This report provides an overview of a business analysis conducted on Cathay Pacific. The analysis includes assessing the company's business model, social media comments, and examining the problems and opportunities it faces. Additionally, proposed information management and information systems (IM/IS) solutions are presented to address the identified challenges and opportunities.

Cathay Pacific operates within a supply chain involving manufacturers, distributors, retailers, and customers, emphasising online ticket sales significantly. The industrial structure analysis used Porter's Five Forces Model to reveal moderate bargaining power of consumers, high bargaining power of suppliers, moderate competition from vendors of substitutes, weak competition from new entrants, and moderate competition from existing rivals.

Social media comments collected from Cathay Pacific's official Facebook page were analysed using text topic analysis. The analysis identified challenges and opportunities for the airline. Challenges include issues with the baggage transportation system, such as luggage handling and instances of damage. Another challenge is the incomplete complaint system, which affects the timeliness of customer feedback. One of the opportunities is implementation of entertainment devices and another one is improvements in food quality.

IM/IS solutions are recommended to address the challenges and opportunities. These solutions include a real-time baggage tracking system to enhance the baggage transportation process. Also, there is a customer relationship management system to improve the complaint system. Additionally, leveraging social media and implementing business intelligence tools are suggested to improve entertainment offerings and food quality. Finally, this report provides IS platforms, which are employee portal, social media and websites, partner extranet for better information flow and management.

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Background

Cathay Pacific is an international airline based in Hong Kong. It excels in premium travel, low-cost travel, cargo, and lifestyle services. Cathay Pacific has established a solid reputation for offering its customers excellent service with its in-flight experience and customer service since 1946.

The airline offers different cabin classes to cater to the diverse needs of its passengers, including First Class, Business Class, Premium Economy Class, and Economy Class, in order to passengers' unique requirements, ensuring a comfortable and enjoyable journey.

Cathay Pacific's supply chain is similar to other airlines. In terms of business process, the supply chain can be simplified into four participants: manufacturer, distributor, retailer, customer, and online sales platform. Most customers purchase tickets online, which automatically checks the remaining seats on the flight. When the order is done, the operations staff process registration into the customer order repository and prepares for the flight.

Cathay Pacific's business model involves five parties, which are Airbus manufacturers, the airline, the Government, the Airport, and Customers. Airbus manufacturers produces aircrafts that Cathay Pacific uses for its flights. The airline uses aircrafts for passenger and cargo transportation. The Government provides regulations for aviation industry, such as issuing airline permits and licenses. Runways, terminals, and ground handling and more facilities and services are provided by The Airport. Customers can purchase tickets for Cathay Pacific flights directly from the airline or travel agents.

Industrial Structure Analysis/ Porter’s Five Forces Model

The industrial structure of Cathay Pacific can be analysed by Porter's Five Forces Model.

Bargaining Power of Consumers – Moderate

The bargaining power of consumers in the airline industry is moderate. On one hand, consumers have many options, and low switching costs make it easy for them to move to another brand. Consumers are highly price-performance conscious, expecting a high price for a high-quality product. Therefore, airlines need to price their services fairly and in a reasonable way to maintain customer loyalty.

On the other hand, Cathay Pacific has a loyalty program which is called Asia Miles. The programme makes customers more difficult to switch to other airlines, which helps airline in retaining customers, as they have invested in the loyalty program and customers may be hesitant to switch to a different airline.

Bargaining Power of Suppliers – High

In air manufacturing, only a few suppliers possess the technology and capabilities to produce and provide aircraft components and systems. As a result, there is a reduced pool of potential suppliers, and they have a stronger position in negotiations with airlines like Cathay Pacific.

Furthermore, the specialised nature of these suppliers' products and services adds to their bargaining power. Manufacturing aircraft components demands knowledge, precision engineering, and adherence to safety standards. This level of specialisation creates barriers to entry for new competitors, further limiting the options available to Cathay Pacific.

Competitions from Vendors of Substitutes – Moderate

The competitors from substitute vendors are moderate because they all provide flights, so these are considered homogenous products. Nevertheless, there is fair availability and accessibility of substitutes.

Other carriers in the airline industry offer similar flight services, providing passengers with alternative options. While offering similar transportation services, these substitutes may have unique features, pricing structures, or routes that are different from Cathay Pacific.

The fair availability and accessibility of substitutes mean that passengers different options when selecting an airline for their travel needs. This ensures customers can explore options based on their affordability, convenience, and service quality of airlines.

Competitions from New Competitions – Weak

The threat of new entrants is low due to high capital requirements for purchasing aircraft, regulatory barriers such as obtaining necessary licenses, and an established customer base.

Firstly, the aviation industry demands a large amount of financial resources as entrants need to acquire and maintain a fleet of aircraft. Potential new entrants may have difficulty in

purchase sufficient amount of modern, safe, and fuel-efficient planes.

Secondly, regulatory barriers play a vital role in limiting new entrants. The aviation industry is subject to strict regulations and licensing requirements imposed by aviation authorities. Meeting these regulations and obtaining the necessary licenses takes time and effort, discouraging new competitors to enter the market.

Lastly, Cathay Pacific's strong reputation and established customer base provide a competitive advantage against potential new entrants. Cathay Pacific has built a loyal customer by its exceptional service, maintaining high operational standards, and consistently meeting customer expectations. This established trust and brand recognition to make it challenging for new entrants to gain market share and compete with Cathay Pacific.

