Thirteen Reasons Why...
Cathay Pacific Airways is committing suicide.
1. For the last 40+ years, the Hong Kong aviation market has been a POT OF GOLD! Most airlines consider Hong Kong one of their most cherished routes. On the doorstep of Mainland China, a huge market that has been gradually opening to more capitalism and subsequent growth, the opportunities have been nearly limitless. The geographic advantage of Hong Kong cannot be understated. From the Kangaroo Route to the North Pacific and every place Southeast and Subcontinent Asian in between, Hong Kong has always had more than just strong origin and destination traffic from the financial and manufacturing sectors of the Pearl River Delta, but also huge potential as a global and regional passenger/cargo hub to compete with any airline. Unfortunately, many of these opportunities have been "missed", but worse than that, the relatively easy success of the past has bred a culture of apathy and arrogance that haunts CX to this day.
2. COLONIALISM is an undeniable part of the Swire's past. Without revisiting all that this entailed historically, it is still very much a part of the management culture at CX today. The emphasis on "profits over people" has produced a general feeling amongst staff that they are not valued. This, in turn, has affected the service levels that CX passengers receive from disenfranchised staff. As passengers are faced with ever more airlines choices, they are increasingly choosing other options. These are not just low fare customers, but also premium paying business travelers whom have witnessed first-hand the CX product decay. All the while, despite dwindling profits and horrid gambles on fuel hedges, the directors receive ever increasing bonuses awarded to them by the board.
3. VERTICAL SILO MANAGEMENT is a hallmark of CX. This highly territorial and bureaucratic method of being solely concerned with one's own department's budget is incredibly shortsighted and inefficient. Airlines are extremely interoperable as many departments have huge impacts on one another. To ignore this dynamic to the degree that CX regularly does based purely on historical precedent defies logic and represents a massive leadership failure. Departments heavily entrenched in vertical silo management become individual "kingdoms" more concerned with themselves than the greater needs of the Company. 21st century information technology, the increased speed & quantity of information flow and the exponential computer processing power available, presents vast opportunities to "right the ship." Thus far, I have seen little to indicate that this is changing for the better. Perhaps the redundancy of 30% of office staff will create higher reliance on IT and, thereby, increase interconnectivity between departments.
4. LACK OF CREATIVITY haunts CX in ways unimaginable. The inability to problem solve is legendary in China. The Chinese are masters of emulation, but Mao killed creativity and problem solving initiative for generations. Ironically, the Chinese dynasties were centuries ahead of those on other continents. Therefore, this is not a racial, but a present day cultural, issue. One would assume that the influence of Swire management, which is predominantly British, would help with this problem, but that does not seem to be the case. I believe those problems stem from placing non-airline managers into operational positions. Zoologists and soft drink bottlers have no business running airlines because the differences are too vast. Airline operations are complex and becoming more so. The directors running them need to be experts in both the operations and the financial aspects of the business.
5. LACK OF ACCOUNTABILITY is a big problem at CX. While the staff are regularly reviewed and held accountable, it seems that directors at CX do not share in this tradition. When was the last time a director was actually sacked in lieu of being quietly shuffled to another Swire business or being allowed to retire comfortably? More importantly, when was a director ever denied a bonus larger than those of previous years? Who is being held accountable for the disastrous fuel hedges that are doing massive damage to the CX balance sheet? Similarly, who is being held accountable for the horrible relations between CX and its pilots? How much has been gained versus lost as a result of the years-long conflict? Was one 3-crew LHR pattern really worth destroying all goodwill between 3000+ pilots and the Company? Whose decision was that? Is s/he being held accountable?
6. IGNORING INDUSTRY STANDARDS is another common failure at CX. The arrogant and prideful mentality of "we know best" is rampant within the many "kingdoms" inside the Company. I'm not really sure where all of this pomp comes from, but I suspect its roots are in the Hong Kong POT OF GOLD and Swire COLONIALISM. Much of airline industry operates in very similar fashions, but CX operates well outside the mainstream. While that was for several decades a source of pride, it has in the past several years become an embarrassment as those other airlines are handily outperforming CX. Wise managers would explore how other airlines conduct business and tweak those processes to suit their own operations, but CX managers like to "re-create the wheel" and come up with cheaper alternatives. We have all seen how this goes (ugh, heavy sigh). Most often, it is more cost effective to just do it right the first time, even if that means paying a bit more up front.
