"Dragonair is and will continue to be a full-service airline offering premium customer services…it will be important for the Dragonair brand to continue to develop as a separate airline," says Laura Crampton, GM, corporate communications, Dragonair.
But industry sources speculate that the integration into Cathay's household will be difficult. "(Cathay) is a big airline which is very arrogant, that's the trouble," says one source. "Cathay will put all its own people on (Dragonair's marketing), and it will become a subsidiary, which will never again have the gumption and the freedom to flourish."
Indeed, Cathay's chiefs would do well to heed the lessons learned by Singapore Airlines, which for years faced similar challenges when integrating the Silk Air brand into its portfolio.
Silk Air, which has endured a well-documented struggle to escape from the shadows of its parent SIA, was initially, publicly at least, positioned as a mere subsidiary of SIA. It was a situation, which led to difficulties in brand recognition, and ultimately, a distinct lack of gravitas among the key target audience: its consumers.
In fact, it was only after more than a decade, that Silk Air found the courage to step out on its own, bravely developing a separate brand identity from SIA as part of a US$3 million push in 2003, and since then, the skies have appeared brighter.
But Tim Evill, president and CEO, DDB Hong Kong, the agency which handled Dragonair's creative until recently, is far more optimistic about the carrier's potential positioning. "Silk Air struggled initially with its identity, but Singapore Airlines is now using it in a more strategic way," he says.
"Dragonair is a great brand and its 'can do' attitude has built it into a successful player in a difficult market, because it was prepared to go where no man had gone before. Cathay is incredibly smart. It needs to put someone in there who is going to be fiercely proud, to keep that maverick spirit, because that's what got (Dragonair) where it is."
Central to the issue, and understandably the most critical job now for Cathay, is developing a viable short- and mid-term positioning for its new sibling, one which will avoid placing pressure on Dragonair's bottom line, and ultimately, future survival.
According to Peter Wilken, partner of the Ingram Brand Company, the situation has presented a number of opportunities for both airlines. "There are a lot of arguments to preserve the brand, and potentially give themselves the flexibility of having diversified offerings," says Wilken.
"To my mind, Dragonair has actually got quite a strong franchise on the mainland as a quality business airline, so I think it would be premature to forecast its demise. If anything, they've got the opportunity to make it stronger and complement Cathay's international broad-based positioning with a more specific Chinese carrier like Dragonair."
