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Cathay Pacific is an international airline registered and based in Hong Kong, offering scheduled passenger and cargo services to 172 destinations in 39 countries and territories. The Company was founded in Hong Kong in 1946 and remains deeply committed to its home base, making substantial investments to develop Hong Kong as one of the world’s leading international aviation centres. In addition to its fleet of 138 aircraft, these investments include catering and ground-handling companies and the corporate headquarters at Hong Kong International Airport.
Cathay Pacific continues to invest heavily in its home city and at 31st December 2012 had another 92 new aircraft due for delivery up to 2020.
The airline recently completed construction of its own cargo terminal in Hong Kong, which commenced a staged transition of operations in February 2013 Cathay Pacific and its subsidiaries employ some 29,900 people worldwide (more than 22,800 of them in Hong Kong). Cathay Pacific is listed on The Stock Exchange of Hong Kong Limited, as are its substantial shareholders Swire Pacific Limited (“Swire Pacific”) and Air China.
Cathay Pacific is a founding member of the oneworld global alliance, whose combined network serves more than 800 destinations worldwide.
Competitive advantage is the ability of an organization to outperform others because they produce desired goods or services more efficiently and effectively than its competitors. When a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage.
A competitive advantage exists when the firm is able to deliver the same benefits as competitors but at a lower cost (cost advantage), or deliver benefits that exceed those of competing products (differentiation advantage). Thus, a competitive advantage enables the firm to create superior value for its customers and superior profits for itself. Characteristics of competitive advantages
To improve the product quality, Cathay Pacific efforts to meet and achieve needs of passengers. In an increasingly competitive environment, it is crucial to maintain and develop passenger loyalty by providing high quality products and services. This remains a key focus of the Cathay Pacific Airways. Therefore, Cathay Pacific has introduced a new Premium Economy Class product, a new long-haul Economy Class seat and a new Regional Business Class seat. The airline’s long-haul Business Class was named World’s Best Business Class in 2012 at the World Airline Awards run by Skytrax. “Cathay Pacific’s strengths is to provide a comprehensive level of service, we are committed to the objectives to be achieved.” expressed the company’s strengths said by Cathay Pacific Deputy Chairman and Chief Executive David Turnbull.
Not only service provided by Cathay Pacific inside the aircraft, but also all ground service need to be monitored, such as check-in, pick up luggage and even the passengers leave from the airport to the home way. All these aspects are Cathay Pacific service range and strive to provide satisfactory service to passengers. The Top-class management team and loyal support can workforce a good combination. Thereby, the airline’s real competitive advantage in these “most challenging business conditions for our industry in more than a generation” was its supportive workforce, quoting the response of the airline’s nearly 20,000 staff to a special leave scheme designed to save the company cash and to prevent the need for staff layoffs.
On the other hand, the core strengths of Cathay Pacific Airways are a superb team, a strong international network, exceptional standards of customer service, a strong relationship with China and our position in Hong Kong. These will help to ensure the success of the Cathay Pacific Group in the long term.
From the Hong Kong people’s point of view, Cathay Pacific Airways is a Hong Kong-based international airline registered in Hong Kong, offering scheduled passenger and cargo services to over 90 destinations around the world. So many transit passengers can take advantage of this huge turn flight transmission of Hong Kong and Cathay Pacific’s flight network. Thus, they can proceed to another city through Hong Kong. As the Hong Kong airport is a hub airport, Hong Kong is a transit point for the proportion of long-term passenger. Therefore, Cathay Pacific abandoned the low-price strategy, but stick to the original high-end line, determined to become the most admired airlines, “Shaping a super brand” naturally become a center of all of Cathay Pacific’s work. Concerning the super brand image, it is shaped by 3 elements which are quality products, full service and successful promotion.
Furthermore, the “Cathay Pacific brand” communication activities are very systematic and high-profile promotional activities abound in the world. For example, join to carry out the activities of the “Best Chinese Food” with so well-known restaurants in Hong Kong, joint other business enterprises for holding “Asia Miles Airlines’ frequent flyer program’’, “Cathay Pacific Hong Kong International Races” with the Hong Kong Jockey Club, and so on. Promotional activities with a clear theme promoted in different period and channel, such as TV advertising, print advertising, Internet advertising, outdoor advertising, etc.
