Cathay Pacific and DHL form express cargo joint venture

Cathay Pacific Airways and DHL Worldwide Express today announced that they have signed a new joint venture agreement. DHL has now acquired a 30% stake in Cathay Pacific's formerly wholly-owned subsidiary, Air Hong Kong. Under the agreement, Air Hong Kong will now purchase a fleet of mid-range, wide-body aircraft to operate and enhance DHL's network to the major cities in the Asia Pacific region from the airline's base at Hong Kong International Airport.

Air Hong Kong plans to purchase five freighter aircraft by 2004, and to reach a fleet of at least eight aircraft by 2010. An initial investment of about US$300 million will be committed to the venture before 2004 and a further US$100 million by 2010.

Important to this agreement was the announcement last week that DHL will develop and operate the Express Cargo Terminal at Hong Kong International Airport which will serve as DHL's state-of-the-art Central Asia Hub. It is estimated that combined, these express cargo ventures will create a total of at least 700 new jobs in Hong Kong before 2004.

The new expanded air service, together with Hong Kong's superior cargo handling abilities, will provide shippers with a faster service at lower cost, thereby attracting express cargo to Hong Kong that would otherwise pass through other Asian hubs. Annual throughput for this joint venture will be about 160,000 tonnes - equivalent to about one sixth of all intra-Asian cargo that currently passes through Hong Kong International Airport. Throughput growth in this sector over the following five years is expected to be between 15-20 per cent per annum.

Cathay Pacific Chairman Mr James Hughes-Hallett said: "This new partnership with DHL demonstrates our support for the Hong Kong SAR Government's initiative to establish the SAR as the logistics centre for Asia. As the airline of Hong Kong, we are always committed to enhancing Hong Kong's role as Asia's aviation hub, creating new job opportunities and contributing to the development of the Hong Kong economy. We have already demonstrated our ability to deliver an efficient and cost-effective service in express cargo and we are delighted to take our relationship to the next level."

Chairman and Chief Executive Officer DHL Worldwide Express Mr. Uwe Dörken said: "DHL is delighted to enter this joint venture with our long-term partner Cathay Pacific to support express cargo growth in Hong Kong and Asia. Since we began operating overnight cargo/passenger flights with Cathay Pacific, we have maintained a close relationship with the airline. The express cargo joint venture will strengthen our service to more major Asian cities than ever and complement our collective vision for consolidating Hong Kong as the key express logistics centre of Asia."

The Hong Kong hub will be the focal point of DHL's Asian Air Network, which is designed for fast and secure intra-Asian express services. The Express Cargo Terminal, once completed in 2004, will replace DHL's existing Central Asia Hub, located at the Hactl Express Center at Hong Kong International Airport. 

Since March 2000 Cathay Pacific and DHL have collaborated on overnight cargo/passenger flights from Hong Kong to Osaka, Seoul, Taipei and Singapore. Tokyo, serviced by Air Hong Kong, was added to this network in July this year.