The Downfall Of Cathay Pacific

Daniel Fowkes
10 Apr 2024
· Airlines 
· Analysis 
Cathay Pacific after the global pandemic was left bruised and battered with traffic dropped by 99%, but what truly caused the downfall?

Cathay Pacific could’ve been viewed as a proud flagship carrier in the years leading to the global pandemic. However, the airline and broader group sailed into the unknown as time progressed, and its levels of popularity sunk.

However, Cathay Pacific’s image wouldn’t be the only thing impacted as the 2020s arrived. The airline experienced staggering drops in demand, passengers carried, finances, and more. Ultimately, the carrier was plunged into the unknown, its future uncertain at different points.

Following easing restrictions, the airline has steadily recovered its losses, relaunching routes and unground aircraft types previously parked. However, the lingering effects will take years to disappear completely.

Struggles Before 2020

Before the pandemic, Cathay Pacific struggled to keep pace with other major airlines as global markets evolved. While competitors were expanding and adapting to changing trends, especially highlighted in the Middle East, Cathay Pacific seemed caught in a rut that would need help to get out.

This rut, which was group-wide, largely impacted them and saw them face challenges in maintaining a robust market share. It couldn’t afford to see this slip further for such a large airline.

The turbulent political climate in Hong Kong, marked by widespread protests in 2019, further impacted Cathay Pacific’s standing. The airline was entangled in political unrest and faced scrutiny and pressure from the government. The fallout from the protests tarnished the brand’s image, creating an additional layer that you’d argue wasn’t required.

This poor outlook had a cascading impact on their employee base and prospective recruitment. The appeal to work for the airline had diminished, and for any future workers looking for a job, Cathay Pacific had put themselves quite far down in the pecking order.

Analysts argue that the packages offered to prospective workers and even current employees were an insult compared to what was offered elsewhere. If you had to, why would you work for Cathay and, in some cases, move to Hong Kong?

Arrival Of The Global Pandemic

However, these pressures only increased when the global pandemic arrived, which many described as an airline killer arrived on the scene towards the end of 2019 but majorly into the early stages of 2020.

The effects felt by Cathay were unprecedented, and their recovery would come far later than that of most other airlines. Relying solely on international travel and the restrictions implemented, the demand for Cathay services was reduced to 0.

The once incredibly busy airline barely flew hundreds of passengers daily, and grounding aircraft became a common trend. Month after month, 99% drops in traffic were recorded in what seemed like a never-ending cycle for the company. The slow pace of recovery saw financial woes continue; while recovery would eventually come and demand would return, it would do so far later than other airlines within the market.

Thus, while things are improving, the financial effects, alongside much more, will continue to be felt for years to come.

Wrong Decisions Made By Cathay Pacific

Poor decision-making by Cathay Pacific’s executives is another area that has been heavily criticised when discussing the company’s downfall.

Sure, hindsight makes everything a lot easier, but in the case of Cathay, analysts and onlookers would’ve argued for some time these were hardly optimal choices. These missteps ranged from financial investments to route planning, all contributing to the airline’s once-stellar reputation erosion.

For Cathay Pacific, it’s been a rough few years that you could easily make the case only worsened thanks to the global pandemic and heightened restrictions. Cathay Pacific was one of the hardest-hit carriers globally, and the lack of respite hurt any attempts to recover some of the lost demand.

Some Positives Exist

However, during the height of the pandemic, the Cathay Group experienced some positives. The development of the cargo division was an example of why sometimes having other avenues in your business can be beneficial.

Cathay Cargo was a highlight during the global pandemic despite a bleak passenger operation – Photo: Kevin Chung

This didn’t miraculously improve the Group, but it was something that continued to fly, at least. Cathay wasn’t the only airline that adopted a style similar to this, and the success some companies enjoyed with their cargo division during the height of the pandemic has led to a rethink of long-term strategies.

While the situation improves at Cathay, they’ll feel the effects for years.

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