Increasing the Competitiveness of Cathay Pacific Airways Ltd. in the FCC Air Travel Industry

Objective, Scope and LimitationsProject ObjectiveTo Increase the Competitiveness of Cathay Pacific AirwaysLtd. in the FCC Air Travel Industry

Project scopeCathay Pacifics passenger transportation service

LimitationsCovers only passengers sector of CXs various businessesInitiated out of personal interest and is not authorised by CXBased only on publicly available information

MethodologyGathering of primary and secondary dataPerforming macro-environment and micro-environment analyses Identifying the key findings and suggesting strategic options Evaluation of the selected strategic options Recommendation on the strategies Recommended strategies benefits that are leading to increased Competitiveness

Introduction:The Airline IndustryFCC and LCCCapital IntensiveExtremely Vulnerable to External Environment

Introduction:Cathay Pacifics History24 September 1946

Roy C. Farrell & Sydney H. de Kantzow

Douglas DC-3 Betsy

In 1948 partnership was restructured

In 1959 Merger with HK Airways

Introduction:Cathay Pacific Today5-Star Airline

In 2009 ranked as Best Airline of the Year

Headquarters in HKIA

Introduction:Cathay Pacific Today110 Destinations worldwide

Introduction:FCC Sector CompetitorsSingapore AirlinesA flag carrier of Singapore Established in 1947HQ in Changi International Airport

Asiana AirlinesSouth Korean No.2 AirlineEstablished in 1988 HQ in Incheon International Airport

Qatar Airways A flag carrier of Qatar Established in 1993HQ in Doha International Airport.

Findings: Primary DataTo test whether Core Competencies are actually underpinning CompetitiveAdvantages and lead to Competitiveness, Questionnaire has been developed andsurvey results show:

Hypothesis No. 1 Tests the importance of Superior Quality (Supported 62%)Hypothesis No. 2 Tests the Importance of Superior Innovation (Supported 57%)Hypothesis No. 3 Tests the importance of Superior Customer Responsiveness (Supported 56%)Hypothesis No. 4 Tests the importance of Superior Efficiency (Supported 70%)

Findings: Macro-environmentKey Findings

Market growth due to economic recovery and fast growth of developing Asian countries

Hyper-competition in the industry with strong, government-supported rivals. 5 star airlines competing on service quality and their offers have little differentiationSuggested Strategic Option

Growth StrategiesCapitalize on Asian market growth

Market PenetrationWiden customers database toincrease market share

Product DevelopmentCreate unique offers and services todifferentiate itself

Findings: Macro-environmentKey Findings

Low Cost Carriers is a growing substitute on short and medium haul air trafficSuggested Strategic Option

Branding Create relational value tostrengthen ties with existingand attracting newcustomers

Findings: Micro-environmentKey Findings

Strong financial position

Sophisticated and innovative products and processes (e.g. virtual tour, self-check-in kiosk)Suggested Strategic Option

Growth StrategiesInvest in growing marketvisibility to enjoy moreprofits and gain bigger marketshare

Market PenetrationStrengthening ties with existingcustomers and attract new

Findings: Micro-environmentKey Findings

CX is a recognized airline which receives numerous awards yearlySuggested Strategic Option

BrandingBest Airline of the Year in theindustry shouldwork for the firm and growcustomers database

Evaluation: Strategic Options

Growth Strategies

Branding

Market Penetration

Product Development

Forward Integration

Horizontal Integration

Evaluation: Strategic Options

Recommendations: Corporate +Business Level Strategies

Branding + Differentiation

Market Development + Differentiation

Product Development + Differentiation

Recommendations: Resources required

Financial TechnologicalInnovationMarketingHuman Resource

Recommendations: Resources Need to be DevelopedMarketingTarget MarketingIconic Brand ImageMarket researchLeveraging on Social responsibility

Human ResourceSelect and develop Best PeopleDevelop training ProgramsRegular training for all employeesPromote unique service in adds

Conclusion:Benefits of Branding + DifferentiationBuilding brand equity benefits customers and CX

Enhances customers confidence in their purchase decisionIncreases travelers satisfactionReduces cognitive dissonance Provides a basis for differentiationAttracts new customers and helps retain existingProtects market share Distances CX from competitorsAllows for charging a higher premiumIncreases or at least secures marginsSecures bigger market share All of the above benefits are leading to Increased Competitiveness

Conclusion: Benefits of Market Penetration + DifferentiationSelling more of the same products/services to the present market

Increases market share and pushes out competitors

Widens customer base and increase the market share

Lowers costs per passenger

Improves capacity utilization

Increases margins

All of the above benefits are leading to Increased Competitiveness

Conclusion: Benefits of Product Development + DifferentiationTargets existing market with new or re-designed products (services)

Attracts more travelers by unique and creative products/services

Creates customer loyalty Increases revenue

Sustains profits

Widens the gap with rivals

These benefits are increasing overall CXs Competitiveness

Any Questions?

Thank You For Your Attention!!!

CX is FCC and targer customer group is premium travelers (1st and business classes)

Main capital expenditure1) fleet (CX 54% of Total Asset is fleet and related equipment) Boeing and Airbus2) Fuel major operating expense 27% (ExxonMobil, Shell, BP)