Cathay celebrates milestone
The date for the party had long been set. But last Friday, when Tony Tyler, chief executive of Hong Kong's Cathay Pacific Airways, arrived to celebrate 25 years of service to Vancouver, there couldn't have been a more poetic backdrop for the company's festivities.
Cathay's upstart rival, Oasis Hong Kong Airways, had shut down abruptly just a few days earlier.
Consumers were fuming and travel agents were shaking their heads. Estimates are that the Oasis failure has left some 60,000 bookings on the hook. Even the Vancouver Board of Trade had to deal with some 35 seats it had booked with Oasis for a conference in May.
And so, at the behest of the Hong Kong government, Cathay stepped up with a special deal for passengers stranded by Oasis.
"So far, we have rescued 2,000 passengers out of Hong Kong," said Tyler in an interview, adding that that included service to London, Oasis' other destination.
Tyler said: "To be honest, [Oasis] has never been a big thorn in our side. We never expected it to last. We know the business quite well. Their business plan didn't make sense, though I think high fuel prices accelerated their demise."
That may be the case, but for the brief 10 months that Oasis flew to Vancouver, it did ignite buzz about travel to Hong Kong, with people who had never been there before packing their bags and others heading back and forth just to shop and eat.
Tyler disputes claims by airports in Hong Kong and Vancouver that Oasis boosted traffic on the route to between 30 and 50 per cent, but admits that "if you price well below cost, you are going to price some people into the market."
Now, as jet fuel costs have skyrocketed and credit markets have shrunk, a handful of airlines have bitten the dust in the past few weeks and more are likely to follow.
Tyler, however, thinks that the low-cost model has particular challenges in Asia.
"Getting traffic rights to fly between third countries is difficult in Asia. The distances in Asia are a lot longer, so it's hard to get high utilization . . . . There are not a lot of cheap airports in Asia as there are in the U.S. or Europe. But the main reason is that carriers in Asia are already serving low-fare markets by selling the back-end of their wide-body, twin aisle jets. For $130, you can fly Cathay to anywhere in Asia; it's for a limited period, and it's not every seat, but those fares are out there, so it's hard for others to sustainably undercut you and grow fast doing so."
That being the case, "I believe it wouldn't be in Cathay Pacific's interest to start another so-called low-cost carrier in parallel with itself," said Tyler.
Talk then turns away from other airlines and models and their problems.
After all, it is Cathay's party and it's hard not to gloat. In 2007, the airline saw both record profits of $976 million and record numbers of passengers, at 17.8 million.
On Vancouver, Tyler said: "We started 25 years ago with two flights a week and now we have three flights a day. That's quite something."
Tyler himself was dispatched from Hong Kong in 1983 to start up the Vancouver operation, Cathay's first in North America. He remembers living for a year- and-a-half in a Vancouver bungalow on Minto Crescent off Granville Street (which he saw, on a quick drive from the airport on his way downtown, is still there).
"In 1983, I remember being picked up at the airport, driving into town and looking around and thinking, 'Where is everybody?' My God, how are we going to fill our flights to Hong Kong? There's nobody here.
"Vancouver was a sleepy little place then and it was in the grips of one of the worse recessions. The B.C. economy was in a terrible state. But, on the day, all these Chinese people emerged and descended on Vancouver airport and I thought, 'We are going to be all right.' "
In 1997, the airline established a cabin crew base here that today employs 205 people. By comparison, similar offices were not established in Toronto, San Francisco and Los Angeles until 2006-07.
"I have watched Vancouver over a 25-year period," said Tyler, who makes almost an annual trip to Whistler. "I have seen it growing and developing and the traffic building up."
In talking about Cathay's years in Vancouver and how they have mirrored the city's relationship with Hong Kong, Tyler said: "Lots of Hong Kong people have come to live here. Most have gone back. And now, we have Hong Kong and little Hong Kong in Vancouver and there is an enormous amount of traffic between the two. Kids have come here for school, university. Some have family here, there. Businesses have been set up, developed and grown . . . and perhaps not everyman on the street, but the business elite of Hong Kong do see Vancouver as part of their patch."
Tyler is aware that the next wave of migration to Vancouver is definitely a lot more focused on traffic to and from mainland China, but believes that "we will be part of that story too."
"We make our living out of connecting people over Hong Kong. Even though there will be more direct services, we will still capture a share of that traffic."
http://www.canada.com/vancouversun/news/business/story.html?id=5e734e7d-08d7-4eaf-9668-17d22bb1ef45
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You see a lot of things in mainland China. Spitting on floors of restaurants, blowing their nose on the sidewalk.
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