After talking to a few friends who are working for Cathay or Dragonair in Hong Kong, I believe it's 90% likely that some Australian services will be cut and Sydney is definitely high on the list.
There are now several problems with Cathay's SYD-HKG services:
(1) Slowing demand from both HKG-to-SYD (v.v.) as well as through-flight (connecting in HKG) markets, and the market demand for Cathay's through-services is the most worrying largely due to increased competitions from rivals (a friend at CX said Virgin Atlantic actually got quite a bit of ex-CX markets for through services to UK as well as other regions [in conjunction with partner airlines]).
(2) Disappointing market for premium services to Australia, many companies in Hong Kong have simply suspended most of their employees' air travel on business trips, especially those in the banking sector (large corp. clients such as HSBC, NCB, BOC [HK], ICBC [Asia] etc.). So, the premium classes are not there to support yields anymore.
(3) Cargo demand is dropping faster than most anticipated! CX has tried a number of strategies to push for cargo sales both at home and in other countries (via designated GSAs), but its cargo traffic is still recording 20-30% reduction despite the efforts.
(4) Services to Mainland China via HKG is facing increased pressures from non-stop carriers such as Air China, China Eastern and long-time rivals such as Singapore Airlines. A mate @ Dragonair said their Mainland flights are not filling up and forward bookings for flights to other countries with CX connections in HKG are decreasing much faster than the point-to-point non-stop Mainland-HKG services. Several TAs based in Sydney and Melbourne have told me that a lot of clients are now opting for non-stop services on Air China and China Eastern given their extremely competitive sales fares (e.g. A$850 for 3-month SYD-PVG, SYD-PEK round-trip tkt) that cannot be matched by carriers such as CX, SQ, MH etc.
Regards.
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