Cathay Pacific bans shark fin carriage

THERE was a time when airlines such as Singapore Airlines would serve shark fin soup to the well-heeled in first class. But that had long been taken off the menu in the early days when animal activists made much of the cruelty in harvesting the fin.

Today, Cathay Pacific Airways officially bans the carriage of unsustainable shark products including shark fin. In a statement that it issued on Sep 4, the Hong Kong-based carrier said: “Due to the vulnerable nature of sharks, their rapidly declining population, and the impacts of overfishing for their parts and products, our carriage of these is inconsistent with our commitment to sustainable development.”

 

The ban takes immediate effect but would take three months to be in place.

Apparently Cathay received a petition from 41 international environmental organizations to stop the carriage. Hong Kong government statistics showed that Cathay was responsible for carrying 650 tonnes (64%) out of a total 10,200 tonnes of shark fin imported into Hong Kong.

Cathay said it had studied the issue for “a very long time” and its decision was “based on scientific data.”

However the decision was arrived at, it is a commendable move on the part of Cathay to demonstrate the social responsibility that a company must assume even if it means foregoing money-making opportunities and angering traders using their service.

Air transportation provides a necessary link in moving such products to where they are demanded. It is hoped that Cathay and other airlines will heed the call of environmentalists to not only stop the carriage of shark fin but also tighten procedural loopholes and implement stringent checks to prevent the illicit carriage of live endangered animal species.

Good job, Cathay!

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Qantas-Emirates tie-up is no surprise

THERE are several reasons why a Qantas-Emirates tie-up should not come as a surprise.

 

Foremost is the Australian flag carrier’s desperation to revive its loss-making international operations, which, it is expecting will plunge its full-year profit by as much as 90 per cent from US$552 million the previous year. So the airline is looking for opportunities to boost its earnings as it rationalizes its network operations and connections. Qantas has said that alliance deals have always been on the agenda, particularly when such arrangements not only open up new traffic channels but also reduce operating costs.

The Dubai-based Emirates Airlines, its home situated roughly midway on the kangaroo route, makes a veritable partner. Significantly, the airline is profitable and expanding. Besides, Emirates is a keen competitor for the same market. A tie-up would mean a more amicable intra rather than inter-airline competition.

It has also been speculated that Qantas as a consequence would reduce its operations to Europe – retaining only London as a destination and giving up Frankfurt – while it then feeds traffic to other European ports through Emirates. Qantas hopes to also gain access to a wider Middle-East market as well as making inroads into Africa through Emirates.

Not to be ignored is the fact that other Middle-East airlines such as Qatar Airways and Etihad Airways (also an airline of the UAE but based in Abu Dhabi) have also intensified the competition. Etihad has acquired a 10-per-cent stake in Virgin Australia.

But what is likely to unsettle Qantas more is the alliance between key rivals Singapore Airlines (SIA) and Virgin Australia. In the end, a Qantas-Emirates tie-up would look like a counter-move when adversaries join hands to take on a common enemy. There is not much of a choice left really, so to speak, for the self-professed “alliance specialist”.

Analysts who were quick to deduce that Qantas would also shift its operations from Singapore to Dubai have been mistaken. For many years now, Singapore has been Qantas’ major hub outside Australia, and from where it is able to feed transfer traffic to other Asian ports.

While it is convinced that its fortunes lie in the lucrative Asian market, it does not make sense for the flying kangaroo to skip Singapore or make a sizeable reduction in its operations there. After all, Singapore (Changi Airport) is the darling of transit passengers worldwide. An exit would shut Qantas out of growth opportunities – not just in Singapore but in the region – even as Qantas raises the profile of its low-cost Jetstar subsidiary and continues to pursue the dream of staging a separate Asia-based premium carrier.

Qantas chief Alan Joyce has said that Qantas would continue to develop large hub airports or en-route gateways in its network since these hubs, pulling in travellers from all over the world and sending them on to their final destinations, mean “extending our reach while restraining our costs.” However, he admitted: “We have a gap (in Asia), because our current schedule is predicated mainly on travellers transitting through Asia en route to Europe.”

While that might see some shift of such pure transit traffic from Singapore to Dubai, the former remains a premium hub for its infrastructure and connectivity – unless Mr Joyce becomes convinced that its family of hubs in partnerships with Japan Airlines (Narita), China Eastern Airlines and Cathay Pacific Airways (Hong Kong) and possibly Malaysia Airlines in 2013 (Kuala Lumpur) are adequately positioned even with the exclusion of Singapore.

It looks like with the impending incorporation of the Malaysian flag carrier as a new member of the OneWorld alliance, the two airlines may yet again revisit the proposal of a joint-venture regional carrier to be based most likely in Kuala Lumpur. Even then, it would be difficult imagining Qantas skipping Singapore altogether.

However, there have been mixed signals from both Qantas and Emirates on the rumoured alliance.

