Cathay Pacific to restructure and sack 100s of staffBack to Forum
One by one Asia’s traditional flag-carriers are running into problems.
First it was Thai Airways and Malaysia Airlines, then came Singapore Airlines * and now it’s the turn of Hong Kong’s Cathay Pacific.
All have been affected by a combination of competition from airlines of the Gulf and mainland China and, more recently the advent of LCCs.
Little wonder than that Cathay Pacific will join the 10-across economy club for its B777-300ERs.
* Only a few days ago SIA declared a Q4 loss … its first in five years.21 May 2017
Very interesting, Alex and perhaps puts some of BA’s cost management measures into perspective.
I flew one of Cathay’s shorter regional routes today (to Manila), my first time for quite a while, in Economy. The catering on the A330 was a brown bag with a warm chicken pastry, a cookie and a juice. Subsequently there was perfunctory coffee service in that they went through the cabin with the coffee but you were only served if you specifically stopped them and requested a cup. My memory of similar flights to Taipei and Hanoi in the past (similar duration) was of a hot meal service in Economy. I had availed of the super Pier First before boarding so did not particularly mind but others may have been less impressed, especially as Cathay are by no means cheap alongside Philippines Airlines – where, I seem to recall from last year, a full meal service is still offered.21 May 2017
Tom – I agree. Cost-cutting by CX so obvious on these shorter routes.
One can now see why CX (Oneworld) took the surprising step of teaming up with Lufthansa (a member of rival Star). It’s a development was little reported here in the UK.21 May 2017
TominS yes CX has had those snacks awhile on shorthaul (never eat cold they’re like hardboard) ‘though you still get two hot meals on longhaul, even 8hours. Disagree about economy service and always get a red wine with my snack and top ups, or coffee or tea if in the morning! Newspapers too and time for their duty frees. They’re still very good service. Unfortunate for redundancies and management decisions over fuel and a long wait for B777x.21 May 2017
I have friends working at “Cathay City” in anticipation today. Like many large business, they are very critical about management decisions and capability over the past few years. staff attrition rates are alleged to be high and morale low before this news started to come out a few months ago. I would not be surprised to see a lot of that redundancy as voluntary.
Interestingly I went to book a one-way flight from SGN to HKG on CX in economy and they quoted just over 550 USD, I then noticed that the flight was operated by Vietnam Airways, who are Skyteam, not OW. Hopped over to their website and the same flight was $120 USD including tax etc22 May 2017
Flying through Asia, you can see so many low cost Airlines around now, Indonesia, Malaysia, Hong Kong, Thailand where i mostly pass through or visit.
Take KLIA, double the size of the original Airport, and in its own Terminal and dedicated runways it seems, is Air Asia, have taken business from Malaysia Airlines, sadly. The domestic market for some of these National Airlines which was so profitable, has been removed almost and their regional operations challenged also. Many routes to and from Australia now are operated by Jetstar, Air Asia, and Air New Zealand has lost most of its regional routes to Emirates.
It is astounding to see the growth in just a few years in Asia, then they have the population to do this, whereas i think the market of travelers is pretty stable in Europe. It depends which Airlines people choose, but the numbers of travelers i do not feel increases, just where they put their business and by from.
I do feel a Turning point here with The ME 3, they have reached their capacity, and have become very impersonal, even as a FFP Member, and i personally prefer an identity of an Airline to match my attitudes and values, which is why i stay with KLM.
We all know in Europe, very few Business travelers travel Business compared to 3-5-10 years ago. Highly unlikely anyone would travel our of LCY on an Embraer within Europe, with the same seat, same food and drinks, for 5 times the cost.
For European Airlines with almost no domestic Market as is present in Asia, the Regional (European) is just that. KLM has a very high transit for Intercontinental flights, feeding in with a great reputation from all over Europe, and are settled, profitable and held in high esteem now.
I hope we all choose carefully, support the brands and Airlines we value locally. I felt Etihad was excellent at one stage, but their cutbacks also are kicking in all over the experience of being with them. So my business goes to KLM now, hops over to Amsterdam being a pleasure, and so easy from all over the UK.
But i consider and choose carefully, who and why i wish to travel with an Airline, or use particular airports now, more than ever.
