Dzung Trieu Law Firm_Ms Cindy Lam, Country Manager of Cathay Pacific Airways in Vietnam, spoke about its business strategies and the prospects for cooperation with Vietnam’s travel and aviation sector.
A shadow has been cast over Vietnam’s economy in general and the local aviation market in particular since the beginning of the year. Some airlines are re-evaluating their services while the others are asking the government to raise the fare ceiling to address soaring fuel costs. How has Cathay Pacific been coping?
2011 started off with quite a number of major news items, including the devaluation of the Vietnam dong and high inflation in Vietnam, significant increases in the cost of energy, political instability in the Middle East, and earthquakes in New Zealand, China, and Japan. These factors inevitably impact the public’s desire to travel and impacts on airlines’ operations. For Cathay Pacific, we’ve long recognised that aviation is cyclical in nature. We don’t make short-sighted decisions that will negatively impact on our long-term competitive sustainability.
Our customers will notice that we continue to invest in our products and services. We have just rolled out our new Business Class product, in March 2011; the result of an intensive design process to refine comfort, versatility and function.
In November last year we opened a new lounge called “The Cabin” at our hub, Hong Kong International Airport. It is a brand new space with modern design, an interesting variety of seating, an emphasis on technology and connectivity, plus a wide and healthy selection of food and beverages catering to the pre-flight needs of our premium passengers.
Our other flagship lounge, “The Wing”, is undergoing major renovations and will be refurbished into another impressive space by 2012. We have also recently announced another aircraft order of 27 new generation, fuel-efficient aircraft. Together with our previous orders, we have 92 new aircraft to be delivered over the coming decade. We are committed to keep investing and enhancing our products and services, so as to meet growing expectations and exceed the competition.
We continue to expand and strengthen our network via our home base of Hong Kong. This year we will increase our flight frequency to Paris (twice daily), Taipei (108 flights per week), Toronto (twice daily), New York (four flights daily) and Milan (daily), and launch two new destinations: Abu Dhabi and Chicago.
We also ensure that we have great fares on offer to the public, and have different fare products to cater to the needs of different segments. Take Vietnam for example. In March we launched the “Smart Saver” promotion, which offered very attractive fares to Amsterdam, London, Paris and Moscow, and enticed many travellers.
We will continue launching “Smart Saver” in the first week of May, July, September, November and December, so that Vietnamese travellers can enjoy great fares to different popular destinations worldwide, via our website www.cathaypacific.com/vn. We also have special student fares available with extra baggage arrangements, for students travelling overseas for education.
People now prefer “intelligent consumption”. What is Cathay Pacific doing to adapt to this trend?
There are perhaps different interpretations of “intelligent consumption”, but I believe it also includes the notion of “getting value for money”. Cathay Pacific has always been a forerunner in ensuring it delivers great value to customers.
That is the driving force behind our continuous, relentless efforts to enhance our products and services and our network and frequency. We believe Vietnamese consumers are very wise and can differentiate us from the rest because of our service quality, value, and the enjoyment of air travel they receive from us.
An example worth mentioning is our Asia Miles and Marco Polo Club programmes. Cathay Pacific not only provides a pleasurable air travel experience but also lifestyle aspirations. Many of our customers are repeat customers and are members of Asia Miles (our frequent flyer programme) and the Marco Polo Club (our loyalty programme).
Asia Miles members can earn miles during all aspects of daily life, including purchasing insurance, renting a car or taking public transport, and buying various professional services. Asia Miles are redeemable for flight awards, upgrades, companion tickets, and a range of lifestyle awards including hotel stays, travel packages, health and beauty packages, etc. Our Marco Polo Club recognises the most frequent flyers of Cathay Pacific and Dragonair.
Flying in eligible fare classes with both airlines or any of the oneworld alliance airlines earns members Club miles and Club sectors. The Marco Polo Club offers a range of particular benefits designed to enhance the travel experience of members. In addition, their journey will be even more enjoyable with exclusive benefits from some of the world’s finest hotels. These programmes give even greater value (be it on travel or other lifestyle items) to customers.
Cathay Pacific earned record profits in 2010. Can you tell us more about this?
Yes, it was a fantastic year for the Cathay Pacific Group in 2010, a year worth celebrating. We recorded an attributable profit of HK$14,048 million for 2010, nearly three-fold the figure in 2009. Our passenger and cargo businesses both performed well with consistently strong loads and significant increases in revenues.
Cathay Pacific and Dragonair together carried a total of 26.8 million passengers, an increase of 9.1 per cent over 2009. Passenger revenue increased 29.3 per cent, to HK$59,354 million. Demand was strong in most markets, and there was a marked pick-up in premium travel and seat revenue was managed astutely.
Cargo revenue increased 50.1 per cent, to HK$25,901 million. Freight carried by Cathay Pacific and Dragonair increased 18.1 per cent, to 1.8 million tonnes. Cargo capacity increased 15.2 per cent, as we brought back into service freighters that had been parked in the desert during the downturn. Fuel remains our largest single outlay, representing 35.6 per cent of the Group’s total operating costs. The fuel price increased during the year and was 28 per cent higher on average than in 2009. Managing the risk associated with fuel price changes is a key challenge. We have fuel hedging instruments in place.
The improved business conditions helped us to rebuild our balance sheet. Our financial position is strong. This enables us to increase the size of the airline and invest in a modern, fuel-efficient fleet. In 2010 we launched services to two new destinations, Milan and Moscow, added services to Tokyo, and added 22 destinations to our network through codeshare arrangements with airlines in Central and Latin America, the US, Canada and Japan. Dragonair added a new service to Shanghai, restored services to Fukuoka and Sendai in Japan and added Okinawa to its network. We also added three additional flights between Hanoi and Hong Kong in November last year, making it ten flights a week.
Vietnam’s traffic and business definitely contributed to our group’s success in 2010. Cathay Pacific views Vietnam as an important market not only amongst ASEAN countries but also within our network. We will continue to strengthen our image as the main choice for premium, high quality air travel amongst the Vietnamese public. We hope to solidly establish this position over the next five years.
How do you view trade promotion cooperation between travel and aviation in Vietnam? What have you contributed to supporting and improving this cooperation?
Travel and aviation certainly go hand-in-hand. It is interesting to see how aviation development can stimulate travel demand (availability of flights and networks provide convenience and stoke a desire to travel) and how travel demand stimulates the growth of aviation (greater supply satisfying higher demand).
This relationship certainly exists in Vietnam. The opening up of Vietnam’s skies over recent years has made it a lot easier for the Vietnamese public to visit foreign countries, and for tourists and business people to visit Vietnam.
Taking Cathay Pacific and Dragonair as an example, our progressive expansion of operations between Vietnam and Hong Kong has facilitated and stimulated a lot of traffic between not only these two places but also amongst our 120 destinations worldwide and our vast network in China. Much of this traffic in turn also benefits domestic travel, not to mention the positive economic impact on Vietnam’s economy from tourist spending.
We’ve certainly contributed to the creation of a larger aviation market in Vietnam. The number of international visitors to the country in 2010 increased 34.8 per cent compared with 2009. All markets are growing well, especially China, at 74.5 per cent and South Korea 37.7 per cent. We are proud to have played a part in encouraging and carrying those passengers into Vietnam.
Looking ahead, I see the aviation and travel cycle in Vietnam growing bigger and faster. According to The Air Transport Association (IATA), Vietnam is projected to be the world’s third fastest-growing market for international passengers and freight by 2014.
HUYEN THANH (news.vneconomy)
