Cathay needs to focus on delivering that ‘great flight experience’
A brutal job cutting plan may be necessary to balance the books, but ultimately it’s first-class service that will fill the airline’s seats
A measure of the challenge Cathay Pacific Airways faces in restoring profitable operations is that the staff cuts confirmed yesterday are comparable with those during the dark days of the Asian financial crisis nearly 20 years ago. This time the airline is not responding to a single, industry-wide external shock that has shrunk its market almost overnight. It is trying to stem losses on Cathay and Cathay Dragon’s operations running at HK$3 billion a year, attributed to a number of causes. These include the loss of business to increasingly competitive mainland airlines and Middle East carriers, a slump in lucrative business class travel, rivals increasing the number of seats on competing routes, greater demand for lower fares and a wrong bet on future fuel costs.
This does not amount to cyclical pressure on passenger revenue yield that can be weathered with belt-tightening and tweaking until better times return. Cathay’s new chief executive, Rupert Hogg, formerly chief operations officer who replaced Ivan Chu Kwok-leung earlier this month, admits that changes in people’s travel habits and what they expect from airlines, keen competition and a challenging business outlook have created the need for tough decisions to bring about significant change.
The axe is falling on 600 head-office jobs, including 190 in management, as frontline staff like pilots and cabin crew are spared for the fightback in the sky. Sources say 200 more jobs will be culled from junior ranks, making a total of 800 job losses among 3,000 head-office employees out of a total Hong Kong workforce of 19,000.
It sounds brutal, but still leaves little room for error, given that the airline is expected to add 1,300 cabin crew this year. The airline will, understandably, look for greater efficiency and productivity from remaining staff.
That said, those who are going deserve to be treated with compassion and consideration, on top of 12 months’ salary and extended medical benefits. After all, they are not to blame for the airline’s loss of competitiveness. For example, it emerged earlier this year that it is only from next year that Cathay will embark on a three-year programme to emulate most Middle Eastern, European and North American airlines in cramming 10 per cent more passengers in economy class by adding one more seat per row.
Equally, we trust Cathay’s loyal Hong Kong customer base does not suffer any decline in service. Rather, given the plan to squeeze in more economy-class passengers, Cathay should be focusing on improvements to service that deliver Hogg’s promise of “a great in-flight experience”.