Cathay Pacific improves connectivity and adds capacity to Adelaide

Cathay Pacific is improving connectivity in the South Australia to Europe, North America and Asia markets as it introduces a split schedule and adds capacity to Adelaide.


Summary:

  • Later this month Cathay Pacific is introducing a new schedule in the Adelaide market that improves one-stop connections in several city pairs while increasing capacity by 20%;
  • The new schedule will significantly improve Cathay’s position in the South Australia-Europe market, enabling it to compete more effectively against Emirates and Qatar;
  • The new schedule will also result in better connections to several destinations in Asia and North America;
  • Singapore Airlines, which is currently larger than Cathay in Adelaide (by capacity), may have to respond by also introducing a new schedule aimed at improving connections from Europe and North America.

Cathay currently operates four to five weekly A330-300 services between Adelaide and Hong Kong (depending on the time of year). All the flights depart Adelaide in the morning, arriving in Hong Kong in the afternoon. The current flight from Hong Kong departs in the evening and arrives in Adelaide the next morning.

From 28-Oct-2018 Cathay will have six weekly year-round services from Adelaide, with three frequencies departing in the afternoon and arriving in Hong Kong in the evening, along with three frequencies departing in the evening and arriving in Hong Kong early the following morning.  From Hong Kong the new schedule has three services departing in the morning and arriving in Adelaide in the evening, along with three services departing just after midnight and arriving in Adelaide just before noon.

The sixth frequency will result in 20% to 40% more capacity (depending on the time of year), which should be absorbable, given the improved connectivity beyond Hong Kong. The new schedule offers much shorter one-stop connections between Adelaide and several destinations in Europe, North America and Asia.

For example, most of Cathay’s European flights land in Hong Kong in the early morning, resulting in quick connections to three of the new Hong Kong-Adelaide service but very long layovers (around 12 hours) to all the existing Hong Kong-Adelaide services. There is the same issue for some North American and Asian destinations that have flights landing in Hong Kong in the morning.

Singapore Airlines (SIA) may also be compelled to introduce a new schedule in the Adelaide market to improve connectivity. SIA currently has the same issue as Cathay because its daily Singapore-Adelaide service departs in the evening whereas most of its Europe and South Asia services land in the morning.

As Blue Swan highlighted recently, SIA is improving its product and increasing capacity in South Australia from Dec-2018 as it transitions its Adelaide service from A330-300s to A350-900s.

See related report: Singapore Airlines aircraft changes in the Adelaide and Brisbane markets: the good and the bad

SIA could eventually introduce twice daily service to Adelaide, which will significantly improve connectivity, but is waiting for the delivery of 737 MAX 8s with a new lie-flat business class product (expected around 2020). In the interim, SIA should consider introducing a split schedule using A350-900s, which would enable it to compete more effectively on several South Australia-continental Europe city pairs.

Emirates and Qatar now have a competitive advantage as they offer quick connections in both directions between South Australia and a large array of European destinations. Cathay will close the gap with its new Adelaide schedule and now the pressure will be on SIA to improve its own connectivity to South Australia also.

Emirates and SIA are the largest foreign airlines in the South Australia market by capacity, both carrying nearly 190,000 passengers to/from Adelaide in 2017. Cathay and Qatar are the next largest but are considerably smaller, both carrying slightly more than 100,000 passengers.

However, the new Cathay schedule will enable the airline to narrow the gap – and if the new split schedule is successful at driving growth in sixth freedom traffic, a seventh frequency and larger aircraft could be introduced, giving Cathay as much capacity in South Australia as its two rivals.