Table of Content
TOC \o “1-3″ \h \z 1 Executive Summary
2 Introduction
3 Campaign Introduction
4 Analyses
4.1 Goal
4.2 Network
4.3 Pricing
4.4 Brand and Public Relations
4.5 Product and Distribution
5 Effectiveness Estimating
6 Conclusion
7 Reference
1 Executive Summary
Severe Acute Respiratory Syndrome (SARS) was once wildly spread to 32 nations around the world and caused 916 people died in the first 6 months of 2003. Much about this new disease still remains unknown and puzzled. But SARS has shown a clear spreading capacity along the route of international air travel. It is a challenging threat to public health. Social, economic and psychological impact is enormous in the mobile and interconnected world today. Especially to areas like China, Hong Kong, Taiwan, Singapore and Canada, the loss was devastating, both in economy and human life.
Airlines again experienced another “hurricane” after 911 and economic slump. Fortunately the situation has been contained now, and airlines start to wage a series of campaigns, programs and promotions to stimulate the market in the after SARS era. Governments assist those industries and businesses been seriously hit by SARS to launch recovery plans. Modern airline marketing concepts and strategies are used in this SARS-fighting battle such as network management, product and brand, pricing and distribution and market planning. All these measures, associate with activities initiated by other industries and businesses become a perfect example of marketing campaign of airlines for SARS recovery plan.
2 Introduction
Hong Kong was severely damaged by the SARS economically, socially and psychologically. 302 people were dead and 1446 affected up to August 16th 2003. All businesses were nearly at idle during the SARS ravage period, especially the tour industry, transportation, hotels, restaurants and shopping centers. As an locally based airline—Cathay Pacific Airways(CX), experienced the worst situations ever. According to its statistic, CX lost 1,241 million Hong Kong Dollars in the first six months of 2003 and the profit shrank 25.1% in passenger business. Figure 1 and 2 below illustrate the profit/loss and margin of a ten-year-comparison with year 2003.
Figure 1: CX profit/loss & margin in 10 years. Source: Cathay Pacific website
Figure 2: ATK performance in 10 years. Source: Cathay Pacific website
With such a huge loss, Cathay Pacific has launched an unprecedented marketing campaign consisting of pricing, networking, product and service and promotion strategies of airline marketing, and the cooperation of other supporters to attract customer and regain business. This report will examine all marketing elements involved in the campaign, analyse the rationales and goals behind and estimate the effectiveness.
3 Campaign Introduction
In order to regain and retain customers, and rebuild people’s confidence about Hong Kong, CX has initiated a number of activities, promotions and programs to help rebuild Hong Kong after SARS and maintain Hong Kong’s position as the region’s leading position as the aviation hub in the region. The following programs are included in the campaign.
² Hong Kong Welcomes You
CX is supporting the tourism recovery by giving away more than 10,000 tickets to draw travellers back to Hong Kong.
² Hong Kong Rugby Seven
CX will co-sponsor this popular sporting event with Credit Suisse First Boston from 2004 to 2006.
² Visit Hong Kong Now
This promotion launched overseas offers up to 50% off flight and hotel packages.
² Early Bird Promotion
This overseas promotion has been launched since May during SARS impact. It offers discounted fares to draw passengers back to Hong Kong. Over 80,000 tickets have been sold since June.
² Yum Sing Card
CX will launch the “Yum Sing” card, which passengers can use to redeem discounts at certain restaurants, attractions and shops.
² We Love Hong Kong
CX is participating this campaign to help Hong Kong get out of the swirl of SARS by encouraging people to get out, spend money and resume a normal life.
² Operation Unite—Take off With Hong Kong
CX is strongly support this program to unite communities together and fight the aftermath of SARS.
² Cathay Pacific World Pass
A multiple-ticket promotion to help Hong Kong businessmen to renew overseas contacts and leisure travellers become ambassadors of Hong Kong overseas and recover confidence about Hong Kong.
² Ongoing Familiarization Tour
CX is inviting and hosting varies of interests and media groups to visit Hong Kong for fact-finding and familiarization. It helps to rebuild Hong Kong’s image and confidence.
² Flying without fear
An educational program created by CX to inform general public about the health protection measures of Cathay Pacific Airways.
The following are campaign promotion coupons of hotels, restaurants, attractions, stores and transportation.
SARS disaster is unique and sudden; its impact to airlines is entirely and unprecedented in aviation history. Airlines need full-scale, omni directional marketing strategies to cope with the damages caused by SARS. What airlines have done is not merely a sales promotion or a seasonal, occasional package to increase revenue in a “peaceful era”. CX’s campaign is a good example of the efforts and reactions that airlines engaging now. It does not aim at a specific market sector but the whole instead. The purpose of this campaign is not to achieve common corporative goals. It is more like a “risk management” and ‘emergency action” for the whole company to struggle with SARS and the declines in business.
4 Analyses
The after SARS campaign initiated by CX contains several elements in airline marketing skills such as: networking, pricing, product, promotion, branding, public relations and distribution.
