Cathay Pacific Cargo meets challenges head-on

Faced with unprecedented air cargo market challenges vastly different from those faced by the airline a year earlier, Cathay Pacific Cargo is tapping a broad-based strategy for coping with the sharp decline in cargo traffic, says Titus Diu, the division’s general manager for cargo sales & marketing.

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Responding to the rapidly changing market situation, Cathay Pacific’s strategy took into account variables such as fuel prices, fleet deployment and fluctuations in world trade patterns, all of which had shown a marked change globally over the past 12 months. The carrier’s response included capacity cuts, special leave schemes for staff , adjustment of frequencies, focusing on new markets and also included delaying a planned cargo terminal to cut costsamid the global recession.

“In the first half of 2008 Cathay Pacific had to adjust its cargo operation in the face of crippling oil prices,” says Diu, who oversees cargo sales and marketing for both Cathay Pacific Cargo and its venture with Air China Cargo, an all-freighter cargo airline based out of Shanghai.

As jet fuel rocketed above US$140 a barrel, Cathay Pacific faced huge cost problems making it difficult to operate profitably on long-haul routes. Today, with fuel at about US$40 a barrel, the airline is addressing an entirely differentproblem – plummeting demand.

Declining demand
Not only have diminishing exports from the Pearl River Delta and Yangtze River Delta regions hit the airline, its woes have been compounded by the shrinking European and North American markets. “At a time of weak airfreight demand, there’s a need to carefully manage our capacity as we look for new revenue streams to tap into,” Diu says.