cxfan1960

Yes, please, revert me to DM, and allow seat guarantees to Y/C/W/Y/B/J/K/L/M/V.

leungy18

CX blamed weak passenger demand, especially in premium cabins, in an analysis mid-2016.

Is it just me, or does CX charge insane prices for F and J classes? I can understand that CX can charge a premium as a reputable airline with plenty of nonstops to HKG and a focus on business travelers. But 27k USD for round-trip transpacific in F or 9k in J seems overkill, especially when UA charges 5k for J. Not to mention the less-than-satisfactory CX J food I read about on this forum.

HKGglobaltrotter

I am with you!

The issue is that the quality of CX product/service has fallen so much whilst they have kept/raised their price for premium cabin. The equation simply doesn't make any sense anymore. Pax, some of the most loyal like me (joined MPC 20+ years ago and retained as a DM for 11 years), are genuinely fed up with it.

Their website has issues and bugs all the time, their inflight catering is the worst among the premium airlines I had flown on, the OTP is one of the worst in Asia, their (longhaul) seat hardware whilst is still nice though hardly market-leading and don't even get me started on the regional J seat... the list goes on!

And at the same time, other carriers are catching up fast (in particular I am very impressed with BR). They pretty much offer most things superior than CX at a cheaper price. There's no brainer!

I can keep being a DM very comfortably under the revamped MPO however I have shifted 50% of my travels on other carriers already vs. almost 100% on CX/KA metal since last year. I am not sure if the business demand for premium cabin are that much less due to global economic uncertainty as claimed by CX mgmt, but I can say I am actually spending more or less the same in F/J but now flying BR/SQ/JL.

FlyerTalker688786

I think the most urgent thing to do are:
1, Stop the process of making B777 10 across. That investment can be withheld.
2, Stop fuel hedging as soon as possible
3, Start to give AA flyers mileage on cheap Y ticket and work more closely with AA. Otherwise CX will loose more North American flyers to AA as AA is expanding its Asian network.

TomYoung

They have managed to loose HK$17Billion over 2 years through speculating on oil prices. They call it hedging which it clearly is not. There are still over 2 years to go to clear the commitments made before the price of oil declined, so the losses are likely to continue. Surely the Board approved this disastrous policy and so should be removed. If they didn't, they should still be removed for permitting such long term speculative commitments to be made. And they should remember they are commitments that will not go away even if an unexpected event such as an epidemic or a war in the South China Sea breaks out, significantly reducing all travel. Without the commitment it is easier to cut flights.

Aside from the losses on fuel speculation they made a profit so there is no reason to curtail flights. The marginal cost of a flight is tied to spot fuel prices. The more they fly, the more they earn to cover the fixed commitment. At least they seem to have recognised that as they continue to increase flights and have extended the leases on 3 777ERs.

Their other problem is that they keep whingeing on about weak premium traffic while fiercely reducing the quality of the product (look at regional bizzo seats, reduced food quality and choice, and pathetic wines) and so driving PAX away.

Clearly there needs to be changes at the very top. If Swire cannot see that and act on it, all is lost.

percysmith

What customers want is not what necessarily the most profitable course for the airline.

In fact it's frequently the opposite - 10-abreast is one good example. Unbundling (BoB, luggage fees) another.

percysmith

Also there's little we can do in a slot-restricted airport if we don't have all the time in the world. How many of us can break our journeys to NA in Japan just or Europe in UAE just because their airlines are better?

ckx2

Oh my. As much as I would love this, this is probably never going to happen. I'd choose CX Y over AA Y any day.

insideman

[QUOTE=

The issue is that the quality of CX product/service has fallen so much whilst they have kept/raised their price for premium cabin. .[/QUOTE]

I am not sure I agree that the overall product and service have fallen so much. It is more the inconsistency which puzzles me. The new lounges are world beaters, and the new A350 seats (PEY and J ... I haven't tried EY) are also really good. Yet food is bad across the board, and I just hope the new dine on demand service gets rolled out quickly. Regional J also poor, even if it is only for short haul. While there is perhaps more inconsistency in the crew, the onboard service is still on a par with Middle east and SQ, and way better than US or Euro carriers.

With high load factors yet declining yield, they might actually think they need to increase prices!

qsh

They were so aggressive on hedging because for a couple years that was the only reason their profit stayed green.
But obviously not a very wise decision...

brunos

I don't think that the hedge losses are CX big problem. At least not a structural one.

Most airlines report a strong rise in profit in 2016 (thanks Air China profit for reducing the loss at CX). They have a drop in revenues/yield as ticket prices dropped with the drop in oil prices, but CX has a huge 9.2% drop in yield. That is extremely worrisome given that China and US markets have shown a big increase in number of pax. CX is badly losing on the longhaul Chinese market. It is not going to get better.

As mentioned by many posters the bad spot for CX is the premium market where they are bleeding. Hong Kong is a small market in itself where they have pricing power and maintain very high fares, but with European airlines having weak currencies and agressive US airlines with a vastly improved premium product, CX is getting squeezed. And they are losing the war on transfer flights (transiting in HK to other Asian destinations), especially with ME3 and Chinese airlines opening many more Australasian destinations. Quality of their premium products is not distinctive anymore (due to improvements at other airline and CX costcutting), so what are CX strengths?

The future of CX is bleak, very bleak.

fakecd

in any business happy customer is *1 priority. Regardless of fare or product or MPC etc, i am yet to meet a person or staff who proclaims "oh i love CX so much"

and that is fundamental issue... they lost the client... fuel hedge can be played aroundvwith accounting

HKGglobaltrotter

https://www.bloomberg.com/gadfly/art...-s-cost-crisis

This Bloomberg report I just read on CX FY16 result sums up nicely on the grim outlook for CX. It said CX break-even load factor is ~ 124% (just unbelievable!). Guess you're right...they might think they need to increase prices further!

ralphs

Fantastic article. As the article mentioned, the over-capacity in greater China is an issue as well, probably related to why Cathay continues to sell tickets at a loss.

no1cub17

But lots (like me) would usually choose AA. Right now CX PE is the sweet spot that's attractive in terms of product, price, and elite credits/mileage earning. In other areas AA is arguably superior. Crazy but true.