Fort Worth, TEXAS — American Airlines has launched a codeshare agreement with Cathay Dragon, adding service to four new destinations and increased service to three existing markets in Southeast Asia.
American will place its code on select Cathay Dragon flights from Hong Kong International Airport (HKG), providing American’s customers seamless connecting service to seven cities beyond Hong Kong. The new codeshare flights are available for sale now for travel beginning July 11.
The agreement allows American’s customers to connect to four new destinations in Asia:
Dhaka, Bangladesh (DAC)
Chiang Mai, Thailand (CNX)
Da Nang, Vietnam (DAD)
Phuket, Thailand (HKT)
It also increases frequencies to three existing markets served by American’s other partners in Asia:
Penang, Malaysia (PEN)
Kuala Lumpur, Malaysia (KUL)
Hanoi, Vietnam (HAN)
Established in 1985, Hong Kong-based Cathay Dragon is a wholly owned subsidiary of Cathay Pacific Group and an affiliate member of oneworld®. The airline’s network covers 53 destinations across the Asia-Pacific region, including 23 destinations in mainland China. The codeshare relationship with Cathay Dragon will further strengthen American’s existing partnership with the Cathay Pacific group in the years to come.
American has proudly served Hong Kong since 2013 and currently operates daily, year-round service from Dallas-Fort Worth and Los Angeles.
Despite repeated claims from all sides that China Southern has no interest in joining the Oneworld alliance, American Airlines and Asia’s largest carrier are moving forward with a frequent flyer partnership. The new arrangement announced Wednesday will allow American’s AAdvantage and China Southern’s Sky Pearl Club members the ability to earn and redeem miles on each other’s flights.
Mileage earning for passengers will go into effect March 21, and online availability is planned for later this year. In the meantime, phone reservations agents at American are already reporting the ability to book China Southern flights through Sabre, its booking system. An earn chart, which shows how China Southern fares will earn miles in American’s loyalty program, has also been posted to American’s site.
American and China Southern’s partnership comes at a time in which Oneworld has been cool on formally pulling the Asian carrier fully into the alliance — though it’s not clear which side the hesitation is coming from. At Oneworld’s 20th anniversary in February, Ron Gurney, CEO of Oneworld shared that the alliance had “no plans” to add the carrier in full. Instead, he suggested that China Southern might join Oneworld as a Connect partner, a new type of “alliance light” that allows passengers to connect onto partners and still earn benefits.
The relationship announced between American and China Southern on Wednesday is more thorough than that. In addition to the ability to earn and spend miles reciprocally, loyalty members can book flights directly through the other carrier’s website and still reap benefits. In other words, the relationship is almost like having an alliance partner without having China Southern in the alliance.
To be clear, many expected some sort of deeper relationship to bear fruit after American bought a stake in China Southern in 2017. Only a year after that investment, China Southern bowed out of the Skyteam alliance, leading many to speculate that it planned to join Oneworld. Ever since Gurney’s comments and the big push around Oneworld Connect, however, that enthusiasm seems to have faded.
That doesn’t mean that China Southern may not eventually end up joining Oneworld. Both airlines and alliances have famously been coy about when new members are coming onboard and China Southern will need to tread lightly in the back yard of Cathay Pacific, another major Oneworld carrier based out of Hong Kong. At the very least, AAdvantage members anxious to fly deeper into China will now get minimal frequent flyer benefits. Other Oneworld passengers will have to wait.
HONG KONG/SINGAPORE (Reuters) – Hong Kong flagship carrier Cathay Pacific Airways Ltd said on Tuesday it is in “active discussions” about an acquisition involving budget airline Hong Kong Express Airways Ltd, although an agreement has yet to be reached.
Such
a deal would give Cathay exposure to the growing budget-travel market
at a time when a lack of slots at Hong Kong International Airport has
constrained its ability to follow peers like Singapore Airlines Ltd and
Qantas Airways Ltd and set up its own budget brand.
