The Hong Kong-based airline is set to suffer as China and Taiwan begin a period of dTtente on the travel front. Over the Christmas period, China allowed the first vessels in 50 years to sail directly between islands off Taiwan and its own mainland.
This is the momentous first crack in a Chinese policy that banned all direct routes between China and Taiwan. The policy was eminently logical – after all, how could you have direct routes to a country that you don’t even ‘recognize’ as existing.
This same policy has benefited Cathay Pacific enormously as Taiwanese business travellers have had to fly via Hong Kong to get to China – a ludicrous situation. And that’s why there are 12 Cathay flights a day between Taipei and Hong Kong. Cathay Pacific makes around 11% of its global revenues just from this route. In the volatile world of aviation, it’s one of the few no-brainer routes that exists.
No one knows when China will allow direct flights between Taipei and Chinese cities, but with the opening of the sea route, it can only be a matter of time before air routes follow. And when you can fly direct between Taipei and Shanghai/Beijing that will impact the Hong Kong/ Taiwan route. Cathay Pacific will then have to face up to an even bigger question. In order to recoup those revenues, it will have to consider flying direct to Chinese cities itself.
At the moment, Cathay has a deal with its sister airline, DragonAir, that it will not fly to Chinese cities. The destruction of the Taiwan revenue stream may eventually lead to the end of that gentleman’s agreement. Indeed, it’s somewhat farcical that an airline called ‘Cathay’ doesn’t fly to China anyway.