While admitting that his airline has met with Emirates, Mr Joyce clarified: “We only enter partnerships when we have the right arrangement for the long term. In the current economic environment, taking our time with this part of our agenda will clearly not undermine our broader transformation plan.”

On the other hand, Emirates chairman Sheikh Ahmed bin Saeed al-Maktoum revealed that a code-sharing agreement would likely happen within six months but would not include any revenue-sharing arrangement.

Is that any indication of who is more likely to benefit from the tie-up? You can confidently make your wager, can’t you?

What could be ailing Singapore Airlines?

Singapore Airlines (SIA) Group’s profit for Apr to Jun tumbled 82 per cent year-on-year, from S$253 million to S$45 million – what analysts described as “shocking” results. SIA the airline did worse, incurring an operating loss of S$36 million in contrast to a profit of S$136 million previously, although the first quarter of its financial year is generally the weakest.

SIA blamed high fuel prices in spite of hedging gains, economic uncertainties and a market affected by the Japanese earthquake and tsunami as well as political unrest in the Middle East. According to SIA, average jet fuel prices jumped 46 per cent, contributing largely to an expenditure increase of 11 per cent that outpaced revenue growth at only five per cent.

However, if that is any indication of the trend, SIA’s closest rivals in the region – Australian Qantas and Hong Kong’s Cathay Pacific Airways – seem to be bucking it. It is likely the volatile fuel price, if it continues to soar, will weigh heavily on these airlines as well, but the question is whether it is to the same extent.

Qantas, which will be announcing its results later this month, expects to post better-than-expected pre-tax profit of between A$500 million and A$550 million for the year ending Jun 30 2011, which covers the dismal quarter reported by SIA. This is boosted by a windfall of A$95 million as compensation from engine-maker Rolls Royce over a mid-air blast incident that led to the grounding of the Qantas A380 fleet. Note that Qantas too has its share of flight disruptions from a string of natural disasters; besides the earthquake and tsunami in Japan, there were the floods in Australia, earthquake in New Zealand and more recently Chilean volcanic eruption.

Qantas chief executive Alan Joyce said in a pre-emptive statement: “Considering the challenges facing the aviation industry, this is a very good result.”

Cathay posted record profits last year, overtaking SIA as the world’s most profitable airline. The Cathay Group recorded an attributable profit of HK$14,048 million for 2010, up from HK$4,694b million the previous year. At the time of the announcement in Mar this year, Cathay chairman Christopher Pratt said: “Demand is expected to remain strong in 2011, but this expectation could be undermined if the current (or any higher) level of oil prices were to reduce global economic activity.” It is to be seen if Cathay would suffer as much the same downturn as SIA.

In any case, what could be ailing SIA much worse than its rivals?

For one, the downgrading of air travel and slow recovery in premium travel continue to impact SIA. In the heyday of booming business, SIA was the doyen of premium travel. While that is gradually returning, the spread seems to be thinning out among the competition. At the same time, economy class travel has become highly price-sensitive, enabling the encroachment of budget carriers on the turf of full-service airlines. That has driven SIA to finally decide to set up its fully-owned budget subsidiary – in addition to Tiger Airways of which it already has a 32.9 per cent stake – to commence operations within a year.

Here again, SIA`s decision may have come late, losing out on time that had helped Qantas push the Jetstar advantage across the region. There is already a slew of other budget carriers, including Asia’s largest operator AirAsia which has also ventured into the long haul under the AirAsia X banner. Cathay has said it would not follow in the footstep of SIA but would instead introduce a premium economy class to cater to downgraders. Yet, perhaps, better late than never.

Then again, while SIA has assured its customers it will not happen, will it lose focus in its effort to manage a stable of four diverse airlines – SIA itself, SilkAir, Tiger and the new budget subsidiary – offering different products and service levels?

Full-service airlines that have sired budget subsidiaries – United Airlines and TED, Delta Airlines and Song, Continental Airlines and Lite, Air Canada and Zip, British Airways and GO, Scandinavian Airlines and Snowflake, to name a few – hardly succeed as ultimate champions on both fronts. With a veritable record of excellence, can SIA prove its prowess otherwise?

SIA’s growth appears to be hampered by the maturity of its traditional markets while Cathay continues to enjoy its gateway advantage to the vast Chinese market. Airlines such as Emirates, Etihad and Qatar Airways have intensified the competition in the Middle East. Qantas is pushing into growth areas beyond the Australian borders, through Jetstar and its intention to further utilize Singapore (which it has been doing for many years) as its base to extend its network.

SIA may find the competition becoming increasingly more challenging in the context of Singapore’s liberal open skies policy that has Changi Airport as its priority – SIA’s growth in recent years has been far below that of the airport.