The
Hong Kong carrier has instead shifted some destinations from its main
brand to its regional carrier, Cathay Dragon, as part of a
transformation plan designed to cut costs and increase revenue. It has
ordered 32 Airbus SE A321neos for Cathay Dragon.
Cathay
said it had decided to go public about the discussions in response to
media reports suggesting it may be in talks to acquire shares in Hong
Kong Express Airways Ltd and full-service sister carrier Hong Kong
Airlines Ltd from cash-strapped Chinese conglomerate HNA Group Co Ltd.
It
did not detail the potential value of the transaction, nor the size of
the stake it would hold. It said it would issue an additional statement
when appropriate.
An analyst last year estimated to Reuters that HK Express could be worth about $300 million.
HNA and HK Express did not immediately respond to a request for comment.
A
person with knowledge of the matter said the companies appeared close
to reaching an agreement and noted Cathay’s parent Swire Pacific Ltd had
historically taken majority stakes when making investments.
Cathay is not interested in Hong Kong Airlines because it has both similar routes and full-service positioning, the person said.
A
second person with knowledge of the matter said Cathay had signed an
exclusivity period for discussion but other parties remained interested
in HK Express if a deal could not be reached.
Both sources spoke on the condition of anonymity as discussions are confidential.
ANTITRUST
Given Cathay’s dominance of Hong Kong’s aviation market, a deal could attract scrutiny from the competition regulator.
Some
analysts have also expressed doubts about the likely benefits of any
deal. Daiwa analyst Kelvin Lau said he did not see much value from the
acquisition as the two airlines flew similar routes, but also because
Cathay would need to undertake significant reform to add a budget wing.
Jefferies analyst Andrew Lee however said in a note to clients it would be “positive for Cathay Pacific” as it would give the airline greater access to a different passenger segment in the low-cost market.
FLYING HIGH
News
of Cathay’s interest in HK Express comes just weeks after Hong Kong’s
flagship carrier projected its annual profit at more than double analyst
estimates, sending its shares surging nearly 9 percent.
Shares
of Cathay have risen more than 19 percent so far this year, compared
with an 8 percent fall in 2018. The airline’s shares jumped more than 3
percent on Tuesday morning.
Cathay has faced repeated questions from investors over the last few years about its failure to set up a budget carrier.
Chief
Executive Rupert Hogg has said it would be difficult to do so until a
third runway was completed at Hong Kong International Airport in 2024,
opening up more slots.
“Our
home-based airport is full at the moment, or largely full, and so it’s
not a perfect place to develop a model from scratch,” he told CAPA
Centre for Aviation last May.
HK
Express operates a fleet of 25 A320 family aircraft to regional
destinations around Asia, according to plane tracking website
FlightRadar24.
Embattled
HNA Group is more than a year into the process of unwinding a $50
billion acquisition spree that at its peak netted the company stakes in
banks, fund managers, hotels, property and airlines, among other assets.
(Reporting by Donny Kwok in Hong Kong and Jamie Freed in Singapore; Additional reporting by Kane Wu in Hong Kong; Editing by Anne Marie Roantree and Stephen Coates)
A group of lucky Cathay Pacific customers have scored first-class seats at economy prices, in the second fare blunder by the airline this month.
Tickets on trips from Hong Kong to Portugal were sold on the airline’s website for $1,512, instead of $16,000 usually charged for a similar journey.
The carrier said it would honour the tickets as it investigates the cause of the error.
It extends a recent run of blows to the firm including a huge data breach.
The mispriced fares were available on Cathay Pacific’s website on Sunday.
First-class flights from Lisbon to Hong Kong – via London with a connecting flight – were offered for $1,512 (£1,177), according to the South China Morning Post.
A similar first-class journey through Frankfurt would cost $16,000.
In a statement, the Hong Kong carrier said it would honour the tickets.
