Cathay to "compete hard on price" against Virgin on Melbourne-HKG

By David Flynn , May 1 2017
Cathay to

Cathay Pacific has promised to be price-competitive on the Melbourne-Hong Kong route as Virgin Australia counts down to the July 5 launch of flights between the two cities.

However, the Hong Kong-based airline has indicated it will stop short of a price war which substantially drives down prices and profit margins.

"We'll compete hard on price, but this doesn’t mean we’ll lead pricing down," says Richard Jones, Cathay Pacific's Sales & Marketing Manager for Australia.

"It’s our job to ensure the market sees we are worth the little extra they might pay."

According to statistics from the Federal Government, the Melbourne-Hong Kong route carried an average of 59,000 travellers per month over the last quarter of 2016.

Writing in Cathay Pacific staff magazine The Journey, Jones allows that while Virgin Australia's Airbus A330 "business class is good, but its schedule isn’t ideal."

"We have a superior schedule, and consistency of product across the Cathay Pacific and Cathay Dragon networks. We fly in the morning, afternoon and evening from Melbourne – flexibility that is attractive to the higher yield corporates."

In the newly competitive market "We need to play to our strengths: frequency, service and superior product," Jones emphasises.

One of those flights – CX104/105 – already runs on Cathay's Airbus A350, with the second daily CX 134/135 shifting to the advanced A350 (which includes inflight Internet as well as a premium economy cabin) – from 29 October 2017, while CX178/163 remains on the larger Boeing 777-300ER.

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

05 May 2016

Total posts 581

CX is part of OneWorld. So if you need to fly to HKG but about half the status credits of flying QF doesn't matter for retaining/gaining status or you don't value status that much then CX is a great option for QFF members,

CX is the dominant player on the AU-HK market:

SYD/HKG - 3 times a day

MEL/HKG - 3 times a day

ADL/HKG - Daily

BNE/HKG - 2 times a day

CNS/HKG - 3 times a week

PER/HKG - Daily



"We'll compete hard on price, but this doesn’t mean we’ll lead pricing down...It’s our job to ensure the market sees we are worth the little extra they might pay ."


Translation: We will monitor pricing to ensure we are not priced too high vis a vis VA and QF, but because of our dominance in the AU market it would be dumb for us to try to be the cheapest.

Cathay Pacific - The Marco Polo Club

01 Jun 2016

Total posts 14

SYD/HKG is 4 Daily.

BNE/HKG is Daily on A350 + 4 weekly A330 (soon not connecting from CNS)
CNS/HKG is 4 weekly A330 (soon to be 3)
PER/HKG is 11 weekly A330

Qantas - Qantas Frequent Flyer

26 May 2014

Total posts 446

A bit off-topic, but PER/HKG is usually 9 or 10 per week.  It is a shame they can't run CX136/137 more than 2 - 3 times a week, it provides daytime outbound connections to Japan and also some good inbound connections such as YVR.

12 Dec 2012

Total posts 994

CX website says PER is 9 weekly.
SYD 28 weekly
MEL 21 weekly
BNE 11 weekly
PER 9/10 weekly
The limit across those 4 ports is 70/week.

CX needs to get in on the CBR flights (which like ADL and CNS don't count towards the 70/week limit).

23 Mar 2012

Total posts 92

Although CX have not publically indicated their timetable depicts several reduced Sydney flights per week over the next few months  CX 162 is not operating I attempted to book but it has been deleted from operation therefore not 28 flights per week!

Qantas - Qantas Frequent Flyer

03 Jul 2011

Total posts 183

ADL is only 4 days a week these days :-(

Qantas - Qantas Frequent Flyer

22 Aug 2015

Total posts 18

I'm amazed VA don't do Syd-Hkg. When i asked them they said : we contuniusly moitor demand and will implement if needed. 


Its annoying as i travel this route frequently and it's busier then Mlb-Hkg

20 Apr 2014

Total posts 94

Oz routes are a cash cow for CX who are in a parlous state at present financially, they will likely try to get VA to quit the route to avoid losing market share - I'd watch for a price war to break out. Could be some keen pricing.

