Cathay chief lashes out at aircraft makers' high prices

The head of Hong Kong carrier Cathay Pacific on Tuesday lashed out at aircraft and parts suppliers such as Boeing and Airbus for charging airlines more for their products despite the economic downturn.

In a rare outburst against suppliers, Cathay chief executive Tony Tyler said aircraft and parts manufacturers continued to hike prices and called for closer alignment between the interests of airlines and suppliers.

"I am always astonished when I hear how much what you sell us costs. Big things, small things, seats, engines, parts of all kinds -- how can they be so expensive?" Tyler told a room packed with suppliers at the Asian Aerospace International Expo and Congress in Hong Kong, the region's largest air show.

"The result is that a premium seat and its furniture costs more than a top-quality sports car. If our passengers only knew what some of our costs were, there would be no complaints about the costs of premium fares."

Pricing negotiations between airlines and suppliers are typically kept confidential.

The airline industry has been severely hit by the downturn amid slowing cargo trade as families defer holiday plans and companies cut spending on business travel.

Escalating fuel prices and the global outbreak of human swine flu have exacerbated the issue.

The International Air Transport Association (IATA) had earlier forecast that full-year losses for the airline industry would reach about 9.0 billion US dollars.

"It's absurd to expect an industry which is estimated to be going to lose around nine billion dollars this year to keep paying higher costs for the same thing," the Cathay chief said.

Airbus' senior vice president of market and product strategy, Laurent Rouaud, told the forum that the price increase was necessary "to ensure that we are going to provide a better type of aircraft" to meet future challenges.

For example, he said the latest Airbus planes allowed for more efficient use of fuel than others in the market.

Cathay's Tyler also criticised the global aircraft giants Boeing and Airbus for their order delivery delays.

"I'd have more sympathy for suppliers if they provided the sort of on-time performance our customers expect from us. But they don't even do that," he said.

"I'll try to be even-handed: the world's two leading aircraft manufacturers have had well-publicised problems with aircraft delays."

He said although the latest delays did not affect Cathay, the carrier had "all sorts of unpublicised problems with delays from suppliers of all kinds over the years."

Cathay Pacific reported last month that its first-half revenue plummeted 27.1 percent year-on-year to 30.92 billion Hong Kong dollars (3.96 billion US) due to weak demand.