I also save around £500 per Business return Ex Amsterdam with KLM, paying in Euros, not paying Government £300+ to leave the Island, and do not have to transit LHR airport either!22 May 2017
I’ve just finished 4 sectors in J with CX and there is definitely some scope for them to ‘enhance’ a la BA and save some costs.
One thing I noticed that I hadn’t before (could be I haven’t been paying attention) is the wine list and food options in J appeared almost identical on both long haul and short haul sectors. I flew LHR-HKG / HKG-PVG / SIN-HKG / HKG-LHR.
These could be enhanced along with swapping out Evian for a bog standard brand and losing the posh after dinner chocolates, as nice as they are.
Perhaps just scraping at the surface though!
That said they were full in J on both long haul sectors and were offering £950 to downgrade to PE on the outbound.
Final thought – their J fares to Asia, from what I can tell, are lower now than they were a few years back. In the past I’d never be able to get close to £2k for the above routing. This is about the best out of any OW carrier for this type of routing.
It almost seems their offering has become a little muddled and I’d be far from surprised to seem some reasonable changes going forward.23 May 2017
Ah,Mr.BondParticipant23 May 2017
Maybe, though that story is from January and looked to be a perfect example of #fakenews, being completely unsupported, denied, yet plausible enough to be shared so widely that, according to the source which published it, the servers of their website crashed. At least that provides the motive for the story!23 May 2017
Yet it continues! Most recently in Barrons yesterday
“Crucial Perspective analyst Corrine Png insists the possibility isn’t pie in the sky. The two airlines currently have a cross shareholding structure, whereby Air China owns 30% of Cathay and Cathay 18% of Air China.”
The deal could make sense for both, too. It would give some altitude to Air China’s international expansion, while giving the state-owned carrier access to the Hong Kong airline’s more premium breed of travelers. Cathay could use a knight in shining armor, too. This year is likely to be one of Cathay’s worst since the Global Financial Crisis as it loses market share to mainland rivals and suffers the hangover of a miscued fuel hedge. Png reckons Cathay will lose HKD1.5 billion in 2017 and is unlikely to pay any dividends.”
But – there are good reasons why it is unlikely…
“Swire Pacific has owned Cathay for 70 years, and could be reluctant to sell. Also, takeovers of Hong Kong companies by Chinese ones tend to attract a lot of ballyhoo. Both parties might want to avoid that.”28 Jul 2017
Hi Tom / Alex.
As per my previous post, looking at the overall Industry changes, these are quite major, not isolated to one Region of The World.
The ME3 are all cutting back, and indeed making losses (Etihad currently more so…)
Airlines like KLM are expanding, having higher Load factors (up about 10% on last year for June 17), so looking Worldwide, does this mean European Airlines are clawing back a greater share of travelers of all cabins?
I see far more leisure travelers in Long Haul Business Class and certainly 1st, around The World than those travelling for Business these days long haul. In Europe the Business cabins are 15th of what they used to be and mostly Leisure travelers, so the demographic has shifted.
Asia for sure has changed beyond recognition with so many low cost Airlines, high ever increasing demand (which is not the same in Europe), and Regional travel there offers many choices for all budgets.
Perhaps the traditional National Airlines, will remain with their medium and long haul routes, and lose Domestic/ Regional to LCC’s
I think this has already happened, so more productive to focus on routes where they do not have longer LCC’s, who have previously tried and failed to provide for these long haul routes.
Overall, i think The Aviation Industry has changed now, and the ME3 have already reached their capacity, if not with their cutbacks, people are turning elsewhere now. they are not exciting or unique or lavish anymore!
Interesting VA have been bought out by Skyteam now, and many on here predicted this would happen some years ago. Interesting ahead of Brexit, (and a very cheap price too also include the slots in the UK), giving KLM AF a base for UK routes in the times ahead “ready made”?!28 Jul 2017
it is funny how CX is seen as HK’s “national carrier” but is in essence more British than BA with its Swire group ownership. there was an interesting article a while back in the SCMP about how CX should be allowed to struggle so they might free up more space and competition at HKG, bringing in more revenue for the airport so legco does not have to pay state funds for the 3rd runway. it was quite an “anti British” article as i read it and maybe shows more about the editorial input of Jack Ma’s ownership coinciding with the handover celebrations than actual ideas, that said it was still an interesting viewpoint29 Jul 2017