Airline Management

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Commercial aviation industry continues to face the challenging business situations though the world economy situation shifted into the recovery mode. The residual effect of economic recession that induced by the bankruptcy of Lehman Brothers last year still affect the survival of many airlines.

Cathay Pacific Airways (CX) is an international airline, offering scheduled passenger and cargo services to 114 destinations in 35 countries and territories, which based in Hong Kong. Being one of the world biggest airlines, Cathay Pacific Airways cannot escape from suffering the reduction in passenger and cargo revenue under the economic recession. CX generated HK$7,023 million profit in the 2007-08 financial year but suffered a great loss of HK$8,558 in the last financial year. Though the CX got a slightly recover and reported a profit of HK$812 million for the first six months of 2009, the airline is still facing many challenges in the following period of time.

For instead, although the global economic condition continue to improve, tightening consumer spending on both leisure and business travel still exist. On the other hand, fuel price fell significantly compared to the first half of 2008 but was still higher than in previous years, the unprecedented high fuel price has brought CX to a worst situation. As the CEO of CX, our major responsibility is to assist the airline to cope with the above-mentioned problems in order to maintain a successful business. Thus, the objective of this report is to analysis the impact of high fuel costs and tightening consumer spending on the whole airline industry, especially CX. Based on the analysis of these impacts, numerous strategies and plan of actions will be suggested to strengthen the airline’s competitive advantages and keep its number one position within the aviation industry.

Conclusion

To conclude, CX facing the challenging task to survive under the unstable global market situation and unpredictable fuel price. Airlines are facing exceptionally weak yields in current stage. Consumers spending is still tightening though the world economy is in recovery stage and the average oil prices is forecasted to increase as higher as to $86/b in 2010, which may further making the airlines difficult to operate. Therefore, the plans of actions like…… can help CX to cope with the tightening consumer spending and the high fuel price problems. And it is hoping that CX walk out from the difficult time and run a successful business in the nearest future.

Strategy: Market Segmentation

Market researches should be conducted regularly in viewing the changing customers’ perceptions and needs. With adequate familiarization to the current market situation, airlines can target potential market segments such as mercantile, educational, religious, etc.

MICE (Meeting, Incentive, Convention and Exhibition) industry rebound under the world-wide economy recovery situation, CX can take the advantage and target this particular segment group. According to the statistics report issued by the International Congress & Convention Association (ICCA), the number of meetings per continent sharply increased form 1999 to 2007 while under the influence of Economic Tsunami in 2008, a slightly decreased occurred when comparing with the figure in the previous year. On the other hand, the average number of participants per event increased in 2008, which means that people still actively participated in the MICE activities under the economy recession. We can see that MICE industry is a big potential market which is wroth for CX to open up.

Source from: International Congress & Convention Association (ICCA), Statistics Report, 1999 – 2008

Source from: International Congress & Convention Association (ICCA), Statistics Report, 1999 – 2008

Action: Targeting the MICE travelers

CX is recommended to take an active role in communicating with the meeting planners who play a vital role in organizing and arranging the MICE activities for companies and organizations. Exceptional promotion can provided for this particular segment in order to cater their needs, such as packages including the transportation, accommodation as well as the site-visit tour arrangement. Offering special discount is another alternative to attract this bulk purchasing market group.

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