Since the network and the routes that the airways’ own products, Cathay Pacific constantly purchase new models, update, expand their fleet, and to join one of the world’s five largest airline alliance oneworld alliance to strengthen the global network. Currently, more than 80 piloted aircraft Cathay Pacific fleet is one of the world’s youngest and most modern passenger fleet, with an average age of only seven years. Moreover, Cathay Pacific received 19 new aircraft in 2012 for prolonging to upgrade the competence of the company. As at 31 December 2012, Cathay Pacific had 92 aircraft on order for delivery up to 2020. The order was placed for 6 Airbus A350-900 aircraft in January 2012.
In August, Cathay Pacific ordered 10 Airbus A350-1000 aircraft and converted an existing order for 16 Airbus A350-900 aircraft into an order for 16 Airbus A350-1000 aircraft. In March 2013, Cathay Pacific entered ‘into an agreement with The Boeing Company under which it agreed to buy 3 Boeing 747-8F freighter aircraft. Under the agreements, Cathay Pacific also acquired options to purchase 5 Boeing 777-200F freighters and The Boeing Company agreed to purchase 4 Boeing 747-400BCF converted freighters, which were taken out of service in 2012 and early 2013.
Cathay Pacific is committed to strengthening Hong Kong’s position as a global aviation hub and gateway to the Chinese Mainland, and leveraging its network to enhance business, tourist and cargo traffic flows. Cathay Pacific is dedicated to technological excellence for its products and services. It was one of the first airlines to provide inflight email. It also offers online ticketing and check-in, a downloadable timetable, and the notiFLY flight paging service, which delivers real-time flight information updates to customers via email or on their mobile phones. The iPermit scheme enables Taiwan residents to apply for Hong Kong visas via the internet and collect them upon arrival at Hong Kong International Airport.
Its inflight entertainment system offers more than 20 video channels and an audio/video on demand system for First and Business class passengers. It was voted “World’s Leading Use of Inflight Technology” in the World Travel Awards 2003 poll of 80,000 travel industry professionals. Cathay Pacific is a member of the oneworld global alliance, joining Aer Lingus, American Airlines, British Airways, Finnair, Iberia, LanChile and Qantas. Swiss Air Lines International is the latest full alliance member. The oneworld carriers’ combined network serves more than 570 destinations. Cathay Pacific is also a member of the popular travel reward program, Asia Miles.
There is no such company without weaknesses. Cathay Pacific Airways unpunctuality in their flights sometimes makes their customer difficult to opt to fly with the airline. In addition, the air hostesses are not very pleasant and nice thus making people leave out the airline as an option when traveling home and abroad. Cathay Pacific Airways also finds it hard to reposition itself in the wake of financial crisis. The company also is unable to deal with numerous scandals compelled people to lose confidence in it.
Cathay Pacific Airways is known to be Hong Kong’s leading airlines gives them the opportunity to acquire more customers and generate more revenues. People would have more confidence on airlines that are recognized by the award winning bodies because it would make the people have more confidence on flying with the said airlines. In addition, with Cathay Pacific Airways’ online booking, they give more convenience to their customer giving them the chance to attract more customers especially with people that have no time to go to airlines branches for bookings. The airline has also an opportunity of technology advancement for easier transaction and operations and for more convenience for customers and employees. Moreover, with its recognition, the airline attracts more opportunities of expansion.
Threats are always with every organization. Airline industry is the most competitive industry. Cathay Pacific Airways competitors especially the government owned airlines are the threat of the company. Government owned airlines have less likely to close down. It is also supported with the national government with their resources giving them more opportunities over a publicly owned airline like the Cathay Pacific Airways. In addition, political ramification also affects the operation of airlines. Moreover, economic recession also is a threat to airlines. With economic recession, people are likely to save and reduce their travel expenses to cope up with the recession. People expenditure are the most likely affected with the recession and thus also affects airlines since people don not mostly travel in times of economic recession.
