Executive summary

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Executive summary

• Airway industry trend
• Company introduction
• Market analysis
• Market strategy
• Achievement
• Conclusion

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Airline Industry Trend

• Growth
• ?   Industry outlook improving
• 2005 loss 6 billion / 2006 loss
  2.2 billion / 2007 profit
• 7.2 billion
  (source IATA)
• ?   Business and leisure travel on the rise
• Cost-reduction
• ? The pressure of fuel price going up   
• ?   Low-cost carriers spread
• Competition
• ?   Alliance
• Enlarge service in scope / Reduce cost
  
• ? In flight Perks
• Innovative services (Mercury
  Awards)

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Airline Industry Trend

• Deregulation and open-skies
• ?   Increase competition within national market
  
• Prosperity in Asia-Pacific
• ?   Rapid economic development
• ?   Population over 60 of the world
• Growth in E-ticket
• ? E-ticket worldwide at the end of 2007

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Cathay Pacifics story

• What does Cathay mean?
• ----A medieval name for China popularized by
  Marco Polo in accounts of his travels.
• Cathay Pacific Airways are deeply committed to
  Hong Kong where the company was founded in 1946

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Cathay Pacifics story

• Major Shareholders
• Swire Pacific Limited
• CITIC Pacific Limited
• Total Number of Staff

• 46.82
• 25.69
• 14,700

Provide services to 92 destinations around the
world, and is a founding member of the oneworld
global alliance whose combined network serves
over 600 destinations worldwide
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Geography

• Hong Kong is a major international and regional
  aviation center

• superior geographic location
• Trade/commerce/finance center

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Demographic

• The population of Southern-China over 300 million
• Southern-China one of the fastest area in
  Asia-Pacific
• Economic growth ? High passenger growth
• Trade/finance center ?business passenger
• Psychology people expect high quality service ?
  be respected

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Market Segmentation Target Market
Journey purpose

• The business travel market -- target market
• The leisure travel market
• Personal travel market

Length of journey

• Short-haul
• Long-haul -- target market

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Cathay Pacifics Services Classification
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Service by Region
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Porters Five Forces
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Market Share Value
Note Data in BLACK 2005 Data in
RED -- 2004
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Europe North-Asia North America SE Asia
Middle East SW Pacific S Africa
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Competitors characteristics

• China Southern---with strong government
  background. The biggest air company on
  South-China.
• Qantas Airways---Worlds leading long distance
  airline. Overlord in South Pacific
• British Airways----one of the most famous air
  company in the world with a full service
  experience, has long history on providing service
  between Europe and Hong Kong
• All Nippon Airways---an old-line air company on
  North-East Asia. Friendly/good food/cheap
• United Airlines---a light heavyweight, carries
  more international passengers than any carrier in
  the country

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SWOT analysis

• Strength
• Quality, convenience, On-Time performance,
  location
• Weakness
• Price, fleet numbers
• Opportunity
• Internet booking, Cargo
• Threatens
• The emergence of low cost carriers are
  undercutting Cathay Pacifics prices

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Cathay Pacific Vision

• The quality of service sets the company apart
  from the competitors

• On-time performance
• Maintaining and growing our international route
  network
• Increasing flight frequencies to meet market
  demand
• Take pride in making our customers feel safe,
  welcome, comfortable and, above all, reassured.
• Surpass customers expectations

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Cathay Pacific Vision

• Our goal is to deliver superior service and value
  to the customers

---- goes beyond ensuring satisfaction in order
to strengthen customer loyalty and enhance the
profitability of the airline
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Fleet structureAircraft operated by CX
96

• Boeing 777-300
• Boeing777-200
• Boeing 747-400(a)
• Boeing 747-400 freighters
• Boeing 747-200 freighters
• Airbus A340-300
• Airbus A330-300
• Airbus A340-600
• Average age of passenger aircraft in service

