consultancy Endau Analytics, said Cathay’s brief foray into the red changed thinking at the company.