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Case Title:

Cathay Pacific’s Aggressive Expansion in Downturn

Publication Year : 2010

Authors: S Bhattacharya, S Chaudhuri, C Rao

Industry: Transportation

Region: Global

Case Code: GRS0200IRC

Teaching Note: Not Available

Structured Assignment: Not Available


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Abstract:
The global airline industry came under the grip of massive fuel price increases in the latter part of 2007 and most of 2008. Searching avenues for survival, almost all the major global airlines decided to reduce their seat capacity, retrench employees and ground most of their planes. But Cathay Pacific decided to ignore convention. The airline was noticeably the only one to adopt an aggressive expansion strategy in the days of malaise. Unthwarted by the increasing challenges of the market, Cathay Pacific redeployed capacity and started buying more aircraft to make its expansion plan successful. As there seemed to be no end to the crisis, Cathay Pacific also started feeling the tremor, but it decided to stick to its expansion plans. Critics feared that the daring feat might put an end to the growth saga of one of the leading airlines, threatening its existence in the global aviation industry.

Pedagogical Objectives:

  • To discuss the impact of the rising fuel prices on the global aviation industry.
  • To analyse the strategies adopted by Cathay Pacific in order to survive amidst the massive fuel crisis.

Keywords : Aggressive expansion strategy; US aviation industry; Indian aviation industry; Job cuts; Postponement of flights / aircraft orders; Redeployment of fleet capacity; Middle East market; Fuel expenses; Non-fuel expenses; Fuel surcharges; Fuel consumption; Replacement of aged flights; GPS (global positioning system) technology; Continuous descent

Contents : 
Trends in Aviation Industry: The Impact of Rising Fuel Prices
Employees retrenched to offset the hike in fuel prices
Fuel Hedging and Fuel surcharges unable to offset the rise in Jet Fuel Prices
Cathay Pacific’s Expansion Strategy: Will it Pay Off?
Financial Performance of Cathay Pacific
Comparison of Fuel Surcharges levied by Cathay Pacific w.r.to other leading airlines

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Case Study :
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Structured Assignment:
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Teaching Note :
   INR 400 = USD ($)
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