Cathay Pacific 2011 Annual Report Download - page 23

Cathay Pacific Airways Limited Annual Report 2011 21
Available tonne kilometres (“ATK”), load factor and yield for Cathay Pacific and
Dragonair cargo services for 2011 were as follows:
ATK (million) Load factor (%) Yield
2011 2010 Change 2011 2010 Change Change
Cathay Pacific and Dragonair 14,367 13,443 +6.9% 67.2 75.7 -8.5%pt +3.9%
There was no significant peak in cargo shipments at
any time during 2011. We had to reduce capacity in
line with demand on key routes.
Fuel prices were high throughout the year. This
affected the profitability of our cargo operations.
Fuel surcharges were insufficient to recover increased
fuel costs.
Demand for cargo shipments from our two main
markets, Hong Kong and Mainland China, declined
from the second quarter of 2011 and remained weak
for the rest of the year. Exports from Mainland China
fell as consumer demand weakened in key markets.
Demand to Europe was particularly weak. Our
business was also affected by increased competition
from carriers operating from Shanghai.
In Mainland China less manufacturing is being done in
the Pearl River Delta and the Yangtze River Delta and
more manufacturing (particularly of high technology
products) is being done in western and central areas.
In order to position ourselves to carry cargo from these
areas, we started scheduled freighter services to
Chongqing and Chengdu in October 2011.
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There is growing demand for high quality foreign
products in Mainland China. This reflects the growing
numbers and wealth of the middle classes and the
strength of the Chinese currency. This growing
demand has resulted in more cargo being shipped to
Hong Kong for transhipment to Mainland China.
Demand on our intra-Asian cargo routes was strong,
reflecting the relative strength of Asian economies. We
switched some cargo capacity from long-haul routes
accordingly. So did other carriers, which led to
increased competition.
The earthquake and tsunami in Japan in March 2011
disrupted the supply chain for high technology
products and consequently the manufacture of such
products in Mainland China. This in turn reduced cargo
shipments through Hong Kong.
Our cargo capacity on Japanese routes was reduced
because of the reduction of passenger flights (and
therefore the availability of belly space for carrying
cargo) following the earthquake and tsunami. But we
did maintain scheduled cargo services to Japan and
operated some charter flights carrying relief supplies.
We added Bangkok to our freighter network in May
2011 with a flight operating via Singapore. This service
was suspended following the floods in late October.
The service was restored in November. We
operated some charter flights as manufacturing in
Thailand resumed.
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Review of Operations CARGO SERVICES ASIA MILES