INFLIGHT: CATHAY PACIFIC AIRWAYS
Cathay losses narrow in H1 as transformation plan takes hold
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Inflight retail remains a dynamic business for Cathay Pacific Airways as it forges ahead with a transformation programme in an environment of rising costs, as Luke Barras-Hill reports.
C
athay Pacific Airways Limited managed to dampen losses in its half-year results, but
Chairman John Slosar points out that the operating environment for airlines ‘remains challenging’ – chiefly due to rising fuel costs. The Cathay Pacific Group
reported an attributable loss of HK$263m (US$33m) in the first six months of 2018, compared to HK2,051m (US$261m) in the same period last year. Likewise, the eponymous carrier
and sister airline Cathay Dragon posted a collective loss of HK$904m in the first six months of the year, compared to HK$2,765m in the same period in 2017. Group revenue increased by
15.7% to HK$53bn, with passengers carried rising by 1.9% to 17.5m and passenger yield lifting by 7.6% to HK$55.4 cents. According to Slosar, the results
mirror improvements in revenue management, favourable forex rates – particularly a weakened US dollar in the early half, higher revenue from fuel surcharges and strong premium class demand. International connectivity to the
as competitors. It adds this programme
remains ‘on track’, despite the aforementioned higher fuel prices. “One of the key areas of our
transformation programme is finding new revenue streams,” comments Aldric Chau, Head of Retail & e-Commerce, Sales & Distribution. “Certainly ancillary revenue is
carrier’s hub in Hong Kong has been strengthened through services to the likes of Brussels, Dublin and Copenhagen, in addition to sister carrier Cathay Dragon’s links to Nanning and Jinan in China and a re-introduced service to Japan’s Tokyo Haneda.
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growing and we expect it to continue to improve. There are many factors that contribute towards our business performance, but inflight retail is performing well and we will continue to be innovative and improve and differentiate our shopping experience from our competitors.” Cathay says the strong
Ancillary growth ‘satisfactory’ Cathay did not break out revenue from ancillaries specifically, but says growth for the period was ‘satisfactory’. Currently,
it is at the
midway point in a three-year transformation programme it says is designed ‘to make our businesses leaner, more agile and more effective’
OCTOBER 2018
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performance witnessed in its inflight retail and duty free business at the tail end of 2017 has continued into 2018. Promotions have been well
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received by its customers, particularly among skincare and cosmetics, in addition to electronics and gadgets. Such has been the success of these
promotions that they have been extended to Cathay Dragon. “Skincare and beauty products in general is our best-selling category,”
and make sure the crew always feel recognised and appreciated – they do an excellent job of looking after and serving our customers and are our de facto sales force,” notes Chau. “All crew are provided with
“Skincare and beauty products is our best- selling category. We introduce new themes every quarter which have gone down very well among our customers. These themes don’t just focus on new products but also cover areas such as travelling and wellbeing.”
Aldric Chau, Head of Retail & e-Commerce, Sales & Distribution, Cathay Pacific Airways
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has always been an important staple of the Cathay business. “We greatly value crew training
comments Chau. “We introduce new themes every
quarter which have gone down very well among our customers. These themes don’t just focus on new products but also cover areas such as travelling and wellbeing. “In the upcoming quarter, we are
going to be giving our customers tips on winter beauty and gifting.” Like many airlines, crew training
Above: Inflight retail remains a key piece in Cathay Pacific’s ancillary revenue jigsaw. Source: Cathay Pacific.
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