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

2. Objective, Scope and Limitations
Project Objective
To Increase the Competitiveness of Cathay Pacific Airways
Ltd. in the FCC Air Travel Industry
Project scope
Cathay Pacific’s passenger transportation service
Limitations
Covers only passengers sector of CX’s various businesses
Initiated out of personal interest and is not authorised by CX
Based only on publicly available information

3. Methodology Gathering of primary and secondary data
Performing 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

4. Introduction: The Airline Industry
FCC and LCC
Capital Intensive
Extremely Vulnerable
to External Environment
CX is FCC and targer customer group is premium travelers (1st and business classes)
Main capital expenditure
1) fleet (CX 54% of Total Asset is fleet and related equipment) Boeing and Airbus
2) Fuel major operating expense – 27% (ExxonMobil, Shell, BP)

5. Introduction: Cathay Pacific’s History
24 September 1946
Roy C. Farrell & Sydney H. de Kantzow
Douglas DC-3 – ‘Betsy’
In 1948 partnership was restructured
In 1959 Merger with HK Airways

6. Introduction: Cathay Pacific Today
5-Star Airline
In 2009 ranked as ‘Best Airline of the Year’
Headquarters in HKIA

7. Introduction: Cathay Pacific Today
110 Destinations worldwide

8. Introduction: FCC Sector Competitors
Singapore Airlines
A flag carrier of Singapore
Established in 1947
HQ in Changi International Airport
Asiana Airlines
South Korean No.2 Airline
Established in 1988
HQ in Incheon International Airport
Qatar Airways
A flag carrier of Qatar
Established in 1993
HQ in Doha International Airport.

9. Findings: Primary Data
To test whether Core Competencies are actually underpinning Competitive
Advantages and lead to Competitiveness, Questionnaire has been developed and
survey 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%)

10. Findings: Macro-environment
Key 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 differentiation
Suggested Strategic Option
Growth Strategies
Capitalize on Asian market growth
Market Penetration
Widen customers’ database to
increase market share
Product Development
Create unique offers and services to
differentiate itself

11. Findings: Macro-environment
Key Findings
Low Cost Carriers is a growing substitute on short and medium haul air traffic
Suggested Strategic Option
Branding
Create relational value to
strengthen ties with existing
and attracting new
customers

12. Findings: Micro-environment
Key Findings
Strong financial position
Sophisticated and innovative products and processes
(e.g. virtual tour, self-check-in kiosk)
Suggested Strategic Option
Growth Strategies
Invest in growing market
visibility to enjoy more
profits and gain bigger market
share
Market Penetration
Strengthening ties with existing
customers and attract new

13. Findings: Micro-environment
Key Findings
CX is a recognized airline which receives numerous awards yearly
Suggested Strategic Option
Branding
‘Best Airline of the Year’ in the
industry should
work for the firm and grow
customers’ database

14. Evaluation: Strategic Options
Growth Strategies
Branding
Market Penetration
Product Development
Forward Integration
Horizontal Integration

15. Evaluation: Strategic Options
Suitability
Feasibility
Consistency
Acceptability
Branding
Yes
Market Penetration
Product Development
Forward Integration No
Horizontal Integration

16. Recommendations: Corporate +Business Level Strategies
Branding + Differentiation
Market Development + Differentiation
Product Development +
Differentiation

17. Recommendations: Resources required
Financial
Technological
Innovation
Marketing
Human Resource

18. Recommendations: Resources Need to be Developed
Marketing
Target Marketing
Iconic Brand Image
Market research
Leveraging on Social responsibility
Human Resource
Select and develop ‘Best People”
Develop training Programs
Regular training for all employees
Promote unique service in adds

19. Conclusion: Benefits of Branding + Differentiation
Building brand equity benefits customers and CX
Enhances customers’ confidence in their purchase decision
Increases travelers’ satisfaction
Reduces cognitive dissonance
Provides a basis for differentiation
Attracts new customers and helps retain existing
Protects market share
Distances CX from competitors
Allows for charging a higher premium
Increases or at least secures margins
Secures bigger market share
All of the above benefits are leading
to Increased Competitiveness

20. Conclusion: Benefits of Market Penetration + Differentiation
‘Selling 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

21. Conclusion: Benefits of Product Development + Differentiation
Targets 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 CX’s Competitiveness

22. Any Questions?

23. Thank You For Your Attention!!!