Cathay Pacific Axes Flights To Kuala Lumpur… But Not Really

Cathay Pacific has quite a presence between Hong Kong and Kuala Lumpur, as they operate 4x daily flights between the two cities. They’re the primary airline in the market, especially given that Malaysia Airlines only operates 737s between the two cities nowadays.

As some of you may know, Cathay Pacific has a wholly owned subsidiary, called Dragonair, though it’s being rebranded as Cathay Dragon. I think the rebranding is brilliant, given that in the past many people have been confused about the relationship between Cathay Pacific and Dragonair — by adding “Cathay” to the name, the relationship is hopefully a bit clearer to the average consumer.

Cathay-Dragon

Essentially Cathay Dragon is to Cathay Pacific as American Eagle is to American… sort of. They’re a regional carrier, and operate routes to China (a market in which they’re actually considered to be a “premium” airline), as well as to many other leisure destinations within Asia.

Well, interestingly Cathay Pacific will be discontinuing flights between Hong Kong and Kuala Lumpur by May 2017. Cathay Pacific’s flights in the market will be replaced by Cathay Dragon, which will operate a similar schedule.

KL-Petronas-Towers
Petronas Towers in Kuala Lumpur

Now here’s the crazy part — Cathay Pacific is transferring five A330 aircraft to Cathay Dragon.

Per the press release:

Dragonair today announced that it will operate four daily flights between Hong Kong and Kuala Lumpur commencing early next year, further strengthening the airline’s regional network.

The new flights will be introduced progressively between March and May 2017. Kuala Lumpur will become Dragonair’s third destination in Malaysia – the airline already operates 11 weekly flights to Penang and five weekly flights to Kota Kinabalu. Together with Kuala Lumpur, Dragonair will be operating 44 weekly flights to Malaysia.

Cathay Pacific will cease its four daily flights to Kuala Lumpur upon the launch of the new Dragonair service. Additionally, five of Cathay Pacific’s Airbus A330 aircraft will be transferred to the Dragonair fleet to support the airline’s operation and growth.

In other words, Cathay Pacific is “canceling” the flights, and Cathay Dragon will pick up those flights with the planes that Cathay Pacific just transferred to them.

So, what’s in it for Cathay Pacific? Cathay Dragon has a lower cost structure, so they’re saving money with each flight they operate. From Cathay Pacific’s perspective I certainly can’t blame them, and I suspect Cathay Dragon’s growth within Asia will continue.

However, I’m sort of surprised that Cathay Pacific’s union contracts allows them to transfer planes in such a way, since it’s pretty clear what they’re doing here, that they’re essentially trying to save on staffing costs. Cathay Pacific has a pretty strong pilot union, so I’m shocked they don’t have a clause in their contract preventing something like this (or perhaps Cathay Pacific is getting away on some sort of a technicality).

For consumers there are a couple of potential implications:

  • Historically the route has primarily been operated by regionally configured A330s, though they also sometimes flew longhaul configured A330s in the market, like when I flew them a while back; with Cathay Dragon, all planes will be in the shorthaul configuration
  • Cathay Dragon is a oneworld affiliate carrier, meaning oneworld benefits fully apply on them; however, Alaska Mileage Plan miles can be redeemed on Cathay Pacific, but not on Cathay Dragon, so you won’t be able to redeem Alaska miles to Kuala Lumpur on Cathay Pacific anymore

Cathay-Pacific-Business-Class-26
Cathay Pacific & Cathay Dragon regional business class seat

Bottom line

While the route change as such might not be huge news, I do find it interesting how apparent Cathay’s strategy here is. They’re transferring the planes and the route to their wholly owned subsidiary, as a way of saving on costs. For consumers this means that you can always expect the same regional product to Kuala Lumpur. Furthermore, this isn’t good for those hoping to redeem Alaska miles to Kuala Lumpur.

What do you make of Cathay Pacific’s Kuala Lumpur route transfer?

Comments

  1. Ben, maybe Kuala Lumpur has a different market demography than the rest of the SE Asian destination? I noted that CX still has a HKG-TPE flown with First class equipped cabin, and that flight is less than 650 miles.

  2. I flew this route with Cathay a few year ago and they had the a330 with fully flat business seats, as they only had about 8 people in business this flight was one of the best I ever flew regarding cabin crew service.
    And I was able to redeem BA miles for this route.

