September 2016
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Creating a Life Well Travelled
CENTRE STAGE

With the aviation industry facing a host of challenges on the eve of Cathay Pacific's 70th Anniversary, Chief Executive Ivan Chu discusses how a new fleet of aircraft, greater offerings for passengers and more imaginative destinations will ensure long-term success.


Ivan Chu
Ivan Chu
Chief Executive,
Cathay Pacific Airways


When Cathay Pacific was founded as a small regional carrier after World War II, few could have predicted how strong a pivotal role it would play in the development of Hong Kong as Asia's World City. But for Ivan Chu, Chief Executive of Cathay Pacific, the fortunes of the airline and its home city have grown hand-in-hand.

"Seventy years ago, I don't think it was ever envisaged that Cathay Pacific would become the world-class network carrier we are today; but with Hong Kong's growth as a manufacturing centre in the 1950s, through to becoming a major financial centre in the '70s and '80s, we have always been here. If you look at the city's pillar industries – financial services, tourism, trading and logistics, professional and producer services – there are 3,500 regional headquarters here, making Hong Kong an important centre, and we have played a major supporting role in that," he says.


Cathay Pacific has played a strong a pivotal role in the development of Hong Kong as Asia's World City.
Cathay Pacific has played a strong a pivotal role in the development of Hong Kong as Asia's World City.


Chu, who has worked for Swire for the past 32 years, was appointed Chief Executive of Cathay Pacific in 2014 and is also Chairman of Dragonair – soon to be rebranded as Cathay Dragon. In leading Hong Kong's flagship carrier, he takes pride in its illustrious history and association with the city’s growth. Although the airline has had many triumphs over the years, it is now – like all airlines globally – facing a slew of challenges unique to our time.

"The whole industry is experiencing difficulty at present. Undoubtedly we're seeing a good trend in lower fuel prices – which make up 30 to 40 percent of our costs – so that's very welcome. However, the fluctuation in fuel price is volatile, which makes it notoriously difficult to manage costs overall. There is also a general softening in demand for passenger services and cargo, and this is directly related to the state of the global economy. If you look around the world, many of the major carriers – ourselves included – have had to scale down capacity to match present demand," he says.

Indeed, with the World Bank revising its 2016 growth forecast for the global economy to just 2.4 percent, Chu feels that expedient measures are necessary to remain sustainable. "Cathay Pacific has always had the highest load factor in Asia Pacific. Last year it was 86 percent, but this year it dropped to 84 percent. Although this figure is high compared to our peers, it's still a significant drop for us. The macro-economic situation has forced us to revise our own growth target from close to five percent to just above three percent."

A further challenge Chu cites is the current geopolitical landscape. "We have been watching the trend of sluggish demand gradually unfolding since the last quarter of 2015, and much of it can be ascribed to political events, specifically the US presidential elections, Australia's elections and the unknown consequences of the UK's decision to leave the EU. In times of uncertainty, businesses tend to invest less and hire fewer people, which in turn slows demand for travel and freight," he says.

Outstanding products

Despite the ups and downs currently facing the airline, Chu is unshakably optimistic about Cathay Pacific's future – both regionally and globally. Hong Kong is a major aviation hub, and this position places it at a great advantage for future development and for writing the next chapter in what Chu calls the city's "story of connectivity". A major step in that direction is the introduction of a new fleet of aircraft – Cathay Pacific's first for more than 20 years.

With 22 Airbus A350-900s scheduled for delivery between this year and next, followed by a further 26 A350-1000s between 2018 and 2020, this mid-size long-haul aircraft will further Cathay Pacific's ambition as an international network carrier. "Crucially, the A350 will advance our business model. Its lightweight design and composite construction allows Cathay Pacific to spread its wings by increasing our connectivity to more long-haul destinations," he says.

The lightweight design and composite construction of the A350 allows Cathay Pacific to fly to more long-haul destinations.
The lightweight design and composite construction of the A350 allows Cathay Pacific to fly to more long-haul destinations.

The A350's extra-wide cabin has windows affording panoramic views, while relaxing interior aesthetics and state-of-the-art technology help take passenger comfort to new heights.
The A350's extra-wide cabin has windows affording panoramic views, while relaxing interior aesthetics and state-of-the-art technology help take passenger comfort to new heights.


Chu is confident that passengers will appreciate the new aircraft's credentials: "It will be of tremendous benefit to our customers. The A350 is very quiet, extremely comfortable and showcases vast improvements in Business Class, Premium Economy and Economy cabins, which will set a new standard of service for our airline. On an environmental level, it is also the best aircraft available on the market today, as it is more fuel efficient and generates fewer emissions. This is the aircraft of the future."

For Cathay Pacific, providing the best possible experience for passengers in the air is something that must be replicated on the ground. In June this year, The Business Class Lounge at The Pier reopened at Hong Kong International Airport to great acclaim.

Reopened in June 2016, The Pier Business Lounge is the largest of Cathay Pacific's eight lounges at Hong Kong International Airport, measuring 3,306 square metres, and is able to accommodate 550 travellers.
Reopened in June 2016, The Pier Business Lounge is the largest of Cathay Pacific's eight lounges at Hong Kong International Airport, measuring 3,306 square metres, and is able to accommodate 550 travellers.

