http://www.businessweek.com/articles/2014-03-20/cathay-pacifics-growth-illustrates-chinas-wild-tourism-boom

Tourism

Cathay Pacific’s Growth Illustrates China’s Wild Tourism Boom


The well-told tale of China’s rising middle class is showing up in Cathay Pacific Airways’ (293:HK) torrid U.S. expansion.

The Hong Kong-based carrier started its fifth daily flight to the New York area earlier this month and will soon expand to four daily flights from Los Angeles and 10 per week from Chicago. Cathay also has two daily flights from San Francisco. In New York, the flights account for roughly 1,500 seats per day. “I’m a bull when it comes to the potential for outbound traffic from China,” Rupert Hogg, the airline’s chief commercial officer, said in a speech on Thursday in New York, on his first week on the job. “The numbers are very large indeed.”

Quite. China’s tourist boom is among the largest in the world, with the number of international travelers expected to double to 200 million annually by 2020, according to a recent report by the brokerage and investment firm CLSA in Hong Kong. “Historical evidence in other Asian countries suggests that per-capita GDP growth beyond $8,000 triggers explosive outbound travel,” the report said. “By 2020, the number of provinces in China with per-capita GDP spending exceeding $8,000 will increase from 10 in 2012 to 27.” The population of those provinces will rise from 500 million to 1.2 billion during that period.

France and the U.S. are among the more popular destinations for Chinese tourist groups, although Hogg says “the islands and sea and sand” spots in Thailand and the Maldives are showing enormous traffic growth from mainland travelers.

Cathay Pacific has $29 billion of new aircraft on order to address the travel increase, and Hong Kong’s airport authority is exploring a third runway to keep pace with the cargo and passenger traffic. Hogg says the airport, built on Chek Lap Kok island, will meet its capacity 15 years ahead of schedule.

Bachman is an associate editor for Businessweek.com.

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