  3. CX pilots union is currently imposing what they call contract compliance, which includes a training ban on new promotions. CX has planned for significant long haul growth – so to get round the lack of new pilot promotions, the transfer of existing short haul routes to KA will let them redeploy pilots to their new long haul routes. Since pilots still get to fly the same hours, they have (theoretically) no cause to complain…

  4. I am reading this simultaneously to discovering that Trump thinks Clinton and Obama were the founders of ISIS…

  5. I wish that Alaska would include Cathay Dragon like the OneWorld partners do, would make it much easier!

  6. It is not new that CX transfers aircraft to KA. In 2012 I was on a KA flight on HKG-PVG. It was operated by an A330 (B-HLA) that was just transferred from CX to KA. The seats/config (at least in J) was still the old CX regional style instead of the KA seats/config.

    When KA occasionally runs out of aircraft, it is not unheard of that the flight is sub by a CX aircraft. This happens particularly often to TPE.

  7. While I am not able to comment specifically on the CX contract as I have not seen it, it sounds like they are getting around any transfer provision by canceling the route and Cathay Dragon conviently announcing a new route on the same day, it sounds like tickets won’t be transfered so they flights are not being transfered. I doubt there would be any clause against transfer of aircraft out of the fleet in the CX pilot agreement but could be a prohibition against transferring routes why they have to cancel and announce a new route.

  8. uh oh, I’ve been waiting a few days to be able to book the flight with Alaska miles. Transferred SPG over to Alaska. What now?

  9. @ATX maybe book flights to Singapore and then buy a separate ticket to KUL. Or maybe wait until AS opens up JAL redemptions.

  10. What should I do if I have KUL-HKG return award flights already booked for June? Used AAdvantage and Enrich miles.

  11. @tly AAdvantage miles do work on KA flights so they should just move you over. Theoretically Enrich miles also work since MH is part of oneworld.

  12. @ATX, as others have said, just book to SIN, or even BKK, and get a connecting flight. There are dozens of flights a day on all sorts of carriers for all budgets from either of those cities to KUL.

  13. KA’s J catering is much better than CX’s as their catering budget is higher. Food is CX is just bad

  14. @Brad B – ticketing won’t be transferred?

    So for those of us that have HKG-KUL/KUL-HKG flights booked on CX in April 2017…?

  15. I once flew HKG-PEK on Dragon Air in F and I was allowed access to the Cathay F lounges and the hard product was the same as the Cathay longhaul J product. The service and food were excellent on the flight. I’m definitely a big fan of Dragon Air F.

  16. You are NOT a qualified armchair CEO for Cathay. There is no crew/union agreement that doesn’t let this happen, and neither does KA have a lower cost for operating crew that much compared to CX. The actual reason is lack of crew and also the flexibility of switching to single aisle aircraft on a low yield route like this, but not cutting down on CREW COSTS.

  17. @Harry I didn’t see anything saying “Reservations will be accommodated on Cathay Dragon” so I am assuming they will cancel the tickets

  18. I fly KUL HKG often. I do not like Dragon so will switch to SQ. The Cathay pilots and management are always at odds. A new hire pilot today gets no housing. Try living in Hong Kong with no housing allowance impossible. Cathay is now short pilots. They just announced last week the hiring of DEFO’s again. Every single flight attendant I know (it’s a lot) who fly for Cathay now call them Cathay Pathetic. They hate the job and not many pilots are happy. Dragon is not much better. They cancel often and have many MX issues. Anyway thank god for SQ 🙂

  19. It’s definitely a crewing issue. They are short on pilots and freeing up KUL will allow for CX to pursue its growth plans without being held hostage by the union situation. CX is in a peculiar situation. The political situation between HK and China doesn’t help nor does the strength of Middle Eastern carriers that have deep government pockets and subsidies. It’ll be interesting to see how CX tries to weather the storm over the next few years. By deploying Cathay Dragon on KUL, it seems like they are taking proactive steps to ensure their own survival. Frontline staff take the brunt of customer grievances, but they also will never be privy to the real financial situation and full understanding of the competitive landscape because it is all proprietary. So in conclusion, they’ll always be unhappy.

    Further to @Tim comment above, new second officers these days do not get housing allowance and it only makes sense when you consider the fact that local hires are not eligible for housing. General recruiting principles apply in that if you can hire someone locally, you hire them locally before pursuing for more expensive overseas options. That’s just good business sense. Responsibility of the company is to make a healthy return on invested capital and make money for shareholders. Even before CX’s screw up on fuel hedging, such recruitment principles were already in place and is in line with what other comparable companies do in the local market. You can argue what the comparables should be, but for a business operating on razor thing margins, you really have to squeeze every little bit just to get by. Let’s see how much they can continue to cut before everyone jumps ship.

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