Challenges That Cathay Pacific Airways Faces

Topics: Cathay Pacific, Hong Kong International Airport, Hong Kong Pages: 3 (840 words) Published: November 23, 2010
Challenges that Cathay Pacific Airways faces
With the integration of Dragonair into Cathay Pacific Airways in 2006, its influence over the domain of aviation has extensively elevated. From 2006 to 2007, the turnover of Cathay Pacific Airways has raised from HK$60,793 million to HK$ 75,364 million with a percentage increase of 24.0% . Nevertheless, there are internal and external challenges existing as obstacles to its future development, such as labour conflicts, global financial crisis, high capital cost and emergence of low-cost airlines,. In this essay, the latter two issues with be examined at length in terms of causes, effects and possible solutions.

According to Mr. James Tien Pei-Chun, the chairman of Hong Kong Tourism Board, the rising oil prices increase the capital cost of global aviation industry, triggering difficulties in operation . In the first-half of 2008, the average price of aviation fuel that Cathay Pacific Airways paid was 60% higher than that in the first-half of 2007 . It is patent that the high capital cost is predominately attributed from perpetual high-priced air fuel which detrimentally influences Cathay Pacific Airways on the whole. On 2nd July 2008, a profit warning announcement was submitted by Cathay Pacific Airways to Hong Kong Exchanges and Clearing Limited. It stated that high-priced aviation fuel posing a ‘significant and adverse’ impact on financial performance of Cathay Pacific Airways. Effective strategies of reduce the usage and wastage of fuels are urgent and prominent to offset the impact of high-priced oil for the interest of survival of business.

To increase cost effectiveness in the short-run, Cathay Pacific Airways has newly adopted redeployment on flights according to capacity. Owing to the significant demand, 8 flights are provided to Australia in addition and bigger aircrafts were used for 14 European countries. Besides, the number of flights of appreciable revenue potential to the Middle...
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