Cathay Pacific Airways is continuing its North American market resurgence by adding destinations and frequencies to take advantage of strong demand.
The latest addition is a 4X-weekly nonstop route from Hong Kong to Boston, set to launch in May 2015. The carrier also increased capacity to its Los Angeles gateway in June and to Chicago earlier this month, as well as launching service to Newark in March. New Boeing 777-300ER deliveries have been aiding the growth in these markets.
North America is proving to be one of the major focuses in Cathay’s growth strategy. In July, it increased capacity 22% in the market, with traffic increasing 20.5%. This rate of increase far outstripped the other regions, with the airline’s global capacity growth rate just 5.9%.
While the rapid capacity expansion in North America has caused its yield and load factors to slip slightly in the market, loads remain higher than in the carrier’s other regions. The airline also said its revenue rise has remained “in line” with capacity. Cathay described its US routes as “very strong” in the first half of 2014, although it admits Canadian yields have been under pressure.
The North American expansion has coincided with a rebound in profitability for Cathay. The carrier increased its first-half net profit to HK$347 million ($44.8 million), compared to a net profit of HK$24 million in the same period in 2013.
In 2012, Cathay was forced to trim North American service as it cut costs and accelerated the retirement of some of its Boeing 747-400s. The airline’s North American capacity was down about 15% year-over-year midway through 2013. However, when its premium traffic demand began to rebound, the North American market led the way. By the end of 2013, Cathay had resumed all its previously cut services.
When CEO Ivan Chu took the reins last year, he said the carrier was bullish on North America and would be adding both frequencies and destinations. He also said the arrival of its Airbus A350s in 2016 will open up the possibility of thinner routes into North American secondary markets.
With the addition of Boston, Cathay will serve six markets in the US and two in Canada. The airline will also have 14 freighter markets in North America after it adds Calgary in October.