Cathay Pacific converts A350-1000's

By Shihal Sapry

Cathay Pacific converted 6 A350-1000's to the smaller A350-900 variant back in last year. This was announced when the airline ordered A321NEO's for Cathay Dragon, its sister airline focusing on regional route. Cathay initially had 26 orders for the A350-1000. This switch decreases the A350-1000 order backlog to around 171 aircraft.

Photo by Jujug Spotting on instagram

With Cathay's yields under pressure from Mainland Chinese carriers, Middle East 3, Turkish Airlines as well as Hong Kong Airlines, a smaller aircraft could be a better option in managing yields. Before the A350-900, the smallest aircraft that could fly to the US was the A340-300. It has now been removed from the fleet. Furthermore, certain routes can only be flown by the 777-300ER due to performance even though passenger loads do not warrant it. The 777-300ER is also slightly too large for Cathay to use to launch new routes. The graphs below depict the capacity between the 3 class 777-300ER and the A350-900.

From these two graphs, it can be deduced that the spread of the 3 service classes is similar. with the A350-900 being more Premium Dense.  The following graph depicts the decrease in capacity from a 777-300ER to an A350-900.

We can see a  decrease of 5% in Business Class, 12.5% in Premium Economy and 20.1 % in Economy. This decrease in capacity has taken place over the following routes since the A350-900's introduction:

• Newark (CX890), daily

• Manchester (CX357), 6 times weekly

• San Francisco (CX892), daily

These are new routes that have been flown exclusively by the A350.

• London Gatwick(CX343), 4 times weekly

• Tel Aviv(CX675), 5 times weekly

• Barcelona (CX321), 4 times weekly

• Brussels(CX339), 4 times weekly

• Copenhagen(CX227), 3 times weekly

• Dublin(CX307), 4 times weekly

• Paris(CX379), 12 times weekly

• Dusseldorf(CX379) will end in March next year. It is noteworthy that Singapore Airlines also started Dusseldorf service around the same time that Cathay did.

These new routes only materialised after the A350 joined the fleet. This means that the A350 is allowing Cathay to open up routes that it could not previously serve with A340s and 777s. It appears that the A350-900 is appropriately sized to serve these markets effectively. Furthermore, Cathay is using the A350 to further optimise demand and capacity on their network. If the routes perform well and require a larger aircraft, the 777-300ER will be introduced on these routes. The A350 service classes are consistent with the rest of Cathay's long haul fleet, so that customer service offerings are equivalent.

(Source: wikipedia)

The A350-1000 is expected to have the capacity of the 777-300ER. Cathay currently has 53 777-300ER's in its fleet, with 20 A350-1000 orders, as well as 21 777-9X orders. The A350-1000's would probably offer Cathay an almost 1:1 replacement for the 777-300ER and the 777-9X would offer a slightly larger replacement in terms of capacity.

By converting to the smaller A350-900, we can deduce that Cathay has sufficient aircraft sized for 777-300ER routes, but requires smaller aircraft to serve thinner routes. Furthermore, Cathay's Business Model prioritises frequency, which implies that a smaller aircraft serves a thinner destination more frequently than a larger aircraft serving the same destination at lower frequency. Moreover, a larger aircraft is always harder to fill and with Cathay experiencing yield pressure, the smaller A350-900 would allow them to continue network expansion and maintain yields across the network. There is no point flying an A350-1000 to a destination only to find that you struggle to fill seats, so you discount fares and decrease your yields.

Another point of note, is that the A350-900 is an efficient airframe. By swapping it on 777 routes, it is very possible that fuel costs are reduced and yields are improved. This should help Cathay as well since the collapse of the oil price, their fuel hedging as impacted their financial performance.