in terms of the question of HK as a hub for long haul it's not new for CX to have heavy competition in this area (TPE, BKK, SIN etc etc etc) the only difference is now mainland china carriers are adopting the same model (eg CZ in CAN).
the result is the same, CX wins on brand and product.
in terms of slots and capacity im sure CX will win good rights when the 3rd runway is opened, LCCs are growing but at very slow pace. CX can still choose 748 or 380 in future to maximise capacity on available slots if needed.
many chinese I know do not even know of CX and get shocked(when they eventually find / fly CX) to see that there is a chinese airline that has good service.
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You realize that this article explicitly suggests that CX should NOT be pursuing the Chinese market for connecting through HKG, right?
Quote:
A significantly large portion of passengers on Dragonair are connecting from China to another destination via Hong Kong; they are not high-value O&D passengers.
This seems to be a bit of a clue as to a suggested strategy for CX:
Quote:
Despite the traffic downturn, revenue was however up about 13% – and that in an era of constantly declining yields. BA's strategy was to focus on the premium market attracted to and based around London. The number of premium seats was increased; BA has some of the smallest economy class cabins on long-haul aircraft. Efforts were made to build higher-yielding O&D traffic in order to turn down the tap of connecting passengers.
In today's overall economic climate, Cathay should return to some traditional strategy that worked: Excellent Friendly Service, Great Hard Products, and Impeccable Safety Records. People that flies CX is willing to pay the extra money for these advantages. I know most Chinese in the Greater New York area chose to fly CX because of these advantages, even they can't stomach the crappy services on Air China and China Eastern. They have no problem shelling out the extra $200-$400 USD to fly with CX although faster, cheaper alternatives are available.
As for expansion, CX should take a more aggressive approach. KA's success in Chinese market shows the Chinese are not looking at cheap flights, but airlines that can provide Great Service. Unfortunately CX/KA are only allowed to have HKG as hub. If China allows CX/KA to another another hub or two in China, CX and KA will start racking in a ton of intra-China traffic profits.
For international traffic, CX might be limited by availability of long-range airplanes. But should the planes started to arrive, CX should really look to aggressive expand North American traffic. CX is exploring A380/B748i because those airplanes have fast delivery dates, it could be a sign that CX is going to be more aggressive in long-range destinations.
In today's overall economic climate, Cathay should return to some traditional strategy that worked: Excellent Friendly Service, Great Hard Products, and Impeccable Safety Records. People that flies CX is willing to pay the extra money for these advantages. I know most Chinese in the Greater New York area chose to fly CX because of these advantages, even they can't stomach the crappy services on Air China and China Eastern. They have no problem shelling out the extra $200-$400 USD to fly with CX although faster, cheaper alternatives are available.
As for expansion, CX should take a more aggressive approach. KA's success in Chinese market shows the Chinese are not looking at cheap flights, but airlines that can provide Great Service. Unfortunately CX/KA are only allowed to have HKG as hub. If China allows CX/KA to another another hub or two in China, CX and KA will start racking in a ton of intra-China traffic profits.
For international traffic, CX might be limited by availability of long-range airplanes. But should the planes started to arrive, CX should really look to aggressive expand North American traffic. CX is exploring A380/B748i because those airplanes have fast delivery dates, it could be a sign that CX is going to be more aggressive in long-range destinations.
I do think CX should have expanded their network much further long time ago. Their destinations are still very narrow and limited in my opinion. A great map can help diversify their business models even when one destination is having economic recessions. However, there are pros to CX too, their profit and loading and all the stuff on paper is very nice, due to a limited destinations they have launched.
Anyway, everything is too late. CX is losing their comparative advantage especially now when China airlines are growing rapidly. Also EK and QR have "stolen" a lot of pax from CX towards Middle East and Europe. Launching a brand new destination becomes much more difficult than before as brandname needs time to build, especially in many European countries where CX never flys to.
Well, I kind of agree to what the author of the analysis says.
Anyway, everything is too late. CX is losing their comparative advantage especially now when China airlines are growing rapidly. Also EK and QR have "stolen" a lot of pax from CX towards Middle East and Europe. Launching a brand new destination becomes much more difficult than before as brandname needs time to build, especially in many European countries where CX never flys to.
This sounds like a flawed argument to me.
If the Middle Eastern airline has been able to, in a matter of a few years, 'steal' passengers from CX which has been a well known brand since the 1990s (at least), this simply contradicts your statement 'brandname needs time to build'.
CX started SFO and ORD operations relatively late. Are they now doing much worse than their competitors SQ and UA?
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Quote:
Despite the traffic downturn, revenue was however up about 13% – and that in an era of constantly declining yields. BA's strategy was to focus on the premium market attracted to and based around London. The number of premium seats was increased; BA has some of the smallest economy class cabins on long-haul aircraft.
Given the difficulty of booking business class seats on many CX flights, I would agree this is the way to go.
I remember the first time I stepped on a BA 747 with what was then the "new" BA seating arrangements in the late 1990s: I was travelling in Y (the horror ) and remember walking past one business class cabin, then another huge business class cabin, and then the WTP (premium economy) section before finally arriving at the economy cabin at the very rear of the plane. A 747 with a seating capacity of less than 300 passengers!
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2012: AKL AUH BAH BLR BLQ BOM BOS DCA DEL DPS DUS DXB HEL HKG HND JED JFK LAX LHR KUL PSA RUH SIN SYD
many chinese I know do not even know of CX and get shocked(when they eventually find / fly CX) to see that there is a chinese airline that has good service.
