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Cathay Pacific Airlines Essay

4333 words - 17 pages

Case AnalysisStrategic Marketing in Asia~ CATHAY PACIFIC ~IntroductionSince its establishment in 1946, Cathay Pacific has been a profitable airline company, which experienced periodical growth. In 1998 however, the airline experienced a loss of US $70 million, a stark contrast from earning $218 million in profits in the previous year. For Cathay Pacific, this was the first loss experienced by the air carrier since 1963. Cathay Pacific's economic hardship was mainly the result of a financial crisis, which affected the Asia-Pacific region at that time. As a result of this crisis, air travel heavily declined, resulting in low passenger loads and yields. For Cathay Pacific, this translated into a decline of 12.9% in revenue. Additionally, Cathay Pacific also faced a series of problems with its labor department due to disagreements over negotiations and the handling of in-flight operations. This conflict resulted in strikes and delays for the airline. Cathay Pacific's problems were exacerbated by the media, which closely scrutinized the airline's actions. As a result, Cathay Pacific also had a crisis in Public Relations. This report discusses the key issues that have surrounded Cathay Pacific and provides an analysis with some recommendations to tackle the situation at hand.AnalysisDespite its well-known reputation in the Asia-Pacific region, Cathay Pacific faced many challenges that would have a significant impact on its business. By examining the changes that have taken place in the company and the airline industry over the years, the following key issues can be identified. Cathay Pacific needs to address these key issues in order to be successful in the future.Update - What has happened since 1999In a bid to escape its 18-month financial slump, Cathay Pacific strategically used Hong Kong as the main hub for air transport in Asia. Additionally, the company's performance in Europe and North America was able to compensate for the airline's poor performance in Asia. These initiatives paid off as Cathay Pacific earned a profit of $285 million in 1999. Cathay Pacific was also fortunate in its timing, as its participation in the "One World Alliance" began to increase traffic for the airliner. "One World Alliance" is a joint effort among different airlines to share frequent flier points and promotions in a bid to attract fliers.2000 was a good year for Cathay Pacific for several reasons. Firstly, the Asian economy was gradually improving which resulted in more passengers returning to travel. Secondly, Cathay Pacific's continued cost cutting and capital investment strategy began to show significant results. The company posted profits of $642 million, a jump of 130%.In 2001, the entire air industry suffered a large blow from the September 11th terrorist acts. As a result, airline travel dramatically declined, affecting all the companies. Cathay Pacific's response to this business climate was to maintain its strategy of cost cutting and investment.In 2003,...

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