• 11
• 6
• 22
• 6
• 7
• 15
• 26
• 3
• 7.0 years

An good aircraft is a good platform for the
airline to serve his customer
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Brandtied with the community

• Cathay Pacific is a home-grown Hong Kong brand
  recognised around the world.
• Advertisement---- I can fly TV compaign
• E-commerce---- the leading company
• Asian Wall
  Street Journal
• Sponsor public activities---- aviation
  environmental educational sports universal
  local charitable donation medical shows

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Pioneer in technology

• Cathay Pacific is one of the worlds leading
  airlines in harnessing the power of the Internet
  to reduce communication costs and increase
  operational flexibility
• A more responsive IT strategy and architecture
  has been put in place to improve the delivery of
  supporting technology to staff across the Company
• Inflight purchases can now be pre-ordered online
  prior to a flights departure. This helps to
  guarantee the passengers choice is available and
  to better manage the inventory

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5-stars service

• Entertainment
• Personal Television studio are available in all
  seats
• More than 20 different video channels in all
  classes
• English, Cantonese, Mandarin and Japanese
  languages
• Communication
• PREVIEW YOUR E.MAIL INBOX FOR FREE inflight!
• Offer inflight laptop power in every class!
• Meals
• Made Fresh to Order----restaurant on board
• 20 special meals, catering to a wide variety of
  tastes
• Co-operation with 5-stars Hotels

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Government support

• A total number of 54 bilateral Air Services
  Agreements(ASAs) had been concluded between HK
  government and foreign governments.
• Cathay Pacific Airways got four of nine licenses
  granted by the Air Transport Licensing Authority
  (ATLA) 2004.

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Co-operation with competitor

• Cathay Pacific holds a 10 shareholding of Air
  Chinasecond major competitors in North Asia
  since December 2004
• Establish strategically-partnership with Air
  China to create more opportunities
• Coat with China Government color

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Achievement-- World ranking

• Cathay Pacific currently ranks as the world's
  third most profitable airline (net profit)
• Sixth largest airline by stock market value.
• The sixth largest airline in Asia by revenue.
• Ranked 16th-largest in the world in terms of
  revenue passenger kilometres
• Ranked as the worlds sixth largest air cargo
  carrier. Figures based on last full-year data
  for 2004. Source Airline Business, IATA

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Achievement--Marketing

• The Cathay Pacific Group has recorded a profit
  attributable to shareholders of HK3,298 million
  for 2005, compared with a profit of HK4,417
  million in 2004
• Turnover increased by 19.1 to a record HK50,909
  million

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Achievement--Marketing

• ----The substantial decrease in profit reflects
  the adverse effect of high fuel prices on our
  profitability

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Achievement--Shares

• Amplitude in 52 weeks11.9515.00(HK)
• Dividend/share0.65 (HK)

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Conclusion

• Cathay Pacific is successful so far!
• Cathay Pacific Airways
• have build a regional airline kingdom base in
  Hong Kong
• have set up comparative advantage between
  themselves and competitors
• have set up vallum to defence theirs business
• will on the rise with the developing of
  South-China

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Recommended reading

• Mc Namee, P. B., (1998) Strategic Market
  Planning A Blueprint for Success, John Wiley and
  Sons, 1998.
• Johnson G. and Scholes K., (1999), Exploring
  Corporate Strategy, 5th Edition, Prentice Hall.
  (JS)
• Porter, M. E. (1980) Competitive Strategy
  Techniques for Analyzing Industries, The
  Macmillan Press Ltd. (MP1)
• Philip Kotler (2003) Marketing Management, 11th
  Edition
• http//www.cathaypacific.com
• http//www.mintyroberts.com
• http//www.strategycompass.com
• http//financial.yahoo.com
• ltltCathay Pacific Annual Report 2004gtgt
• ltltCathay Pacific Annual Report 2005gtgt
• International Civil Aviation Association
• Civil Aviation Department Hong Kong
• 5 competitors web sites and annual reports for
  2004 and 2005