Singapore Airlines was voted 2023’s best airline in the Skytrax World Airline Awards, known as the aviation Oscars. Cathay ranked number eight. The city’s flag carrier took fourth place in 2019.
Lau, 53, said investments in first and business class were especially important, as they were “big revenue drivers” for the airline.
The airline is banking on a resurgence in corporate travel, which Lau said was coming back “quite strong”, especially demand for flights to and from mainland China.
Cathay’s corporate travel has almost recovered to pre-pandemic levels as a proportion of overall traffic.
The airline is launching a new business-class cabin, called Aria, which will arrive in the second quarter of next year as part of a redesign of its long-haul Boeing 777-300ER aircraft. A new first-class cabin will be featured in Cathay’s Boeing 777-9 aircraft from 2025.
A surge in demand after Hong Kong lifted coronavirus travel restrictions earlier this year helped Cathay report a net profit of HK$4.26 billion (US$546 million) for the first half of 2023, compared with HK$4.99 billion in losses in the same period last year.
Aviation analytics firm Cirium said business class fares were between 12 and 24 per cent higher in August compared with the same month in 2019 for travel between Hong Kong and London, New York, San Francisco and Tokyo.
Cathay’s strategy is in line with an industry-wide trend that has seen airlines such as Germany’s Lufthansa, Australian airline Qantas and Air France invest in their high-end services.
The moves came even though corporate travel has been slow to recover in the United States and Europe as economic uncertainty, higher inflation and environmental concerns about airline travel affect demand. Lau said Cathay took a longer-term view of the market.
“We have a lot of confidence in Hong Kong and in the whole Chinese mainland market,” Lau maintained. “So that is why I think when we make these investments, they will be there for the next five to 10 years.”
Gary Ng Cheuk-yan, senior economist at corporate and investment bank Natixis, said it was an “unavoidable choice” for Cathay because it had to make investments in its business and first-class amid competition from other airlines, including Middle East operators such as Emirates and Qatar Airways.
Despite indirect journeys to destinations in the West taking longer on Gulf carriers, the savings could be as much as half of a direct flight in Cathay’s business class, which would sway some customers, he added.