HONG KONG: Direct flights between the mainland and Taiwan will not necessarily have a major adverse impact on Cathay Pacific as this will be mitigated by an expanded trade agreement that the central and SAR governments signed last Saturday, Cathay officials said.

Cathay chief operating officer John Slosar yesterday said the sixth supplement to the Closer Economic Partnership Agreement (CEPA) contains a provision which allows mainland travelers to use a single permit to travel both to Hong Kong and Taiwan.

Under the new provision, mainland group tours bound for Taiwan can also enter Hong Kong in transit.

Slosar said this flexible arrangement can mean increased tourist traffic from the mainland to Hong Kong, and potentially benefit Cathay Pacific.

He said Cathay Pacific lobbied the Hong Kong government for help shortly after the mainland and Taiwan struck an agreement allowing direct cross-Straits flights.

Before the deal was made, travelers from the mainland needed to pass through Hong Kong before they could proceed to Taiwan, an arrangement which boosted Cathay's Hong Kong to Taiwan operations.

Slosar said the inclusion of easier entry to both Hong Kong and Taiwan came following Cathay Pacific's lobby on the Hong Kong government.

Cathay's cautious optimism on CEPA's possible boost to passenger traffic from the mainland came as other airline officials gave an update of further setbacks, as well as strides, in its core operations.

The airline said April traffic data showed a significant year-on-year drop in cargo tonnage, but this was offset somewhat by year-on-year gains in passenger traffic, as a result of an increase in passenger volume during the Easter holidays last month.

According to latest data, Cathay Pacific and unit Dragonair combined carried a total of 123,179 tonnes of cargo and mail in April, down 13.3 percent from a year earlier. Year-to-date, tonnage has fallen by 17.3 percent compared to a capacity drop of 13.6 percent.

Slosar said Cathay is keeping a tight lid on operating costs to counter the adverse effect of the economic downturn and it has no plans of going to the capital market for funds.

(HK Edition 05/14/2009 page16)