Cathay Pacific adds capacity to Adelaide as competition to China intensifies

14 August, 2017

Cathay Pacific Airways has boosted capacity in the Adelaide market by 17% with the introduction of a fifth year-round frequency. The extra flight improves Cathay's position in the South Australia-China market, which is expanding rapidly but became more competitive following the late 2016 launch of services to Adelaide by China Southern Airlines.

Cathay Pacific has served Adelaide with nonstop flights to Hong Kong since Mar-2014, when it dropped the tag sector from Adelaide to Melbourne. In upgrading Adelaide to nonstop Cathay Pacific reduced Adelaide from seven to four weekly frequencies, but with an increase in overall capacity for the South Australia market as previously the flight was shared with Melbourne on a circle routing.

Cathay Pacific maintained an Adelaide-Hong Kong schedule of four weekly nonstop flights from Mar-2014 to Dec-2015, when it added a seasonal fifth weekly frequency for the peak months of December, January, February and March. The fifth weekly seasonal flight was again operated for the same four months last winter.

As the South Australia-China market continues to grow rapidly it should be able to accommodate growth from Cathay Pacific as well as support new direct services from Chinese airlines.

In early Jul-2017, Cathay Pacific introduced the fifth frequency on a year-round basis. This will drive a 17% increase in seat capacity for the Adelaide market for the fiscal year starting 1-Jul-2017 (FY2018). Capacity will be up 25% year over year for eight months but flat for four months, resulting in a year-round increase of approximately 17%. Cathay Pacific serves Adelaide with 251-seat three class A330-300s, providing the Adelaide market with a lie flat business class and premium economy product as well as regular economy.

The additional year-round frequency from Cathay should help drive a further boost in Adelaide's overall international passenger traffic for FY2018. In FY2017, Adelaide's international traffic was up by 11% to 952,000 passengers. The increase in FY2017 was driven primarily by new routes from Doha by Qatar Airways and from Guangzhou by China Southern.

Cathay's traffic in Adelaide was also up slightly in FY2017 - and has increased consistently since the airline upgraded the Adelaide-Hong Kong sector to nonstop in 2014. Cathay Pacific carried just under 105,000 passengers to and from Adelaide in calendar 2016, according to BITRE data. Cathay's Adelaide traffic last year was up by 8% compared to 2015 and by 77% compared to 2013, the last full year it still served Adelaide as a tag with Melbourne.

Cathay Pacific Adelaide-Hong Kong return passenger traffic: 2013 to 2016

2013 2014 2015 2016
59,081 77,197 97,198 104,764

Source: CAPA - Centre for Aviation and BITRE

Cathay Pacific carried 7,508 passengers to and from Adelaide in May-2017, the most recent month with available BITRE data. Cathay's share of the Adelaide international market was 10.6% in May-2017. In calendar 2016, Cathay's share of the total Adelaide international market was 11.3%.

The year-round fifth frequency should enable Cathay to maintain approximately 11% market share in Adelaide as its capacity increase is roughly in line with the market's overall increase in capacity. The fifth frequency should allow Cathay to grow traffic in the local Adelaide-Hong Kong market as well as on the one-stop markets it competes in, including Adelaide-mainland China.

Cathay Pacific's Adelaide-mainland China traffic has grown significantly over the last few years as Chinese visitor numbers to South Australia has surged. However, Cathay Pacific has ceded Adelaide-China market share this year to China Southern, which became the first Chinese airline to serve Adelaide in Dec-2016 when it launched three weekly flights from Guangzhou.

In the first five months of 2017, Cathay accounted for approximately 20% of Adelaide-mainland China bookings while China Southern accounted for a leading 42% share. In the same period of 2016, Cathay accounted for a leading 35% share of Adelaide-mainland China bookings, according to OAG Traffic Analyser data.

As the South Australia-China market continues to grow rapidly it should be able to accommodate growth from Cathay Pacific as well as support new direct services from Chinese airlines. Chinese visitor numbers to Australia increased by 48% in the year ending Mar-2017 to 50,000.

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