Cathay Pacific has been having a rough time recently. The airline has been bleeding money, and have faced tougher competition from a multitude of carriers. The airline had expanded their partnership with Air China, and equity holder in the company. This didn’t seem to help much, and the airline is still finding itself trying to outmaneuver some of their competitors. The airline will face competition on the long haul market when Hong Kong Airlines adds new TPAC (trans-Pacific) service. Shorthaul-wise, the airline is facing competition from HKA, and from Hong Kong Express, an ULCC.
Enter Cathay Dragon
Cathay Dragon, formerly known as Dragonair, is Cathay’s regional arm. The airline flies mostly routes to China and to South East Asia. The airline usually offers lower fares than Cathay Pacific, but both airlines have a very strong relationship. As CX has been fighting competition from their competitors, Cathay Dragon has been pushing harder and harder to obtain better market access. If the airline plans to grow, they need more aircraft to fuel their expansion. As an all Airbus carrier, the airline has naturally selected Airbus to replace their fleet of A320 family aircraft.
The A321neo, A Good Fit
The airline, through its parent company Cathay Pacific, just signed a firm order for 32 A321neos. The airline currently has a total of 23 narrowbody aircraft. There is no new on what the aircraft interiors will look like yet, but i suspect a cabin of about 16 business class seats, with around 170 seats in economy. What peaks my interest is that the airline ordered 9 more than what they need to replace their current fleet. I suspect that the airline is planning for moderate expansion, but also plans to retire some of their A330s in favor of the A321neo. I can see Cathay Pacific taking over Cathay Dragons A330-300s, and reconfiguring them. This would allow Cathay Dragon to keep a few A330s for their denser routes. Therefore, Cathay Pacific would obtain cheap A330s to expand their regional network as they retire their 777-200s and 777-300s (note the airline is not retiring their 777-300ERs).
This order makes economic sense for both carriers. As the market in SE Asia keeps growing, there will be a need for larger aircraft. Since Cathay Dragon does not have any long haul routes, the utility of some of their A330s may be better suited at Cathay Pacific. With the new A321neos, Cathay Dragon will be able to introduce a new suite of inflight products, as well as wifi on board (hopefully). As Cathay Pacific moves forward, I hope that the airline does not start drastic cuts in their first class cabin. The airline has one of the best First Class products in the world, and it would be a shame to see it fall from that list.
What do you think? Does the A321neo fit well into Cathay Dragon’s fleet? Should Cathay Pacific and Cathay Dragon better tailor their schedules to provide a better product? Let us know!
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