In addition, threats in terrorist attack, the rising fuel and labour costs also have caused the company to experience low level of profits for people are hesitant to travel due to these threats.
Cathay Pacific is using the growth strategy in the market. Organization wants to expand the number of markets served or products. They develop the business through their current business and new business In their growth strategies, there are concentration, Vertical integration, horizontal integration, related diversification and stability strategy. Main product of Cathay Pacific is providing the transportation. In the addition, they provide the entertainment, food and beverage to the passenger in the flight. Nowadays, they will change the menu of the flight and add the new entertainment to meet the passenger needs. For example, they announce the latest promotion to enhance award-winning in-flight wine selection. The introduction of six world class wines is from saint-E’milion Bordeaux, France to the first class wine list. It can attract the passenger to use their product on second of May. In each year, the company should be increase or improve the facility to get the passenger satisfaction.
In the integration, there is vertical and horizontal. Cathay Pacific is the powerful organization. In their flight product, they need to provide the food to the passenger. Some of the airline, they should be find the supply to provide the food but Cathay Pacific have the Cathay Pacific Catering Services (Hong Kong) limited company to provide the food. It can control the food quality and the supporting will be fixed. On the horizontal integration, they take over the Dragonair on 28 September 2006 Dragonair was the competitor of the Cathay Pacific before the takeover. Within the Cathay Pacific takeover the Dragonair, The two aircraft were restructured, and exchange waypoints. Dragonair should re-position as a regional airline, mainly to China and Southeast Asia markets. Moreover, Dragonair have another main function of the company. It is providing the intercontinental routes to Cathay Pacific to interchange network. For the diversification, there is the related and unrelated. Cathay Pacific created the Asia Miles membership.
The member can through nine type of industry to get the Miles include the airline, hotel, finance and insurance, meals and banquets, retail, travel and leisure, automotive and transportation, telecommunications and professional services to get Miles. If the members buy the product in the partner company, it can get the Miles. The Miles can exchange the travel, electronic products, meals, concert tickets etc. The partner agencies were the China Airline, Australia Airline, Japan Airline etc. The Asia Miles can attract the guest to choice the service of the company. It is the loyalty program to attract the guest to be the loyalty customer.
The unrelated diversification of them is promotion of the company. they should join the Hong Kong Tourism Board will be held in the Chinese New Year Parade on every Chinese new year day one. Also, Cathay Pacific sponsored the TV programmed about the travel and airline industry such as the “Choi Lam eat on the world” TV travel programmed made from TVB. Also in stability strategy, Cathay Pacific reduced the frequency of flights on the Los Angeles, New York and Toronto routes. Base on stable demand on passenger, Cathay Pacific still maintain three flights a week on the Los Angeles, New York and Toronto routes at the same time, to make a total of 20 flights per week.
Reason behind the corporate strategy
Cathay Pacific is based on customer retention for the company, service is absolutely critical. The company has been voted Airline of the Year in the Skytrax passenger poll twice in the past three years. But the company knows that it cannot survive as a premium airline without continually reinventing itself to maintain its status in such a highly competitive industry as the airline industry. Performance of its personnel is the most critical in the organization.
Cathay Pacific is mainly focusing on their primary line of business and increasing the number of products offered or markets share. For instant, purchasing new model aircrafts and adding different routes to different parts of the world. Also it uses the new technology to get help in the operation.
Also, Cathay Pacific has their own catering services for preparing the foods consume in the aircraft. Thus Cathay pacific becomes its own supplier so it can control its inputs. Beside, for keeping the market shares in the airline industry. Cathay Pacific has taken over the Dragonair. Cathay Pacific is combine with Dragonair that to increase the competitive strengths and lower competition among industry rivals. To increase the profit and encourage the potential customers, Cathay Pacific set up the Asia Miles membership to aim at attracting the guest to be the loyalty customer.