7. CX knows the COST OF EVERYTHING BUT THE VALUE OF NOTHING. Make no mistake, CX has amazing accountants. They know what everything costs right down to the penny, but they have no idea about what represents good value. Perhaps this is the byproduct of Hong Kong being so expensive. The value associated with the cost becomes lost in the fog of rampant inflation. Prices in Hong Kong have become so disconnected from actual value on items like real estate and food that perhaps the whole concept of value itself has been lost.
8. LAWLESSNESS is another problem for CX. I have never in my entire life witnessed a company that gets fined and sued as much as CX. Why is that? Some is just bitter and disenfranchised staff, but mostly it is because CX lives in the gray areas of the law. The Company has paid multiple fines for cargo price fixing. They have had to address charges of age discrimination in multiple jurisdictions. Taxes have gone unpaid in Europe. There have been cases settled against CX in the UK and all the way to the High Court in Hong Kong. If CX is going to be a top-shelf international company, then it must be willing to comply with the laws of the jurisdictions in which it operates and employs staff. Hong Kong is a very employer friendly city, but much of the rest of world is going the other direction. CX needs better qualified managers to ensure that business done overseas complies with the laws there.
9. The HIGH COST OF LIVING in Hong Kong is really hurting CX. Paying high quality staff a livable wage in Hong Kong is difficult. In the past decade, I have seen the skills and qualifications of new joiners go down dramatically. It is embarrassing that CX has literally hundreds of its pilots living with their parents in Hong Kong. Suitable applicants are simply not willing to come to CX and endure the cost of living in Hong Kong. Yet, CX cannot continue to pay well above industry average wages long term and expect to thrive against competitors from elsewhere whose employees cost significantly less. There are two solutions for this problem: outport staff (basings) and technology (more machines and fewer people).
10. TRAINING at CX has always been a problem. Improvements have been made, but there is a long ways to go yet. That it takes many months to train a new captain is ridiculous. A solidly experienced first officer should take no more than one or two months to become a captain. Similarly, that it takes as many as 80 sectors to sign off a junior first officer is absurd. That failures are so common says much more about the recruiting and training departments than it does about the trainees. Also, upgrade training inevitably brings or keeps pilots on the Hong Kong base. Upgrades and fleet decisions should be made to get pilots out of Hong Kong and onto bases, not to keep them in HK where they are most expensive.
11. PROMOTION FROM WITHIN versus acquiring outsiders makes change difficult. Nearly every new CX manager is cut from the same mold. They are Swire princes or princesses from high profile universities whom have navigated the Swire/CX gauntlet. They all think the same way. If they did not, they would long since have been sacked. Free thinkers and those willing to venture outside their "silo" do not last at CX. These are the only Swire managers you will ever observe being visibly removed. Why? Because they have broken "the code" and every Swire knows what that is through observations like these. Usually, those who are publicly removed are either from the outside or have lost their Swire discipline and called CX's stupidity out. In short, CX managers know who butters their bread, and getting the job done right is less important than keeping your job.
12. Why does all this occur? One reason... because POWER IS MORE IMPORTANT THAN PROFITS at CX. The whole "house of cards" comes crashing down once "the help" comes to think they have any power over their employers. This "house of cards" is both colonial and Asian. It is all about showing who is boss and saving face. Never mind that "the help" are significant stakeholders in the Company and its success or failure as well. What matters most at CX is that they know their place. This defies logic because if these employees are desiring a career, then their connectedness to the Company is every bit as strong as any director. Arguably, they are more vested in the long term health of the Company because they will NOT be receiving a golden parachute and shuffled to another Swire company when things go pear-shaped.
13. Every time there is a suicide, the inevitable question is why. Often, there is no obvious answer, but one truth always remains... BECAUSE THEY CAN. I don't know why CX seems determined to kill itself. The above are certainly contributors but not the whole explanation. Maybe the Swires don't really care about CX. Maybe they are trying to sell it. Perhaps CX is more about branding and bragging rights than actually making money from a successful company. Perhaps the other Swire companies in Asia benefit from CX in ways that are not commonly or well understood. Maybe the recent failures are not fully comprehended in London. Perhaps the constant BS the Company is always shoveling at its employees is actually believed in London. That would be hard to imagine, but I have always heard that staff "updates" are actually written for those above, not below. Could it be that simple? Do Mom and Dad (London Swires and the Mainland Chinese) simply have no idea what is going on in the life of their teenager (CX)? I am really starting to wonder if the adults will show up before it is too late. Even if they do, will they know how to fix it? Perhaps it is time for some professional help. I believe there are outsiders who could save CX, but I doubt anyone at CX now or anywhere within Swire can get the job done. God help us...