This article first appeared in The Edge Malaysia Weekly, on October 5 - 11, 2015.

UNDETERRED by rising competition and a slowdown in China, Cathay Pacific Airways Ltd continues to plot a path for even more growth through 2016.

The Hong Kong-based carrier is upbeat about grabbing a bigger share of traffic in Hong Kong, with new destinations to be added during the remainder of 2015 and next year.

Hong Kong International Airport handled 62.9 million passengers last year, up 6.1% from 2013, making it the world’s third busiest airport after Dubai International Airport and London’s Heathrow Airport, according to James Tong, the airline’s director of corporate affairs. Cathay, which also owns China-focused Hong Kong Dragon Airlines Ltd, accounted for about 50% of total passenger traffic or 31.57 million passengers.

For 2015, Cathay hopes to post “high single-digit growth” in the volume of passengers carried. Last year, passenger volume was up 5.5% from 2013.

“Even though China’s economy is slowing down, this is down from a high base. Its economy is still growing. We are optimistic about the outlook for 2015,” Tong tells international journalists at the delivery of the airline’s 70th Boeing 777 aircraft — also the last and 53rd B777-300ER it had ordered — in Seattle, the US.

“Southeast and Northeast Asia are also growing. We haven’t seen any major slowdown in any of the markets we operate in.”

He also points to Cathay’s large presence in North America, with 100 flights a week to the continent.

“We fly four times a day between Hong Kong and Los Angeles, and five times a day to New York. We just started a four-times-a-week service to Boston (in May) and we will keep growing [our route network across North America],” he says.

Cathay has thrived amid challenging market conditions and increasing competition, which caused some of its rivals to suffer huge losses and announce cutbacks as well as delay delivery of new aircraft.

Group-wise, the airline had a strong start this year, with net profit in the six months to June 2015 rising almost sixfold to HK$1.97 billion (RM1.12 billion) from HK$347 million in the same period last year, helped by a one-third reduction in fuel cost due to lower prices.

First-half revenue, however, fell 0.9% to HK$50.39 billion and passenger yield, which reflects the airline’s pricing power, dropped 9.3%.

Tong says lower fuel prices have benefited the airline “a lot” in terms of profits. Fuel cost accounted for 39% of Cathay’s total operating costs.

Over the last two years, the airline had accelerated its international expansion under the Cathay and Dragonair brands with the addition of several European destinations, including Manchester and Zurich.

“Beginning last month, we (Cathay) operate four times a week from Hong Kong to Düsseldorf in Germany. We have just announced that we are flying to Madrid in June 2016, also four times a week,” says Tong.

Cathay currently serves 189 destinations in 51 countries. Its network is expected to continue to grow as quickly as its fleet expansion. With the latest delivery, Cathay operates 149 aircraft, and 70 more planes worth about HK$180 billion (at list price) will be delivered between now and 2024.

The aircraft on order include 22 Airbus 350-900s, 26 A350-1000s, 21 Boeing 777-9Xs (which will enter service between 2021 and 2024) and a B747-8 freighter (to be delivered next year).

The airline has yet to decide whether or not the aircraft on order will be used to replace its older planes.

“From a commercial perspective, we want to have some flexibility in terms of deploying  our planes because we don’t know how the market will be like between now and 2024,” says Tong.

One thing for sure is that Cathay will retire the last of three remaining B747-400s in its fleet by October next year to make way for more fuel-efficient aircraft.

Cathay has not ruled out the idea of buying the A380 superjumbo — but not in the foreseeable future.

“We found that business passengers prefer carriers with a substantial number of flight frequencies. For example, we operate five flights a day between Hong Kong and London. Thus, it is better to have five flights spread out throughout the day, rather than have two big aircraft leaving on a certain day.

“Up to this moment, it is our strategy is to have more frequencies over capacity. Of course, it doesn’t mean that we won’t need it (bigger aircraft) forever. At some stage, we may need to upgrade our aircraft to bigger ones.

“But, at the moment, we prefer to have aircraft that seat 300 passengers so that we can spread the flights to different times, for example, to London and New York instead of having two 544-seat aircraft,” says Tong, unperturbed that the airline may lose the initial advantage in offering the world’s largest aircraft, given that Cathay is already operating in the sectors served by A380 customers.

While some airlines are still in two minds about offering full and low-cost services to find the right business model, he says Cathay will continue to operate as a full-service carrier with a focus on the premium corporate and leisure market. “We will continue to operate as a full-service network carrier offering three or four classes of service. We see this model being able to tackle both the corporate and leisure markets.”

Nevertheless, Cathay recognises that people travelling on low-cost carriers are guided, to a large extent, by prices, which means that the airline will still need to offer competitive fares to avoid being outmuscled by its rivals.

Cathay has declared its premium economy seats — priced between economy and business class — a success two years after it unveiled the product. Tong says its premium economy class has proved to be a success on long-haul flights that are typically more than 10 hours, such as from Hong Kong to Europe and North America.

Meanwhile, the latest aircraft joins Cathay’s other B777-300ERs serving Europe and North America.

“Cathay took delivery of its first B777-300ER in September 2007. Today, we operate the largest B777 fleet in Asia,” Cathay chief executive Ivan Chu said in a statement.

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