Cathay Pacific 2008 Annual Report Download - page 21

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• We now have 10 Boeing 747-400BCF freighters after
switching three over from the Dragonair fleet. The
scheduled delivery of the last Boeing 747-400BCF
freighter is in July 2009 bringing the fleet size to 11.
However, we have now taken two of these aircraft
out of service from January 2009 for a one-year
period as a result of the recent deterioration in
cargo loads.
• We strengthened our freighter network with the
addition of a new service to Dhaka and Hanoi. The
route has performed well since its launch.
• We postponed our plan to launch a new service to
Houston and Miami in 2008 due to the delayed
arrival of our third Boeing 747-400ERF freighter. The
service was launched in the first quarter of 2009.
• We also launched a new twice-weekly freighter
service to Jakarta/Ho Chi Minh City in January 2009
and increased our Malpensa frequency from three
to six per week in February 2009 to maximise
revenue earning opportunities.
• Regionally, demand out of Mainland China was
robust for most of the year, particularly from the
Yangtze River Delta. However, there was a marked
dip in demand around the Olympics period.
• We will maintain our freighter frequencies to Beijing
and Xiamen in 2009. In the coming summer schedule,
our Shanghai frequency will increase and at the same
time all Dragonair’s Mainland China freighter
operations will be transferred to Cathay Pacific.
• Business to and from Japan and Korea was well
below expectations for most of the year. The Taiwan
market was also soft and we expect a further
erosion of demand following the launch of
scheduled cross-straits services in December.
• In 2008 we reduced our European and transpacific
services in order to mitigate the impact of high fuel
prices and, in the latter part of the year, a slowdown
in exports from Hong Kong. Capacity has been
further adjusted for 2009.
• The Company’s wholly owned subsidiary Cathay
Pacific Services Limited (“CPSL”) entered into a
franchise agreement with the Airport Authority of
Hong Kong (“AAHK”) on 18th March 2008 for the
franchise to invest in, design, construct and operate
a new air cargo terminal at Hong Kong International
Airport. The franchise agreement is for a term of 20
years and the new cargo terminal was originally
scheduled to commence operation in the second
half of 2011. In light of the recent market downturn,
Review of Operations CARGO SERVICES ASIA MILES
CPSL entered into a supplemental agreement with
AAHK on 15th January 2009 to defer the completion
of the new cargo terminal by a maximum of 24
months to mid 2013. Under the supplemental
agreement, CPSL will compensate AAHK for the
deferral. The amount of compensation is deemed to
be fair and reasonable having duly considered the
contractual terms and conditions of the franchise.
Dragonair
• We began a phased retirement of Dragonair’s older
Boeing 747-200F and Boeing 747-300F “Classic”
freighters in a move to operate a more efficient
fleet. The retirement plan was accelerated due to
the fuel crisis and financial slump and all the
“Classics” have now left the fleet.
• With the retirement of the “Classics” the Dragonair
freighter fleet consisted solely of Boeing 747-
400BCF freighters. Three of these were switched to
Cathay Pacific in the latter part of 2008 so by the
end of the year Dragonair operated just two Boeing
747-400BCF freighters.
• Due to the financial downturn, one of these Boeing
747-400BCF freighters was parked in California with
effect from January 2009. Dragonair now has just
one Boeing 747-400BCF freighter flying regionally.
• The Japan market remained soft and demand on our
freighter service to and from Osaka was below
expectations. The service was withdrawn with
effect from the winter schedule.
• Shanghai was Dragonair’s most important freighter
route in 2008. For greater operating efficiency, this
route will be transferred to Cathay Pacific in the
coming summer schedule.
ASIA MILES
• Asia Miles, our travel reward programme, continued
to grow and at the end of 2008 had more than three
million members.
• The number of partners increased to more than 300
in nine categories including airlines, hotels and
major financial institutions.
• Over 90% of Cathay Pacific flights carried frequent
flyer redemptions.
• There was a 23% growth in flight redemptions from
Asia Miles members on its 20 partner airlines.
• A brand-new website, www.asiamiles.com, was
launched in September with greatly enhanced
content and layout.
Cathay Pacific Airways Limited Annual Report 2008 19