Having worked in the airline industry for the past three decades, Philip NL Chen, 51, knows his business from the inside out.

"It's probably the worst business on earth," says Chen, CEO of Hong Kong-based Cathay Pacific, which is celebrating its 60th anniversary this year.

In his opinion, virtually anything could have an impact on the global airline industry, including the state of the world economy, politics, diseases (such as Sars in 2004), terrorism and natural disasters.

"As a result, we can't be complacent at all," says Chen, who first joined the carrier in 1977 and was named chief operating office in 1997 and chief executive in 2004.

Chen isn't complacent either when it comes to dealing with rapidly growing competition from low-cost carriers.

First, he believes in "good value for money". At the end of the day, if a low-cost airline offers only a low fare, then it does not always give the best value for money for all passengers.

Second, he believes that the success of no-frills carriers in North America and Europe is unlikely to be duplicated in Asia due to various factors.

"The market and regulatory conditions are different. If you set up a low-cost airline in the US, you can fly anywhere in the US.

"The same is true for Europe. But if you set up in Asia, you can't do that. Moreover, the airline industry has a high fixed-cost structure. Each of the aircraft is expensive while fuel alone accounts for more than 30 per cent of total costs.

"And if you think our fares are expensive, we could compare it to the cost of riding the Bangkok Skytrain. It's roughly 70 cents Hong Kong (Bt3.3) for one stop (a distance of about 1 kilometre), whereas it costs you just 20 cents Hong Kong per kilometre to fly from Bangkok to Los Angeles.

"That includes the cost of our staff, fine food and other services. I think it's good value for money and it's even very cheap," he says.

Recently, Cathay Pacific completed its shareholding realignment, making Dragonair part of its group. But Dragonair will retain its separate brand, market positioning and identity.

The group also owns Air Hong Kong, a freight airline. In the first half of 2006, the group reported a profit of Bt62.4 billion.

Last year, the group managed to achieve an annual rate of return of over 7 per cent.

The Cathay Pacific group is controlled by the Swire Group and partly owned by a Chinese state firm.

Since Hong Kong is an international gateway into China, Cathay Pacific has been a key benefactor in the booming Chinese economy.

Chen says more globalisation and more communications will lead to more air travel in the future.

China, for instance, is set to be a huge market for international outbound tourism as currently only 1 per cent of its 1.3 billion population have travelled outside the country.

For business travel, he says, the rapid growth of cross-border logistics has also required businessmen to do more travel in the region.

Currently, Bangkok is Cathay Pacific's second busiest foreign point of service after Taipei, as it operates more than 50 flights per week out of the Thai capital.

The airline has also opened a 330-square-metre passenger lounge at the new Suvarnabhumi Airport, which Chen says has a lot of room for further expansion.

Suvarnabhumi is now the world's largest single-terminal airport, with a total space of more than 500,000 square metres - about 10 per cent larger than that of Hong Kong's Chek Lap Kok, which opened nine years ago.

Chen says the Hong Kong airport has also started its expansion programme with the building of its second terminal.

Nophakhun Limsamarnphun

nop1122@yahoo.com