4.1 Goal
Obviously, the goal of this campaign is to use all marketing strategies and skills to regain business, attract passengers back to Hong Kong, rebuild faith and confidence, remove fear and doubt, resume normal life and business operations and to fly CX again. The goal of the campaign intends to send messages to the public that:
W Hong Kong Government and people are working hard together to fight the war against SARS and the situation has been under controlled.
W It is safe to come and visit Hong Kong now after the dedications and efforts have been put in and the disease has been contained.
W CX has taken all sanitary and protective measures to ensure passengers’ health and safety.
W CX has associated with the government and many business sectors in Hong Kong to offer worldwide costumers low fares of flight, accommodation, transportation, shopping, attraction and interesting locations and tasty food. It is the best time to visit Hong Kong now.
4.2 Network
This campaign uses worldwide network of CX’s route structure. It includes all service destinations and locations around the world. It provides passengers convenient and comfortable flights with special offers, discounts and varies kinds of promotion and package among CX service destinations(codeshare and OneWorld passengers excluded in non-Cathay flights). However, convenient and seamless connections are also available through OneWorld partners to 135 countries and 570 destinations.
4.3 Pricing
In this battle against SARS, CX uses low price strategy to draw customers to fly again. As in other businesses and industries, price may be the first and most sensitive issue that customers consider first. With quality services but very good offers in price, customers may still be attracted even bearing slight uncertainty of flight during SARS period. “Visit Hong Kong Now”, “Early Bird Promotion” are two typical pricing programs in CX’s SARS campaign. Up to 50% off discounted price is offered to the market.
4.4 Brand and Public Relations
CX is a well-known and quality air carrier from the most dynamic, cosmopolitan city, the Pearl of the East—Hong Kong. It’s brand awareness and company image are high and well acknowledged by the market and airline industry. At this most critical and difficult moment, CX has demonstrated its dedications, willingness, cooperative spirits and sincerities to stand with Hong Kong by supporting programs like “Hong Kong Welcomes You”, “We Love Hong Kong”, “Operation Unite”, for example, to assist recovery. It will increase CX’s brand awareness more, create positive perceptions, earn people’s trust and friendship and enhance CX’s public relations.
4.5 Product and Distribution
CX has introduced new services and products combined with hotels, restaurants, attractions and shopping as a package with lower-than-ever prices to the market. It is targeting at all market tiers from business travelers to tourists and backpackers. The offers are full-scaled and objects are worldwide. All overseas branch offices, travel agencies, ticket centers and traditional sales channels are all involved in distribution.
5 Effectiveness Estimating
The effectiveness of the marketing campaign has progressively increased revenue with the SARS threat fading away and people start to resume normal life. These programs initiated by CX has stimulated the market even more and encouraged passengers’ intentions to take flights earlier. Discounted fares and special packages include hotels, restaurants, transportation and attractions motivate costumers to visit Hong Kong right away after SARS gone. The supports and dedications to the communities to fight rebuild and refresh Hong Kong would win people’s acknowledgement and trust. Hong Kong people would choose and advocate CX as their airline from home.
From the statistics, CX’s business and number of passengers have progressively risen after the campaign in place. Figure 3 below shows the operational results from March to July 2003.
Figure 3: Passenger Load Factor, March-July 2003 Source:CX website
Nevertheless, in spite of the rising number of passengers carried by CX, the yield remains relatively low compared to the same period previous years due to the SARS recovery campaign and depressed market price. After all, this is the inevitable experience that CX has to pass through. The market will take time to recover and the effectiveness of the campaign will be expected to increase accordingly.
6 Conclusion
Airline marketing elements and skills are not just used in ordinary sales to boost business. It surely can be used in critical situation and when business risks are encountered, such as SARS. From the advertisement campaign and promotion programs launched by CX, we can see a typical example of how airlines use marketing strategy as a tool to save the business when emergency comes. The object is clear, to regain business and encourage passengers to fly CX again by sending the messages to the public through an advertisement campaign:
W SARS is under control now, and no longer a threat to public health.
W CX has taken all necessary actions to protect passengers and prevent SARS from spreading again.
W CX, as one of the family members of Hong Kong, has demonstrated strong support to Hong Kong and Hong Kong people by various activities and programs.
W It is safe and best deal to visit Hong Kong and fly CX now.
W It is a good bargain to join the promotion package now and take the advantages of high quality services and low fares.
Marketing skills like pricing, product and service, branding and public relations, promotion and distribution etc. are used in the campaign. Passengers will be back and business is expected to return to normal soon.
7 Reference
Airline Business Magazine, 2003 Apr, May, Jun, July, Aug issues.
Cathay Pacific Airways. <http://www.cathaypacific.com/intl/0,,,00.html> Accessed Jun 2003
Department of Health, Government of Hong Kong Special Administrative Region, China
<http://www.info.gov.hk/dh/> Accessed Aug 2003
World Health Organization, <http://www.who.int/en/> Accessed July 2003
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