Cathay Pacific’s planes are getting ever fuller with travellers in a time of cheap oil and airfares, but the same cannot necessarily be said of its shareholders’ pockets.

The latest monthly

traffic figures released by the group on Wednesday showed passenger load factor at Cathay Pacific and its Dragonair subsidiary, which is being rebranded Cathay Dragon, rose to 86 per cent last month, “the highest January figure since Dragonair became part of the Cathay Pacific group” in 2006, the company said. The two airlines together transported 2,897,890 passengers in the month, a 10.9 per cent jump compared to January 2015 – when oil prices were more than double the current level and passengers on Hong Kong’s outbound flights paid surcharges that were more than five times higher.

The continued plunge in oil prices has boosted global air travel demand as the fuel surcharges levied by airlines – a small but not insignificant revenue source for the companies – have also dropped. The fuel surcharges – scrapped starting from this month – stood at HK$24 for short-haul flights and HK$109 for long-haul flights last month, compared with HK$129 for short-haul and HK$566 for long-haul in January last year, according to the Civil Aviation Department’s website.

Demand in the long-haul premium cabins once again lagged expectations
Patricia Hwang, Cathay Pacific

While demand for flights is strong, Cathay’s fuller planes are not translating into more money earned by the company. “We continued to see strong traffic flows on key regional routes last month, and economy class demand on long-haul services remained high,” Cathay Pacific’s general manager for revenue management, Patricia Hwang, said. “However, demand in the long-haul premium cabins once again lagged expectations, while yield (a measure of per unit profitability) was affected by a combination of factors including unfavourable currency movements.”

On the cargo front, flat volume brought only more yield worries as the global air cargo slump continued. Mark Sutch, general manager for cargo sales and marketing, said a surge in shipments towards the end of the month in advance of the Lunar New Year holiday had helped boost results for the month, and that demand on the key transpacific routes remained “solid” and India represented “strong” traffic. But he said, “rate-cutting as a result of overcapacity continued to put significant pressure on cargo yield”.

The two airlines carried 147,690 tonnes of cargo and mail in January, up 0.3 per cent year on year. Traffic as measured in revenue freight tonne kilometres flown dipped 0.5 per cent, while the cargo and mail load factor fell by 1.8 percentage points to 61.6 per cent.

Cathay Pacific’s shares closed 2.52 per cent lower at HK$11.6, as the Hang Seng Index dropped 1.03 per cent. The stock has lost 13.56 per cent so far this year, while the benchmark index is down 13.64 per cent.

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