Cathay Pacific seeks greater presence in Korea

Clarence Chung, country manager of Cathay Pacific in Korea

Cathay Pacific’s A330-300 aircraft waits on an airstrip at Hong Kong International Airport before the takeoff.

Cathay Pacific’s new business-class seats

Hong Kong-based airline challenges Korean Air, Asiana to attract more Korean travelers

By Lee Hyo-sik

Hong Kong’s flagship carrier Cathay Pacific Airways, which has an extensive global network, is seeking to attract more Korean travelers flying not only to the Chinese territory, but also to other parts of the world.

To do so, Cathay, which is in direct competition with Korea’s two flagship carriers — Korean Air and Asiana Airlines —, has begun operating newer aircraft on its Incheon-Hong Kong route, and providing high-quality, customer-friendly in-flight products and services.

In an interview with The Korea Time, Clarence Chung, country manager of Cathay Pacific in Korea, said that Hong Kong International Airport offers extensive connectivity to Southeast Asia, the Middle East, Europe and Africa, stressing that Koreans traveling to these regions should fly with Cathay.

“We are a globally-competitive premium airline that operates 174 routes in 40 countries around the world with a fleet of 135 planes,” Chung said. “A growing number of Korean tourists visiting Hong Kong have become our loyal customers. We want more Koreans to use us when traveling to other parts of the world via Hong Kong.”

Cathay, founded in 1946, currently operates five daily flights between Incheon International Airport and Hong Kong International Airport. It began the service to Korea in 1960.

The carrier, which employs 30,000 workers across the globe, earned $12.3 billion in revenue last year. Its subsidiary Dragonair operates a daily flight between Busan and Hong Kong, and four weekly flights between Jeju and Hong Kong.

Korean Air flies four times a day between Incheon and Hong Kong, and operates a daily flight between Busan and Hong Kong. Asiana Airlines offers four daily flights between Incheon and Hong Kong. Jin Air and other local low-cost carriers also serve customers traveling between the two destinations.

Chung said that in an increasingly competitive environment, it is crucial to maintain and develop passenger loyalty by providing high-quality products and services. “We have introduced various new products, such as new premium economy-class targeting those willing to pay little more for extra space. We also recently launched a new regional business class.”

The country manager said Cathay has invested heavily in renewing its fleet, and developing innovative cabin products and services so that customers who travel to Hong Kong and other destinations will choose the airline on future flights.

“We will continue to innovate and introduce products and services that they expect from a premium airline,” he said. “We anticipate that an increasing number of Koreans will visit Hong Kong as more people travel overseas. At the same time, more people from Hong Kong and mainland China have and will come to Korea via Cathay, on the back of ‘hallyu,” the Korean cultural wave.”

Difficult time for airlines

Cathay Pacific and other global carriers have seen their bottom lines deteriorate since the outbreak of the global financial crisis in late 2008, Chung said. High oil prices, volatile foreign exchange rates and other downside risks have weighed on the airline industry. The intensifying market competition has made it worse.

“We operate in a volatile and challenging industry, and one which will always be highly susceptible to external factors that remain largely beyond our control,” he said. “The cost of fuel remains the biggest challenge, particularly for an airline like ours where long-haul operations form a significant part of our total operations.”

Against such a backdrop, Cathay has taken a slew of measures to boost its profitability and increase market share, the country manager said.

“Our focus will remain on protecting the business and managing short-term difficulties while remaining committed to our long-term strategy,” Chung said. “Our financial position remains strong and we will continue to invest in the future. Our core strengths remain the same as ever: a superb team, a strong international network, exceptional standards of customer service and a strong relationship with Air China.” The carrier ranks as the world’s eighth most profitable airline.

Competing with low-cost carriers

Unlike Korean Air and other global airlines that operate budget carriers, Chung said Cathay has no plan to set up the low-cost unit.

“The emergence of the low-cost airline industry has fueled air travel demand among those reluctant to fly due to financial reasons,” he said. “We see this as a positive trend as the aviation market has become larger. However, we will not launch a budget carrier but remain as a premium airline serving Hong Kong and other cities by offering a comprehensive network, the most competitive products and services, and the most desirable customer experience for passengers.”

The country manager said Cathay has created positive synergy with Dragonair, which operates an extensive network in mainland China. Dragonair, acquired in 2006 by Cathay, runs a fleet of 18 planes covering 45 destinations across the Asia-Pacific region, including 22 in mainland China.

“Some say Dragonair is a low-cost carrier. But it is not. The airline is a premium carrier like Cathay,” Chung said. “It has helped us build strong presence in China and move further into secondary Chinese cities. People going anywhere in China can fly with Cathay to Hong Kong, and then transfer to Dragonair for their final destinations.”

When asked for his comments on the success of Incheon International Airport, the country manager said Korea has done a marvelous job in creating the world’s most efficient airport.

“For eight years in a row from 2005 to 2013, it has been rated the best airport worldwide by Airports Council International. Incheon is very efficient because of its convenient baggage services and a fast immigration process,” Chung said. “Incheon Airport is regarded as one of the hubs for the international aviation market on the back of Korea’s sustainable economic growth. Additionally, the booming hallyu makes the nation much more attractive in the eyes of global airlines.”

CSR activities

Chung said Cathay Pacific formed an environment and charity working group in 1994.

“Employees of Cathay and Dragonair in Korea have been donating a portion of their salaries to the fund,” he said. “The money goes to supporting orphans, senior citizens living alone and other underprivileged people.”

Additionally, Cathay partners with Beautiful Store, a Korean social enterprise, and runs a “beautiful Saturday” community event.

“Our staff donates hundreds of personal items to the store every year to help it raise funds for people in need,” he said. “Also, some of our employees volunteer to sell donated items on a regular basis. The proceeds go to the store financing its wide range of community charity activities and grassroots projects.”