With the growth of the mainland economy maintaining its upward momentum, Cathay Pacific Airways has revealed plans to move even more aggressively into the market there by increasing the frequency of its flights and adding new routes to its schedule.

Tony Tyler, chief executive of Cathay Pacific Airways, told China Daily that the airline's recent joint venture with Air China in cargo transport signifies a significant step forward toward the company's goal of expanding on the mainland.

"We will continue to grow our business (on the mainland) mainly through Dragonair, to link all the key cities on the mainland with our international network in Hong Kong," Tyler said.

He added that Cathay's subsidiary Dragonair will increase the frequency of its flights on existing routes and add new routes to mainland cities as the market develops.

Last year, Dragonair cut services to Sanya, the mainland's most southerly island, to bring service capacity in line with customer demand.

The airline also suspended services to Dalian, Guilin, Shenyang, and Xian beginning last May, in a major cost-cutting drive, during a period of sluggish passenger demand.

As the global economy has entered its gradual recovery, so have the numbers for Cathay Pacific and Dragonair, which experienced sharp increases in traffic the early part of this year.

In February, Cathay and Dragonair carried a combined 2.06 million passengers, a 14 percent jump over February 2009. For the first two months of 2010, the number of passengers rose 6.7 percent.

Capacity aboard Cathay and Dragonair, meanwhile, increased 0.7 percent in February, while the capacity to the mainland has dramatically shot up by 10.2 percent.

Tyler said the company is likely to show better results this year, as the world's economy gradually picks up. "We are planning a modest increase - low single-digit growth in capacity," he said.

One new challenge facing Cathay is that the Ministry of Railways has laid down a blueprint for building 16,000 kilometers of new high-speed railway by 2020.

That will mean 70 percent of key cities, mainly in the eastern and central mainland, with a combined population of more than 50 million, will be accessible on the high speed rail links.

Despite potential competition with the fast trains, Tyler said the high-speed railways will actually mesh well with airline services.

"I don't expect we will have such a significant impact from the high-speed rail. We have to see how the market develops within the Chinese mainland," Tyler said.

He added that the high-speed railways may have a more direct impact on the relatively shorter haul flights, for instance flights between Guangzhou and Wuhan.

However, flights of Cathay and Dragonair on the mainland usually are longer than journeys aboard currently operating high-speed railways.

"Lots of our capacity on the mainland is between Hong Kong and Beijing, as well as between Hong Kong and Shanghai," Tyler said.

He added that the high-speed railway will enhance the connectivity of the airline, as the new fast trains will help bring more passengers to cities connected along major air routes.

"You can see that happening in Frankfurt, Paris and Amsterdam. The railway link has been very positive," Tyler noted.

(HK Edition 03/26/2010 page2)