“We are looking into the root cause of this incident both internally and externally with our vendors,” it said.
“For the very small number of customers who have purchased these tickets, we look forward to welcoming you on board to enjoy our premium services.”
Just two weeks ago the airline made the same blunder.
Lucky flyers made off with business-class seats on flights from Vietnam to New York for about $675 return. They should have cost $16,000.
At the time, the carrier acknowledged its “mistake” and again, said it would welcome the passengers onboard.
Cathay Pacific to honour $16,000 fares sold for $675
Airlines have a mixed history of honouring tickets sold in error.
Singapore Airlines, for example, honoured tickets sold for less than half price in 2014. But United Airlines cancelled transatlantic tickets sold for less than $100 by a “third party software provider” the following year.
A challenging year
The latest stumble extends a bad run for Cathay Pacific.
In October, the firm was the subject of a data breach in its IT systems, jeopardising the personal information of up to 9.4 million passengers.
Huge data hack hits Cathay Pacific
A month earlier, it had to send one of its planes back to the paint shop after spelling the airline’s name “Cathay Paciic” on the side of a jet.
Those missteps come as the airline tries to return to profitability after posting its first ever back-to-back annual loss in March.
Cathay Pacific has struggled against competition, particularly from low-cost Chinese carriers covering Hong Kong, mainland China and South East Asia.
DUBAI/BEIJING, Jan 2 (Reuters) – Qatar Airways has acquired a 5 percent stake in China Southern Airlines, the state-owned Gulf carrier said on Wednesday, in a move to gain access to the fast-growing mainland Chinese market.
Qatar Airways also owns a 20 percent stake in British Airways-parent International Consolidated Airlines Group, 10 percent of South America’s LATAM Airlines Group SA , 49 percent of Italy’s Meridiana and 9.99 percent stake in Hong Kong’s Cathay Pacific.
Qatar’s flagship airline has sought new partners and routes after it was blocked last year from flying to the lucrative markets of Saudi Arabia and the United Arab Emirates because of restrictions imposed by those countries.
Saudi Arabia, UAE, Bahrain and Egypt, imposed a political and economic boycott on Qatar since June 2017, accusing it of supporting terrorism, which Doha denies.
China Southern in a separate statement said Qatar Airways may consider increasing its stake in the airline in the next 12 months. Qatar had no previous investment in the Chinese airline.
Qatar Airways is the second foreign carrier that has a stake in China Southern, after American Airlines. The Chinese carrier left the Skyteam airline alliance at the start of the year.
There are opportunities for “us to work together and build a long term relationship in ways that would bring benefits to customers of both airlines,” said Qatar Airways’ Chief Executive Akbar al-Baker.
Ajith K, director of Asia transport at UOB Kay Hian, said given that China Southern is the biggest competitor of Cathay Pacific in Greater China, this deal could strengthen the China Southern’s position at the Hong-Kong carrier’s expense. “Why Qatar is doing this, seems to me, one of course is to gain access to the Chinese market. Secondly it’s probably that they are hedging against their bet given they own almost 10 percent in Cathay Pacific.”
(Reporting by Asma Alsharif and Saeed Azhar in Dubai and Stella Qiu in Beijing; editing by Louise Heavens)
The first of 20 A350-1000s for Cathay Pacific has completed its initial test flight from Airbus’s Toulouse plant. Deliveries of the Rolls-Royce Trent XWB-powered aircraft to the Hong Kong carrier are scheduled to begin in June. It will become the second operator after launch customer Qatar Airways to receive Airbus’s biggest twinjet.
The new twinjets will be operated alongside Cathay’s existing fleet of smaller A350-900s, 22 of which are currently in service with six more on order, according to Flight Fleets Analyzer.
Cathay will deploy the A350-1000 on its new route to Washington DC from September. The airline says that at “8,153 miles” (7,095nm/13,126km), the new service to Dulles will become the longest in its network.
