A global pandemic was always going to hit the airline industry hard, but with no domestic market to fall back on, it's been particularly tough for Hong Kong's flag carrier Cathay Pacific, which has been one of the worst-hit major global airlines.
2020 saw record losses of HK$21.6 billion (US$2.8 billion), 8,500 staff were laid off, and the entire Cathay Dragon Brand was scrapped. Chairman Patrick Healy described it as the “toughest period” in the airline’s 70-year history. Even in the first few months of 2022, under a zero-Covid policy, and with Hong Kong enforcing some of the strictest border rules and quarantine measures in the world, the airline has struggled to claw its way back even as rivals have slowly been getting back on their feet.
Dogged by bad news, the airline that Hongkongers were once so proud of has undoubtedly taken a hit. The mass staff lay-offs in the early days of the pandemic were viewed by many as ruthless and inhumane. To make matters worse, public perceptions were further soured after Hong Kong’s first outbreak of the Omicron variant was traced to two Cathay Pacific airline staff who breached home quarantine rules.
However, as Hong Kong eases out of its fifth wave of the pandemic, there is hope that quarantine-free travel will slowly start to resume and with that, Cathay's fortunes might rebound. Pandemic woes aside, questions still remain around the airline's place as Hong Kong's flagship carrier, one with colonial roots at a time when a mainland government has made no secret of the fact that it wants to erase every trace of the city’s separate identity.
Will Cathay's legacy as one of the world's great airlines be enough for it to regain favour in a post-pandemic world? Can it, like its own brand motto suggests, 'move beyond' the past few turbulent years and soar once again? Two brand and advertising experts access how hard this giant has been hit, the impact from the pandemic, and what the company could do to fix its brand.
Engagement manager, Prophet
The brand, like all airlines, has certainly taken a significant hit in recent years, faced with a series of external challenges arising from the pandemic. However, with international travel gradually resuming, the Cathay Pacific brand is poised to emerge stronger than before if it pulls the right strategic levers – by innovating customer experiences, rejuvenating customer messaging and igniting employee engagement.
Additionally, Cathay Pacific must also recognise that travel in this new normal isn’t the same anymore. Thus, it should work with the authorities to navigate this challenge, as well as find regulatory ways to help revive its glory.
Strategically, I think it was a good move for Cathay Pacific to expand its business to complementary lifestyle categories, with a clear messaging to “help consumers move forward in style". We’ve seen leading airline brands like Singapore Airlines and Thai Airways pivot quite successfully. However, the launch of a new lifestyle brand and ecosystem named 'Cathay' last year signals a shift from travel. Unfortunately, this shift in proposition wasn’t clearly articulated and might have been perceived as more of a short-term sales play due to the pandemic, as affirmed by the negative online comments on social media. Air travel has always been the core of what makes the Cathay Pacific brand truly resonating and appealing for travellers, and the rebranding might have diluted its core brand equity.
It may look like gloom and doom for the brand, but I believe Cathay Pacific will rise from the ashes. They have just launched an enhanced O2O customer experience to make air travel simpler, easier and better once international travel resumes. The airline also has a clear communications strategy anchored on 'Move Beyond' to actively engage customers on social media through employee pandemic stories, new customer experiences, and sustainability. And more importantly, Hongkongers still have strong brand affinity for their homegrown carrier brand.
That being said, another key question will be how Cathay Pacific can better think through its strategy not as a homegrown carrier of Hong Kong but a proud carrier of the greater China region, and appeal even more to the hearts and minds of the significant Chinese travellers who tend to be more patriotic in national brands of late.
Business and brand strategist
Author, Asian Brand Strategy
Cathay Pacific remains challenged because of the hub situation in Hong Kong. There is a perception that they are inseparable to China and flying through the region is severely limited at the moment. So they are a little left behind compared to other global airlines.
Also, as we see the Hong Kong brand undergoing a transformation, so too does Cathay need to evolve. Cathay probably leaned more towards Hong Kong than it did China, but now with Hong Kong and China more intertwined, Cathay needs to adjust the brand. You can’t just get stuck in legacy, it won’t cut it in today’s modern world. Brands can live for a while on their legacy, but there comes a point when they must evolve. The challenge is, do they have the cash for that? Are the owners ready to back the airline for that?
Another big question is the future between Cathay Pacific and the mainland China airline brands like Air China, China Southern and China Eastern. Are they going to compete? Are they going to share routes? Are they going to intertwine in terms of collaboration?
So I think Cathay is up for a challenge. Firstly because of the pandemic, secondly what is Cathay's relationship to its Hong Kong roots? And the third point is that they need to innovate and modernise. Airlines are under huge pressure to upgrade, modernise, digitalise and be relevant to tomorrow's consumers as well. I think the future of travel is up for a change and so brands like Cathay need to be nimble in terms of products, services and relevance.
Also, over the past two pandemic years, I think perceptions have started to taint the Cathay Pacific brand. First of all they haven't been able to fly, and then they've also had a few PR blunders in terms of staff lay-offs and discontent. Those small negative stories accumulate in the back of minds. So I would say Cathay is coming out on a negative and so first of all they need to restore the brand back to neutral, where as other airlines are probably neutral by now and are coming back with positive stories.
There's definitely an opportunity for Cathay but it will take bold moves. It's not going to come by itself. They have global market conditions against them, they have competition against them, they have a lot of drivers and benchmarks against them. But there is an opportunity no doubt. There is a market of loyal customers waiting for them. But if they're going to come out they will need to be bold about it. They will have to cut through the clutter of noise and stand up to the competition. They need to regain control of the narrative and tell us something positive. They also need to rethink the Hong Kong and China story. The market is underserved right now and they have a role to serve. But it will take bold decisions and they need to have a masterplan for that. I think they are looking at least three years to get back on the block again.