Hong Kong's de facto flag carrier said that yields on the profitable Golden Route between Taipei and Hong Kong would decrease as Dragonair and EVA Air increase flights on the route.
"We are going to see a lot of capacity on that route in a very short space of time and usually when that happens, obviously, the market responds and prices are a function of demand and supply. Unless demand suddenly surges by the same amount, there would be some price pressure," said Tony Tyler, a director for the carrier said.
The Golden route will see 98 additional flights to 340 flights a week. The current route brings in US$770 000 00 in revenue a year.
"The loss of market share is clearly a negative for Cathay. Not only are they shut out from participating in the organic growth of the market, but the increased share to Eva and Dragonair is likely to place competitive pressure on margins," said Simon Gresham of Merril Lynch.
More information at the Reuters / Yahoo website