An introduction to the revamped The Pier Business Class Lounge, where you can take a journey inspired by Hong Kong's street life.


An introduction to the revamped The Pier Business Class Lounge, where you can take a journey inspired by Hong Kong's street life.


"It's simply beautiful. Every time we invest in a new product, we ask ourselves three questions: what's new, is it better than before and is it better than what our peers offer? This lounge definitely ticks these three boxes," Chu says.

Accordingly, passengers have a lot to look forward to when they check in. "Just purely in terms of food and beverages, we've got some amazing offerings. Our Tea House serves carefully curated blends with refined dim-sum. The huge Food Hall dishes up everything from tapas to salad, freshly made pastries, hot sandwiches and, of course, our signature Dan Dan noodles. We do this so we can meet the objective of a 'Life Well Travelled' for our passengers." Chu reveals that more outport lounges are scheduled for renovation, including the flagship London lounge at Heathrow Airport, to be reopened in the third quarter of this year.

Hub and spokes

With new branding, lounges and inflight products, and its signature Service Straight from the Heart, Cathay Pacific’s “Life Well Travelled” brand philosophy focuses on enhancing customers’ overall travel experience.
With new branding, lounges and inflight products, and its signature Service Straight from the Heart, Cathay Pacific's "Life Well Travelled" brand philosophy focuses on enhancing customers' overall travel experience.

The new service between Hong Kong and Madrid provides easier access for passengers travelling from Southern Europe to key destinations in the Asia Pacific region.
The new service between Hong Kong and Madrid provides easier access for passengers travelling from Southern Europe to key destinations in the Asia Pacific region.


With the A350 fleet and its First and Business Class lounges raising the bar ever higher for customers, Cathay Pacific is also launching new routes. Chu encourages people to think of Cathay Pacific's network as a wheel. If Hong Kong is the hub, then more “spokes” are required around the globe.

This year, Cathay Pacific launched its first direct flight to the Spanish capital Madrid. Chu explains: "As well as being a major city that appeals to many passengers from Asia Pacific, Madrid is also the shortest route from Hong Kong to South America. In terms of cargo, Madrid is ideal for serving the huge demand in Asia for high-quality wine, Iberico ham, wonderful cherries and other produce. This strengthens the import-export business in our region, which is good both for Hong Kong and the Iberian Peninsula."

Another destination earmarked is Gatwick Airport in the UK. "At Gatwick, we will be resuming our operations, which ceased in the 1990s. It was our first airport in the UK, but today it’s a very convenient hub for carriers who fly to European destinations. We can take advantage of this by offering direct flights, as an alternative to Heathrow Airport."

Continuing, he says, "Last year, 68 million people went through Hong Kong Airport, of which 34 million flew with either Cathay Pacific or Dragonair. Adding new services to Madrid and Gatwick will go beyond helping travellers discover these places. There are many passengers from North Asia, Japan, Mainland China and Australia, for example, who want to visit Europe via Hong Kong, so this will increase demand for our short-haul services, which in turn benefits our whole network."

The rebranding of Dragonair to Cathay Dragon – which is to be rolled out from November – will also enhance the Cathay Pacific Group’s network connectivity. Since Dragonair became a wholly owned subsidiary in 2006, 23 new destinations have been added and standards of service and product offerings to customers have been improved. However, for Chu, the rebrand is the final remaining task to align the two airlines.

"For many customers in Mainland China, Dragonair is the more familiar brand. We want to leverage this recognition to expose them to Cathay Pacific when they consider long-haul destinations. In the West, Cathay Pacific is more well-known, so passengers flying inbound to Mainland China will soon see Dragonair as part of the Cathay Pacific family thanks to the rebranding. It’s mutually beneficial," he says.

Notwithstanding the present volatility in the world economy, from November this year Cathay Pacific will be flying to its 18th cargo station in the Americas: Portland, Oregon. The new route, to be undertaken by Boeing 747-8F freighters, will play a key role in meeting growing demand to transport a wide range of commodities from the Pacific Northwest to various parts of Asia. "When we look to the future growth and development of our network, our eyes are on Asia," says Chu.

The rebranding of Dragonair as Cathay Dragon will see a new livery that features a Cathay-style brushwing logo, symbolising the close partnership and shared brand values of the two airlines.The rebranding of Dragonair as Cathay Dragon will see a new livery that features a Cathay-style brushwing logo, symbolising the close partnership and shared brand values of the two airlines.

An integrated future

Chu maintains firmly that the best is yet to come for the aviation industry. "The big story of our time is the rise of China. Last year, more than 100 million Chinese travelled abroad, and in five years' time, the World Tourism Organisation is expecting this to rise to 200 million. In terms of inbound traffic, they are expecting 130 million people to visit Mainland China by 2020, whether as tourists, investors, traders or students. The emerging middle class in Southeast Asia – home to more than 600 million people – is also seeking to travel within the region, as well as to North America and to Europe. That is why it's essential we look past this current volatility. Put simply, the continuous growth in passenger numbers can only be a good thing for Cathay Pacific."

Summing up his thoughts on Cathay Pacific’s position on its 70th anniversary, Chu says, "We want to make this year special for our passengers and our staff. While the past should indeed be celebrated, we must keep the future in our sights so we stay relevant, offer service straight from the heart and continue to embrace innovation."

Swire News September 2016
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