The ‘glory days’ would most likely have been the mid-80s to mid-90s.
During that time, Asian air travel boomed. Japanese tourists started flooding into the region and beyond, and Taiwanese businesses poured into just-opening China. Airlines couldn’t expand fast enough, and non-stop Taiwan-Mainland flights were forbidden.
Cathay managed to grab market share by buying a load of second-hand L1011 TriStars from the US, and offering crazy packages to lure cockpit crews from the UK and Australian militaries. With a preferential government policy and only one runway at Kai Tak, the airline didn’t have to worry much about competition. Profits rolled in.
But it couldn’t last. Hong Kong’s high inflation pushed up Cathay’s costs much faster than its regional rivals’, and started to undermine its competitiveness. To complicate things, the coming handover of Hong Kong created uncertainty and led the British owners – the Swires – to sell stakes to Chinese state aviation interests.
Still, the airline went on to expand massively, notably on the back of the China growth/Chinese tourist phenomenon, growing a major cargo business, and developing Dragonair as a classy rival to nasty, cheap and even scary Chinese carriers on Mainland routes. It went through labour problems, fuel-price surprises and outsourcing, but nothing unusual by industry standards – though it has long suffered exceptionally whiny employees and customers.
Fast-forward to today. Mainland carriers have matured into big, serious regional and global operators, as have Middle-Eastern ones; Hong Kong has inevitably declined in relative prominence as a hub linking Asia to North America and Europe. And budget airlines like Air Asia and Peach have become a low-cost choice for regional travellers who don’t mind arriving at the destination late and hungry. Meanwhile, Hong Kong’s costs still drag on the city’s comparative advantage as an old-style airline’s home base.
Cathay is not alone in the industry in struggling to adjust. It has to charge a premium to survive, yet it can’t differentiate its product – modern air travel is basically a longish bus-ride, and only pretentious bores and ad agencies think ‘service’ and ‘quality’ and slinky, doe-eyed cabin attendants are deal-breakers.
But CX has additional burdens. The Swire system of appointing eager British ‘chaps’ as core managers is a curious colonial hangover. It is also a reminder that the company hails from one of Hong Kong’s family-run cartel/landlord-conglomerates. And as Hong Kong undergoes Mainlandization, it can only be time before Beijing wants the airline in more dependable party-state-linked hands.
But, like Hong Kong, it was amazing for a while.