Cathay May Add Japan Charter Flights as Yen Spurs Demand

Cathay Pacific Airways Ltd. (293), Asia’s biggest international carrier, is considering adding charter flights from Hong Kong to Japan as the weakening yen spurs travel demand.

Cathay may offer the flights to so-called second-tier cities in Japan during summer to capitalize on “very good” demand from people in Hong Kong, Chief Operating Officer Ivan Chu said today. The carrier has seen double-digit growth in demand on routes to Japan from Hong Kong and Southeast Asia this year, he said, without giving figures or identifying the Japanese cities.

“Japan market is the bright spot of our business this year,” Chu told reporters in Hong Kong, where Cathay is based. “The depreciation of the yen has helped.”

The yen has declined about 12 percent against the dollar in 2013, making Japan a cheaper destination for foreign visitors. The number of Hong Kong tourists to Japan surged 62 percent from a year earlier to 59,400 in March, according to the Japan National Tourism Organization. Visitor numbers from Thailand, Indonesia and the Philippines jumped at least 70 percent.

Cathay rose 2.9 percent to close at HK$14.36 in Hong Kong. The stock has gained 1 percent this year, compared with a 2.6 percent advance for the Hang Seng Index.

The carrier is “cautiously optimistic” about the passenger business this year and is adding flights to long-haul destinations in North America, Chu said. Cathay halted expansion for long-haul flights and pared Middle East services in 2012 amid a global economic slowdown.

Territorial Dispute

Travel demand from China to Japan remains lackluster, Chu said. A dispute between the two countries over ownership of uninhabited islands intensified last year and damped demand for Japanese services and goods in China.

Spring Airlines Co., China’s biggest carrier outside government control, currently fills just half its seats on flights between the two nations because tensions remain, said Zhang Wu’an, a spokesman at the Shanghai-based company.

“There’s no improvement on this route,” Zhang said by phone today. “Chinese consumers don’t favor Japan even though the yen is weakening.”

To contact the reporter on this story: Jasmine Wang in Hong Kong at jwang513@bloomberg.net

To contact the editor responsible for this story: Vipin V. Nair at vnair12@bloomberg.net

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