Virgin Australia - Velocity Rewards

27 Mar 2013

Total posts 7

As a VA fan I'd be happy to go to Europe starting with their new HK service but VA havnt got a partner.. Whereas, as TR Babuska points out above, CX have our market covered. And I suspect without checking that each of those CX Aussie flights connects closely in HK with its European departures.

Cathay Pacific - The Marco Polo Club

01 Jun 2016

Total posts 14

CX100 from Sydney and CX104 from Melbourne are best for Aussie - Europe connections; they land at around 9:45 and gives you a perfect 2 (or 3)-hour turnaround time at HKG since most CX european flights leave between midnight and 1AM. 

Cathay Pacific - Asia Miles

25 Apr 2013

Total posts 544

Can't you do HKG-LHR with Virgin Atlantic? Granted that's only one option, but still...

JBL
JBL

01 Jun 2016

Total posts 60

VA will have a partnership with Hong Kong Airlines subject to regulatory approval

Virgin Australia - Velocity Rewards

10 Dec 2016

Total posts 45

Yes while CX have more flights, the offering in Business Class is lineball if not lesser than VA. The lower points earning rate on CX versus VA will impact. I for one will be using VA as I rate the Business cabin service very highly versus the CX which can be very good or very bad. Not sure what lounges VA premium flyers will have access to in HK yet

Virgin Blue - Velocity Rewards

12 May 2011

Total posts 20

Bauhinia lounge with HK Airlines (also owned by Hainan Airlines)

31 Mar 2016

Total posts 644

damien:"Bauhinia lounge with HK Airlines"
Which is every bit as stylish & well decked out as any of the 5 J class lounges @ HKG operated by CX....with 1 distinct difference:
Club Bauhinia is almost always far more exclusive /less busy than the J class lounges of CX.

Guests also seem to get more attentive service/care fm Bauhinia lounge staff than their CX counterparts.  Despite CX enjoy a far more premium reputation than HX, I guess we really should not be surprised when it seems like every Y pax of CX @ HKG holds Marco Polo Silver status(i.e. minimum tier for lounge entry) or higher....

Qantas - Qantas Frequent Flyer

22 Aug 2015

Total posts 18

They use Plaza Premium sometimes when the normal lounge is full or being cleaned.

Business class airfares on this route are so expensive. CX usually more than QF. Maybe some competition will help? 

Qantas - Qantas Frequent Flyer

28 Dec 2015

Total posts 4

Bring on the competition!!! I have not been a fan of CX on the SYD to HKG route, as their prices are exorbitant. SYD-HKG return is 5.5K, SYD to pretty much most of Europe is 6.5-7K, WTF? 

Qantas - Qantas Frequent Flyer

22 Aug 2015

Total posts 18

Agreed.... and specials of 3.5k can be easily found with QA these days

31 Mar 2016

Total posts 644

DragonBaby:

"..have not been a fan of CX...their prices are exorbitant."
Which is pretty amazing given that CX still managed to achieve a net loss worldwide for FY2016 and HKG-AU routes are already  among their largest revenue contributors.

It's normal for any corp to derive most profits thru its high prices and dominant mkt position.  But a mkt-dominant corp charging high prices really need to be pretty incompetent in order to still lose $....

This is really how deep CX is in trouble these days.....

"SYD-HKG return is 5.5K, SYD to pretty much most of Europe is 6.5-7K, WTF?"
The elegant simplicity of Econ 101: The fewer the suppliers in a given mkt, the higher the prices will be at.

Total number of suppliers in each mkt offering the most direct routing possible:
SYD-HKG=2 (Unless U fancy a flight connection in S.E.Asia)
SYD-Europe=At least 20

Distance flown has little or no connection to fare level these days...

Qantas - Qantas Frequent Flyer

28 Dec 2015

Total posts 4

"Total number of suppliers in each mkt offering the most direct routing possible:

SYD-HKG=2 (Unless U fancy a flight connection in S.E.Asia)

SYD-Europe=At least 20"


Yes, I understand that completely, so I am so happy that the ME3 and chinese carriers exist and have so much capacity while I don't have any intention of flying with them. I totally agree with you that distance flown has no bearing on the pricing, and hence on the SYD-HKG route I refuse to fly CX as they are clearly making a killer profit. 


Hi Guest, join in the discussion on Cathay to "compete hard on price" against Virgin on Melbourne-HKG