Augustus Tang, CEO, Cathay Pacific, says the industry must invest in environmental initiatives despite short-term challenges.
Can the airline recover, or will we see a different Cathay Pacific in future?
We all know that Hong Kong is behind in its recovery. But every region has had to deal with restrictions at different levels at various points throughout the crisis. The point is that we will catch up. As Hong Kong’s home airline for more than 75 years, Cathay Pacific has always been fully committed to safely fostering vital connections between Hong Kong and the rest of the world, and to upholding Hong Kong’s international aviation hub status.
We are already operating a full freighter schedule again, and we aim to operate passenger flights to more than 60 destinations by the end of 2022—more than double the number we were operating at the beginning of 2022. Cathay Pacific will recover to be a stronger airline than before the crisis and Hong Kong will be a stronger international aviation hub.
The airline will also be more focused and competitive. Our advantage is being able to see what has happened in other regions as they ramp up. And the key to recovering quickly is starting as early as possible in the rebuilding process. So, we’ve been working on the recovery for some time and by the end of 2023, we will have recruited 4,000 extra people. And some of those people will be returning to us after leaving during the crisis. We had a great response when we contacted former staff. People wanted to come back to work with us.
Working with our partners at the airport and in the government is also vital. For example, it is important to let people know that Hong Kong will be open for business, tourism, and friends and families. The fact that I made it to the IATA AGM in Doha shows that we are extremely determined in our ambitions.
So, the signs are good. I have every confidence that Cathay Pacific and Hong Kong will bounce back. Don’t bet against us!
Are you equally optimistic about travel in Asia-Pacific or do you expect caution?
I’m very bullish about the recovery in Asia-Pacific. The amount of pent-up demand in other regions has been extraordinary and there is no reason to believe that Asia-Pacific will be any different. In fact, it will be better. It is a bigger market.
And at Hong Kong, we will have the new third runway that pushes capacity from 75 million passengers per annum (mppa) to 120mppa. The growth potential afforded by the commencement of the three-runway system at Hong Kong, and the opportunities presented by the Greater Bay Area, will ensure that both Cathay Pacific and the Hong Kong hub will remain competitive when pandemic-related restrictions are lifted. Furthermore, as an international aviation hub, Hong Kong has a critical role to play China’s development, as outlined in the national 14th Five Year Plan.
Yes, there are many countries in the region and probably an equal number of travel policies so there will be a lack of synchronization that will slow progress. But that will be temporary. We are definitely moving in the right direction.
How important is cargo and what improvements do we need to see in this sector?
Hong Kong is the busiest cargo airport in the world. That is still true and that tells you all you need to know about how important cargo is to Cathay Pacific. Despite ongoing restrictions and operational challenges, in the second half of last year we were profitable, and that was due in large part to the exceptional performance of our cargo business.
Pre-pandemic, we carried approximately 50% of cargo on freighters and 50% in the belly of passenger aircraft. But, of course, passenger flights are down enormously. At one point, we were in single digits percentage-wise compared with 2019.
However, our freighter schedule is full. And we were one of the few carriers that could safely transport the Pfizer vaccine at the low temperatures it required. That was important for us and important for the world.
The aim must be to create value for every player in the air cargo supply chain. Digitization will help. Shippers want to know where their cargoes are at any time. They want to book online, see the space available and the rates.
This was a major driver behind the launch last year of our Click & Ship digital booking platform, which allows shippers to do just that. We also launched our own fully featured cargo chatbot to offer our customers in Hong Kong a quicker and more intuitive response to their cargo queries. Meanwhile, our 24/7 Operations Control Centre provides proactive monitoring and customer support for high-value shipments.
Has the crisis affected airline relationships?
If you want to build a world-class hub and a world-class airline you must collaborate with your partners at the airport and in government. For us, the pandemic helped to cement those close relationships.
Our interests are aligned. We have all been fighting the pandemic and we all want to recover as quickly as possible. We need to be competitive in the region and that means creating a valued aviation product. We can’t do that working in isolation.
Can the industry afford to be green?
We can’t afford not to be. Climate change is a bigger crisis than the pandemic because it threatens the long-term future of the industry. At the very least, it could cause significant disruption unless we make real changes to lower our carbon emissions.
We are fully committed to the industry’s net zero emissions by 2050 goal and are exploring all options to reduce CO2. For example, we want to have sustainable aviation fuels (SAF) make up 10% of our total fuel uptake by 2030. And we have a program for our corporate customers to reduce their carbon emissions by participating in our SAF efforts. It’s a first for Hong Kong.
There is a shortage in SAF supply at the moment though, but I hope that this reflects the uncertainty about these fuels a few years’ back. It takes time for the market to adjust especially when you’re talking about building new refineries. The demand for SAF is clearly being demonstrated now and so there is huge potential. The uptake for our corporate SAF program proves that. It is an attractive market for suppliers now.
Of course, governments can accelerate the process with the right policies. It will probably take a mixture of carrot and stick, but incentives for SAF production would be a good start. Governments are talking about this, but they need to act.
Will diversity be a source of strength?
I am a firm believer in diversity. A diverse workforce adds to a company’s performance. Cathay Pacific was among the first carriers to sign up for IATA’s 25by2025 initiative. In fact, we expect some 30% of our senior executives to be female in the next few years. We’ve also set up a task force to study the issue and to make sure that we make the right decisions to improve diversity going forward.
Are there are any other areas in aviation on which we should focus?
The talent loss to other industries is something that concerns me. Cathay Pacific is doing well in its recruitment but there will be continuing shortages as the industry recovers.
We must think through how we will attract young talent at the industry level. It won’t be easy. Aviation skills can take a long time to master but this is a very volatile industry that can change quickly. The pandemic proves that. And that makes young people wonder whether the commitment to train will be worth it.
Even so, I think we can persuade them. But we have to open a dialogue with the younger generation and begin to teach them about the glory of aviation. It offers such an exciting career and is a pillar of the modern world.
What are the lessons learned from the past two years?
For me, the main lesson is that people make the difference. I can’t thank the Cathay Pacific team enough for the wonderful job they did during such a challenging period. I appreciate that it isn’t just about the job and that the disruptions they faced affected their families and their future.
To build on such a dedicated team means that leadership must set the right tone going forward. And then they must trust and empower their team. There is no magic formula. It is about creating the right spirit and that is something for which Cathay Pacific is renowned.
The Cathay Pacific motto is “move beyond.” That has become extremely important and more relevant than ever. We will move beyond our existing challenges and be bigger and better in the future.