Cathay Pacific Airways, Hong Kong's largest airline, said yesterday it will resume passenger flights to
Shanghai on December 1 after a 16-year hiatus.
The airline's move will further intensify competition on one of Asia's most lucrative routes.
Pending government approval, Cathay Pacific will provide a daily return service between
Hong Kong International Airport and Shanghai's Pudong International Airport.
The introduction of the service follows a recent decision by the
Hong Kong authorities to grant the airline traffic rights to fly passengers to the mainland's most important commercial hub.
"We are delighted to be flying passengers to
Shanghai once again, after a 16-year break," said Cathay Pacific Chief Executive Philip Chen.
Cathay, Asia's third-largest airline by market value, had been trying for years to return to
Shanghai after it withdrew from the mainland in 1990 when it bought a stake in
Hong Kong Dragon Airlines Ltd (Dragonair).
"Our strong global network and connectivity, plus our fleet of large wide-bodied aircraft, will maximize the efficient use of the additional traffic rights and boost the
Hong Kong hub and economy," Chen added.
According to the airline,
Shanghai accounts for 35 per cent of the passenger market and 68 per cent of the cargo market between
Hong Kong and the mainland.
Cathay is expanding on the mainland to take advantage of rising travel demand. It resumed flights to
Beijing at the end of 2003 after a 13-year break.
At present, it only provides passenger services to
Beijing and Xiamen, in East China's Fujian Province, while it carries cargo to Shanghai.
Cathay will complete its HK$8.22 billion (US$1.1 billion) purchase of Dragonair shares tomorrow, the airline said in a statement to the
Hong Kong stock exchange late on Monday.
The company will buy 1.18 billion shares in Air China, the nation's biggest international carrier, for HK$4.07 billion (US$523 million) today, completing a purchase announced on June 9.
Aviation analysts expect Cathay's involvement to further intensify competition on the key route, where China Eastern is currently battling it out with Dragonair.
"Nearly 10 per cent of China Eastern's aviation revenue comes from the Shanghai-Hong Kong route," said Li Lei, an analyst at Beijing-based CITIC Securities.
China Eastern is actively seeking strategic partners for long-term development in order to meet this challenge, added Li.
"It's a difficult time for China Eastern. It reported a 1.5 billion yuan (US$187.5 million) loss in the first half of the year due to rocketing fuel prices," Li said.
But Luo Zhuping, secretary of China Eastern's board of directors, said earlier: "We enjoy geographical advantages as we are based in
Shanghai and we have a strong presence in East China."
Luo added that China Eastern would not launch more flights to
Hong Kong due to the rocketing fuel costs. The airline currently operates about 30 flights per day on the Shanghai-Hong Kong route.
