Cathay Pacific 2010 Annual Report Download - page 22

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Despite some global economic uncertainty, demand
for airfreight services remained strong for the whole of
2010. Demand on the major trunk routes to North
America and Europe was consistently high, despite
significant capacity increases from competitors in the
second half of the year. The regional network in Asia
remained buoyant.
Demand for shipments originating from the key
markets of Hong Kong and Shanghai was consistently
strong. Loads carried by inbound flights were also
higher than expected, with luxury goods and other
products being shipped into Asia and in particular
Mainland China. This is encouraging for the longer
term future of our airfreight business.
The cargo business benefited from the expansion of
the passenger network, both long-haul and short-haul.
Load factors and utilisation in passenger aircraft bellies
were high.
The Pearl River Delta region continued to be our
principal source of growth. However, manufacturers
and customers are starting to move west to places like
Chengdu and Chongqing and outside Mainland China
to countries, such as Vietnam and Bangladesh, where
labour costs are lower than in Mainland China.
We focused on improving yields, which were at or near
record levels for many routes during the peak season
in the latter part of the year.
Demand on the North American and European routes
was consistently strong, assisted by new product
launches in the consumer sector and companies
starting to invest again in information technology and
other capital projects. Companies’ general wish to
keep inventory levels to a minimum and maintain
flexibility also helped to increase demand for
airfreight services.
Shipments to Japan were strong, assisted by the
strength of the yen and by Japan Airlines withdrawing
its freighter fleet from operations in October. Exports to
Australia were assisted by the strength of the
Australian dollar, especially in the latter part of the year.
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All five of the Boeing 747-400BCF freighters which had
been parked in the desert during the downturn have
been brought back into service in response to the
improvement in demand.
We returned to a full freighter schedule from
September ahead of the seasonal peak in demand. We
operated additional services during the seasonal peak
to cater for strong market demand. The freighter fleet
operated at very high levels of utilisation throughout
the year.
Cargo capacity, measured in terms of ATKs, grew by
15.2% over 2009 and by 0.1% over 2008.
A round-the-world freighter service was launched in
July, flying eastwards to Chicago, and then on to
Amsterdam and Dubai before flying back Hong Kong.
The twice-weekly flight offers significant commercial
and operational benefits and has seen good demand.
This is the first time Cathay Pacific has operated
transatlantic flights.
We strengthened a number of scheduled freighter
services during the year in response to market demand.
The Miami/Houston service moved from three to four
flights a week in July, while Miami was served by
another weekly flight in its own right (two weekly
flights during the seasonal peak at the year end). We
moved from four flights to eight flights a week to India
and the Middle East. Shanghai went to 21 flights a
week (compared to 16 during the downturn).
Early in the year we added a third weekly frequency on
the triangular Dhaka/Hanoi route. Later in the year we
split the route into two in order to cater for
substantially increased exports of cargo from
Bangladesh and Vietnam.
During the seasonal peak in the latter part of the year,
we were operating 28 scheduled flights per week to
Europe and 40 scheduled flights per week to North
America. Earlier in the year the figures had been 22
and 25 respectively.
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Review of Operations CARGO SERVICES ASIA MILES