Air China is not a Chinese airline? Hainan Airlines is not a Chinese airline?
For sure you must have been kidding with your comment..
Most Chinese I know however did fly china southern!!!-the supposed greatest threat to CX
I would say that's your personal opinion..
According to SKYTRAX (and my personal opinion is fitting pretty well with it) both Hainan and CX are 5* carriers. CA and China Southern are 4*. I personally find them all having a decent product, and whole some aspects are better on one carrier, some others shine more at another aspect.
The sentence that CX is the only chinese airline that has good service is definitely wrong. (If we say "chinese", we could even include Singapore Airlines, as the % of FAs speaking Mandarin on their crew is even higher than that of Air China (international flights, where they have foreign crew members as well) - so, in any way, I like flying all Chinese airlines, their service level is usually way above that of American carriers and above most European carriers.
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I think CX has a good business model, and manages to make money most of the time. I do however think they are a bit too conservative in starting new destinations. New destinations can bring more revenue from O&D traffic and business contracts as well as provide more transit traffic to support other routes in the network.
Destinations like
MAN -> (There is demand to HKG + transfer traffic to holiday destinations in Asia and Australia) -> CX rely on connecting PAX through LHR. But if PAX are say flying to BKK or Australia, then that requires 2 connections... why not fly EK.... so they don't fly CX.
ZRH ->Still cannot believe they don't fly here. Swiss do very well on this route and make loads of money. It may be too late for CX to fly here though. It is now a major Star hub, and most frequent fliers/business contracts will be tied to Swiss...
IST -> I think CX should look at IST, but TK may have taken hold of that market
Spain/Scandinavia -> It is not too late yet, but CX should look at these markets. Spain has OW carrier (IB) and is good transfer point to S.America. Scandinavia and Spain both do not have connections to HKG and HKG and CX could become a very competitive transfer point for these Passengers. Especially Scandinavia -> SE Asia
Africa -> Chinese business is growing in Africa and CX are perfectly located to take advantage of this. They should look at some new African markets.
ORD -> CX started this route so late, should have done it before! But at least they have started it now.
DFW -> People keep saying this route is needed, and whilst it would fill a gap connecting to large OW hubs, I used to think it was also needed. Now I don't think so. It would be costly to launch and operate, and PAX can easily connect via multiple ports to CX. LAX/SFO/ORD/JFK provide enough onward connections on AA to other points in the USA and this is perfectly sufficient.
I think the main problem CX faces right now is an ageing fleet, lack of aircraft and pilot crew. This may be as a result of a over conservative approach to purchasing new aircraft in advance, and worsening pay conditions for pilots...
Whilst shorthaul is making money for CX at the moment, they should not only rely on this. There is increasing competition and without a competitive longhaul network they won't be able to feed PAX into it.
One thing I will say about CX is their clever approach to frequency on short haul and long haul routes. This is a very good approach because it provides flexibility and options for business travellers and transfer options for connecting passengers. Whilst large aircraft like the A380/748 maybe useful on some routes, I prefer the multiple daily flights on 77W option.
I think CX has a good business model, and manages to make money most of the time. I do however think they are a bit too conservative in starting new destinations. New destinations can bring more revenue from O&D traffic and business contracts as well as provide more transit traffic to support other routes in the network.
i agree with MAN, while others still not too sure..
Quote from another forum, indirect traffic from MAN in 2011 to HKG was 103,000 (MIDT 2011) while leakage from the MAN catchment to London airports was 163,000 (CAA 2011).
add up to be 282 passengers per day for MAN/HKG!! The figures still haven't counted pax to PEK, PVG, CAN, etc.
I believe CX should try to make a tag-on service like HKG-CDG-MAN-CDG-HKG, even though pax may argue it is not a direct flight, i still think it is workable. When they have launched for some time, can try to do it as direct flights.
ZRH, well.. haha
a lot of premium pax, and are bounded to *A now, not sure if they will switch to CX easily, but possible
for regional destinations, probably now the market is already saturated? i think CX has flown to most international cities. to add on this, i think KA can launch some second-tier cities in China if there are enough slots, i think slots are also a serious problem to CX.
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Quote:
Originally Posted by B-HXG
i agree with MAN, while others still not too sure..
Quote from another forum, indirect traffic from MAN in 2011 to HKG was 103,000 (MIDT 2011) while leakage from the MAN catchment to London airports was 163,000 (CAA 2011).
add up to be 282 passengers per day for MAN/HKG!! The figures still haven't counted pax to PEK, PVG, CAN, etc.
I believe CX should try to make a tag-on service like HKG-CDG-MAN-CDG-HKG, even though pax may argue it is not a direct flight, i still think it is workable. When they have launched for some time, can try to do it as direct flights.
ZRH, well.. haha
a lot of premium pax, and are bounded to *A now, not sure if they will switch to CX easily, but possible
for regional destinations, probably now the market is already saturated? i think CX has flown to most international cities. to add on this, i think KA can launch some second-tier cities in China if there are enough slots, i think slots are also a serious problem to CX.
I agree slots is now a major issue for Hong Kong airlines, at least for the next few years until 3rd runway.
CX could operate a 3 or 4 weekly flight to MAN nonstop... with A340-300. They could even operate the flight now, as I believe they have some spare capacity.
) and remember walking past one business class cabin, then another huge business class cabin, and then the WTP (premium economy) section before finally arriving at the economy cabin at the very rear of the plane. A 747 with a seating capacity of less than 300 passengers!
