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

1
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 Pacifics passenger transportation service
• Limitations
• Covers only passengers sector of CXs 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
IntroductionThe Airline Industry

• FCC and LCC
• Capital Intensive
• Extremely Vulnerable
• to External Environment

5
IntroductionCathay Pacifics 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
IntroductionCathay Pacific Today

• 5-Star Airline
• In 2009 ranked as Best Airline of the Year
• Headquarters in HKIA

7
IntroductionCathay Pacific Today

• 110 Destinations worldwide

8
IntroductionFCC 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
Strategic Options Suitability Feasibility Consistency Acceptability
Branding Yes Yes Yes Yes
Market Penetration Yes Yes Yes Yes
Product Development Yes Yes Yes Yes
Forward Integration No No No No
Horizontal Integration No No No No
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
ConclusionBenefits 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 CXs Competitiveness

22
Any Questions?
23
Thank You For Your Attention!!!