Cathay Pacific to Launch Daily Link to Zurich

Cathay Pacific Airways has announced that it will launch a non-stop daily service from Hong Kong to Zurich, as we reported on the eve of this year’s Routes Europe earlier this year (Cathay Pacific Poised to Expand European Network), ahead if it announcing its plans to also introduce flights to Manchester. The new Zurich link will commence from March 29, 2015, subject to regulatory approval, and will offer passengers travelling from Hong Kong direct access to this leading financial centre.

The flight will be operated using a four-class Boeing 777-300ER and will seek to take advantage of the strong business and leisure demand. Located right in the heart of Europe, Zurich is a top banking centre but is also the gateway to the scenic mountains and lakes of Switzerland.

"We are very pleased to be able to add Zurich to our growing international network. Zurich and Hong Kong are two of the world’s leading financial centres, where people appreciate high standards of service, and we are seeing considerable demand for a quality travel experience, especially on long-haul routes,” said Ivan Chu, chief executive officer, Cathay Pacific.

The Hong Kong carrier already offers non-stop flights from the Special Administrative Region of the People's Republic of China to Amsterdam, Frankfurt, London, Milan, Moscow, Paris and Rome. It had served Zurich previously but ended its operation in May 2001 due to commercial reasons, while the return of the Manchester link has long been mentioned due to the large Chinese population in northwest England.

"Cathay Pacific already has a significant presence in Europe and this new destination will help meet demand for both business and leisure travel between Switzerland and Hong Kong. The launch of Zurich, together with the recently announced introduction of flights to Manchester, highlights our ongoing commitment to helping strengthen Hong Kong's position as one of the world's great international aviation hubs," added Chu.

Over the past ten years (2004 – 2013) Cathay Pacific’s European air capacity from Hong Kong has risen 44.1 per cent. It had grown 56.8 per cent until 2011 but capacity has declined 5.4 per cent and 2.8 per cent over the past two years. The London market is its largest, accounting for 43.2 of the non-stop European capacity from Hong Kong last year but this has declined from a high of 46.5 per cent in 2010 due to the introduction of new direct links to Milan and Moscow.

According to MIDT data an estimated 76,000 bi-directional O&D passengers flew between Zurich and Hong Kong in 2013, a route that is already served by Swiss International Air Lines. The European flag carrier currently operates a daily service using an Airbus A340-300. In our analysis, below, we look at bi-directional O&D demand on the route.

The route announcement follows just days after Cathay Pacific revealed total passenger demand (including its sister carrier Dragonair) had risen by 10.1 per cent in April 2014 compared to the same month last year. Its load factor climbed by 3.5 percentage points to 84.7 per cent, while capacity, measured in available seat kilometres (ASKs), increased by 6.8 per cent.

The monthly variation was partly driven by the timing of the Easter Holidays and Cathay Pacific’s general manager revenue management, James Tong, warned that the performance had impact the carrier’s overall yields. “Demand in the Economy cabin was generally satisfactory throughout April, particularly on long-haul routes, though the increase in passenger numbers was at the expense of yield. Yield in the premium cabins was also under pressure and we didn’t see the increase in demand expected from the Canton Fair,” he said.

These views were echoed by Chu who said revenue performance over the first four months of 2014 “has been below expectations” and while passenger numbers and load factors have increased, “yield declines have offset this to some degree”.