The SIA management knows very well it is under pressure to find new initiatives to support its growth. The new budget subsidiary is first turf protection; growth may come after. With new leaders at the helm, can we expect more of the magic that has so successfully set SIA apart from the competition?

If it is any consolation, analysts who did not expect the steep decline in SIA’s 2011/12 first quarter’s profit are optimistic it must get better the next quarter. That sentiment speaks a lot about the confidence the industry has in the airline.

Singapore Airlines becomes selective

IN the past month and a half, I travelled on Singapore Airlines (SIA) between Singapore and Hong Kong and between Singapore and Cape Town, South Africa. I flew economy.

When you fly SIA, you will look forward to a pleasant, comfortable and enjoyable flight. It is always one with expectations. Inevitably, you do not compare SIA with other airlines, but with what you have known the airline to be.

The in-flight entertainment is a big plus for its wide range of movies, in particular the latest box office hits. But imagine what happens when the system is defective where you are sitting. No doubt the affected passenger usually gets some form of compensation, but it hardly makes up for the disappointment. This is what I mean by expectations, when you fly SIA. It has happened. Fortunately, it didn’t happen to me this time.

I find overall, the service is still good, but I observed during these trips how it is beginning to become selective, perhaps unintentionally.

On the HKG-SIN leg, the crew heaped a mound of attention on a passenger in the seat just in front of me, all too visibly, although he appeared to want to be left alone. “Can I help with the bags?” “Can I get you a drink?” “Are you sure you don’t want one?” “Can I get you the papers?” “Is there anything else?” “What about….?” Perhaps they had a reason to want to appease him over something. Or that he was some important person.

As legitimate as it may be, it becomes awkwardly servile and even distasteful to others who were watching the overdose of fuss heaped upon this particular passenger for reasons unknown to them, and they too might wish they had a little of that attention, especially when they asked for assistance that was slow in coming. I asked for the papers but, though promised, never got them. This observation aside, I always wonder why the crew would not come down the aisle with the papers (they used to) as they did with headsets and menu cards, but would go fetch the papers only when asked.

Interestingly, on the flights between Singapore and Cape Town, the crew were kept busy shuttling up and down the aisle to fetch packets of peanuts when asked. It started with one passenger, then others hitched on. One passenger was given a few packets. Then another passenger, given one packet, asked for more. And more. Why not just distribute one packet to each passenger as the airline used to do? Guess it had to do with cost-cutting.

During the meal service on the flight to Cape Town, a couple (a Caucasian man and his female Chinese companion) seated midway down the aisle were served their meals first, ahead of others. Not that they had pre-ordered special meals such as vegetarian (a plus point for SIA, by the way, is how the crew would serve children first). Perhaps they were known to the crew. who actually pushed the trolley up to where they were seated, then backtracked to start with the first row. And why, for some passengers, the crew asked only if they would have a particular meal and not offered a choice unless they asked, having read the menu card, if they could have the other?

That’s what I meant by being selective in service, which is legitimate if differentiated by class, but not a good thing within the same class. It suggests discrimination, though not intended.

As for the meals, they were quite disappointing even as it is generally acknowledged that in-flight meals – whichever airline you fly – are nothing to rave about. For future reference, I will avoid the sandwich in any form! Perhaps I had grown tired of the familiarity, but by comparison, Air Canada and Cathay Pacific offer better fares.

It is not easy to climb to the top of the service ladder, and harder to always stay tops, therein lies the challenge for SIA as one of the world’s best airlines.

“Gwailo” bias on Cathay Pacific Airways

I ASKED a Hong Kong resident who flew with his family from their hometown to Vancouver on Oct 9 what he thought of the service.

He was comfortable with the seat pitch in economy, reasonably pleased with the meals although he noted the portion had been reduced, and very happy with the inflight entertainment selection of movies.

The minuses include dirty toilets, which were not cleaned as far as he knew throughout the entire flight, and the stained tray table at his seat – grains of rice apparently left from the last flight were stuck to the surface. Knowing him to be someone finicky about hygiene, he found these lapses quite unsettling.

On the whole, he found the service provided by the crew not bad, except for something that quite cheesed him off. The “gwailo” bias, he said. He noticed how the crew were most polite (or was it more appropriately subservient) towards Caucasian passengers but not quite so to the rest of the travelers. That was not his beef, but why the different treatment as presumably they all paid the same fare? Caucasian passengers were saluted as “Sir” or “Madam”, but this was dropped when it came to him or the Indian passenger seated next to him. It was simply and curtly: “What would you like to have?” Not that this was particularly rude, but the difference in treatment made it appear so.

This, he said, was what he used to experience on another reputable Asian airline, but I told him I was not particularly aware of it from my frequent recent experiences. I would not venture to suggest that this has anything to do with Hong Kong being Hong Kong which, to my knowledge, has become one of the most improved service-oriented economies in the region. He then recommended, for equality of class, “Fly Air China.”