In order to gain the attraction from the citizen, Cathay Pacific had joined the Chinese New Year Parade in every Chinese New Year to keep their exposure to the public. Furthermore, Cathay Pacific continuing to serve the same passenger by offering the same product or service that to maintain market share and sustaining the current business operation such as providing the long-haul services with an acceptable price. It will not fall behind in the airline industry.
Recommendations and rationale on its corporate strategy
In the case of Cathay Pacific Airways, market development and product development is the best suit their way of doing business. Market development is suitable to their business since they have already penetrated the existing markets. It is important to market their product on new markets. Product development is also suitable to maximize their profits. Product development would also enable them to offer more products and services in which are needed by the existing customer and may also invite potential customers thus increasing their profits.
In an increasingly competitive environment it is crucial to maintain and develop passenger loyalty by providing high quality products and services, we suggested increasing some regional services in response to more robust demand in parts of Asia. Cathay Pacific should added frequencies on routes to India, Japan, Malaysia, Singapore, Taiwan, Thailand and Vietnam and introduced a new service to Hyderabad in India. For providing a more comfortable and an unforgettable flying experience to the customer, a new premium economy class, a new long-haul economy class seat and a new regional business class seat will be added.
To maintain the competitive advantages, Cathay Pacific should implement a more convenience global internet service and e Business platforms. The implementation will ensure staff worldwide can take advantage of improved performance and secure, cost-effective access to critical business applications such as reservations, sales information, revenue management and engineering systems. The global Internet solution will enable future applications and passenger services to be speedily and simply developed and deployed worldwide, while also reducing telecommunications costs. This new lease of life means that the airline can better adapt to the demands of its markets and be responsive to changing business requirements.
Cathay Pacific put safety in the first priority – safety is the first and most important clause of Cathay Pacific mission statement and has been a core commitment since the founding of airline more than 65 years ago. In food safety, Cathay Pacific continues to do their utmost to serve meals that meet the highest levels of food safety and hygiene. It works with caterers to create well-balanced meals, minimizing the use of trans-fats, and follow the policy on no monosodium glutamate. The policies on food safety and hygiene are based on recognized standards, such as the World Food Safety Guidelines for Airline Catering. Our caterers must comply with our strict food safety requirements and they are measured and monitored through our robust audit programme.
In order to have horizontal integration, we advise Cathay Pacific can take over the Hong Kong Airline and Hong Kong Express Airways. The target market is mainly focus on the low air ticket price market and offer package tour. Cathay Pacific can expand the market share on low end.
For diversify the Asia Miles membership, we recommend to co-operate with different credit card issuing banks. Through the credit cards, passenger can easily accumulate their pints to convert to mileage. In return helps to attract more passengers to purchase our services.
To arouse people attraction, Cathay Pacific not only has the TV advertisement but also to put the resources on other medial to promote the company. As the high cost of fuel, it made difficult to operate in some long-haul services profitably. We suggest Cathay Pacific to use fuel-efficient Boeing 777-300ER aircraft to instead of the less fuel-efficient Boeing 747-400 aircraft operate to on the long-haul services.
http://www.cathaypacific.com/cpa/en_INTL/aboutus/mediacentre/cxworld?CX_LANGUAGE=en&CX_COUNTRY=INTL http://www.cathaypacific.com/cpa/en_INTL/aboutus/investor/annualreports http://en.wikipedia.org/wiki/Cathay_Pacific
http://www.ukessays.com/essays/marketing/analysis-of-hong-kong-airline-cathay-pacific-airways-marketing-essay.php http://ivythesis.typepad.com/term_paper_topics/2010/02/swot-analysis-of-cathay-pacific.html http://www.allfreepapers.com/Business/Competitive-Advantage-Airlines/29593.html http://wiki.mbalib.com/zh-tw/%E9%A6%99%E6%B8%AF%E5%9B%BD%E6%B3%B0%E8%88%AA%E7%A9%BA%E5%85%AC%E5%8F%B8 http://en.wikipedia.org/wiki/Hong_Kong_Airlines
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