What’s Cathay Pacific Business Model?

Cathay Pacific Airways Limited operates scheduled airline services. The Company also provides related services, including airline catering, aircraft handling, and engineering.

What Cathay Pacific is doing in more details?

Cathay Pacific Airways, with its subsidiaries Hong Kong Express Airways Limited (HK Express) and AHK Air Hong Kong Limited (Air Hong Kong), had about 240 aircraft, of which over 90 were held at parking locations outside of Hong Kong.

The airlines directly connected Hong Kong to nearly 120 destinations in some 35 countries worldwide (around 255 and about 55 respectively with codeshare agreements), including 26 destinations in the Chinese mainland.

Cathay Pacific is a founding member of the Oneworld alliance, whose combined network serves more than 1,000 destinations worldwide. The company generates most of its sales in North Asia region. Cathay Pacific was founded in Hong Kong in 1946 and is one of the world’s leading international aviation centers.

Where Cathay Pacific is Operating?

Cathay Pacific’s operating segments are: Cathay Pacific and Cathay Dragon, HK Express, Air Hong Kong, and Airline services.

Cathay Pacific and Cathay Dragon segment provides full service international passenger and cargo air transportation under the Cathay Pacific and Cathay Dragon brands and generates approximately 90% of the company’s sales.

The remaining revenues are generated by: HK Express, which is a low cost passenger carrier offering scheduled services; Air Hong Kong, which provides express cargo air transportation offering scheduled services; and Airline services, which represents the company’s supporting airline operations including catering, cargo terminal operations, ground handling services, and commercial laundry operations.

Boasting a fleet of about 240 aircraft, the company annually has about 55,000 aircraft departures. Overall, the company generates almost 60% of total sales from cargo services, followed by passenger services with around 25%, and other services and recoveries with some 15%.

Where is the geographical reach of Cathay Pacific?

Cathay Pacific’s has almost 120 destinations in about 35 countries worldwide (some 255 and about 55 respectively with codeshare agreements), including around 25 destinations in Mainland China.

The company generates around 60% of total sales in North Asia divided in Hong Kong and Mainland China (nearly 65% of total), and Japan, Korea, and Taiwan (over 5%). Americas account for nearly 10% of the company’s total sales, while Europe brings in around 5%.

The remaining revenues are produced in Southeast Asia, Southwest Pacific, South Asia, the Middle East, and Africa.

Cathay Pacific is headquartered in Hong Kong.

What is Cathay Pacific’s Sales and Marketing Strategy?

Cathay Pacific has customer loyalty programme called Asia Miles. Asia Miles is a leading travel and lifestyle rewards programme in Asia which has more than 12 million members and over 800 partners worldwide.

The company’s five largest customers account for about 10% of total sales.

What is Cathay Pacific Financial Performance?

The company’s revenue decreased by 56% to HK$46.9 billion in 2020 from HK$107.0 billion in 2019. Net loss for fiscal 2020 was HK$21.6 billion from a net income of HK$1.7 billion in 2019.

The loss for 2020 is net of the receipt of HK$2.7 billion of COVID-19-related government grants globally and includes impairment and related charges of HK$4.1 billion relating to 34 aircraft that are unlikely to re-enter meaningful economic service again before they retire or are returned to lessors and to certain airline service subsidiaries’ assets and HK$4.0 billion of restructuring costs inclusive of a HK$1.6 billion.

Cash held by the company at the end of fiscal 2020 decreased to HK$6.2 billion. Cash provided by financing activities was HK$23.3 billion while cash used for investing and financing activities were HK$14.3 billion and HK$11.8 billion, respectively.

What is Cathay Pacific Future Strategy?

The company’s innovation includes:

To provide customers with greater reassurance when planning their travel, we introduced a number of new flexible booking arrangements. This includes Cathay Credits, a system for trading in tickets for credits of equal value that can be redeemed for future bookings.

It also introduced unlimited free rebookings, reroutings, or refunds for passengers depending on their booking and travel dates (subject to applicable terms and conditions).

Cathay Pacific launched the WhatsApp enquiry channel in select markets that allows customers to receive quick and effective solutions to their queries in a single chat.

The company launched Cathay Care, its series of enhanced measures across every stage of the journey from check-in to the cabin so that customers can take off with confidence.

This includes temperature checks; contactless check-in and boarding; antimicrobial coating on check-in counters, kiosks and other common areas; mandatory wearing of face coverings by passengers and crew throughout the flight; enhanced cleaning and sanitisation of all surfaces; increased awareness of HEPA filters that remove 99.999% of airborne contaminants onboard aircraft; and others.

The company partnered with AXA General Insurance Hong Kong Limited to provide free coverage for medical expenses related to a COVID-19 diagnosis incurred while overseas beginning in December 2020. This coverage is automatically applied to flights.

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