Competitions from Existing Rivals – Moderate

Buyers in the airline industry face relatively low switching costs when choosing alternative airlines. Customers can easily opt for other carriers without facing significant barriers or costs. In other words, Cathay Pacific is in an intense rivalry with its competitors as it needs to compete for customers within the industry.

However, Cathay Pacific has differentiated itself through its premium service and robust network coverage in the intense competitive landscape. These factors help the airline maintain a competitive advantage and secure its position as one of the world's top ten airlines for 2023, according to SKYTRAX.

Social Media Comments

In the report, data are collected from Cathay Pacific's official Facebook page by using Facepager. There are 1027 comments collected from 19th September to 19th October 2023 on Cathay's Facebook page.

-Text Topic Analysis-

Firstly, we logged in Facebook account in Facepager to access data. After that, we collected the comments from Cathay's Facebook page using Facepager and exported them in .csv format. Then, we used SAS Enterprise Miner to analyse the text topic with the comments collected from Facepager. After the SAS Enterprise Miner had the result, we had a more profound analysis to investigate diverse text topic correlation. After conducting a text topic analysis, we have identified several challenges and opportunities for Cathay Pacific based on the results.

Figure 1 – SAS Enterprise Analysis

Figure 2 reveals a high correlation between the terms "luggage" and "+damage" with the text topic of "luggage, +time, high, +damage, time high." This suggests a potential challenge in the baggage transportation system. Cathay may need to address issues related to luggage handling and minimize instances of damage during transit.

Figure 2 - Correlation between the terms "luggage" and "+damage" with the text topic of "luggage, +time, high, +damage, time high."

Figure 3 – Correlation between "+passenger," "message," and "+time" with the text topic of "+passenger, +flight, +message, number, +time."

In figure 3, we observed a strong correlation between "+passenger," "message," and "+time" with the text topic of "+passenger, +flight, +message, number, +time." The result highlights concerns about the maturity of Cathay's complaint system and the timeliness of customer feedback. Improving the complaint resolution process can enhance customer satisfaction and loyalty.

Figure 4 demonstrates a correlation between the terms "+wait" and "entertainment" with the text topic of "entertainment, +wait, +month, lhr, complaint." The figure presents an opportunity for Cathay to attract more customers by offering advanced entertainment devices to enhance the overall in-flight experience.

Figure 4 – Correlation between the terms "+wait" and "entertainment" with the text topic of "entertainment, +wait, +month, lhr, complaint."

Figure 5 – Correlation between "+cabin," "entertainment," and the text topic of "+time, terrible, june, cabin food, multiple."

Finally, figure 5 indicates a correlation between "+cabin," "entertainment," and the text topic of "+time, terrible, june, cabin food, multiple." This emphasizes improving cabin food quality to address customer concerns and enhance their satisfaction with the dining experience in flights.

Business Analysis, Problems & Opportunities

Cathay Pacific's competitive strategy includes two aspects: industry-wide focus and differentiation.

In terms of differentiation, Cathay Pacific strongly emphasises delivering a world-class travel experience by leveraging advanced technology and offering high-quality products. The airline strives to provide its customers with innovative features that enhance their journey. Additionally, Cathay Pacific places great importance on customer service, ensuring that their cabin crews greet passengers with warm smiles and provide exceptional care throughout the flight. As a result, A memorable and unique travel experience can be created, which sets Cathay Pacific apart from its competitors.

On the industry-wide front, Cathay Pacific has established an efficient supply chain that helps lower costs and optimise operations. By carefully managing their supply chain, they can ensure a smooth flow of goods and services, minimising expenses and maximising efficiency. Furthermore, Cathay Pacific continuously innovates to design various tailored products that cater to the needs and preferences of their customers. This approach allows them to stay competitive and adapt to changing market demands.

Challenge 2 – Incomplete Complaint System

Comment

"Can someone follow up on my complaint first? It's been two months. After I complained, I only received an email from you and gave me a case number. But no news yet. “

Data analysis (matched with the comment)

According to Figure 3 of SAS Enterprise Miner analysis in the appendix, the terms ‘+passenger’, ‘message and ‘+time’ have high correlation of 0.677, 0.409 and 0.174 with the text topic of ‘+passenger, +flight’, +message, number. +time’

Challenge

The challenge faced by Cathay Pacific needs to be a completed complaint mechanism, as highlighted by Lai Nicholas's comment on the airline's Facebook page. The customer expressed frustration with the lack of follow-up on their complaint despite receiving an initial email with a case number. This incomplete process prevents customers from receiving timely feedback and understanding the progress of their complaints, leading to dissatisfaction and unresolved issues. The impact of this challenge is twofold: it hampers customer satisfaction with Cathay Pacific and makes it difficult for the airline to regain customers and maintain a positive reputation. Negative reviews resulting from unresolved complaints may deter potential customers from choosing Cathay Pacific, ultimately losing business opportunities. To address this challenge, Cathay Pacific needs to improve its complaint-handling procedures, ensuring prompt and transparent communication with customers to resolve their issues effectively and rebuild trust.

Challenge 1 - Baggage Transportation System

Comment

“I was left with a damaged luggage after taking a CX flight. Damaged at the retractable handle which you will notice when you try to wheel your luggage at the parking lot, i went straight back to the check-in counter and file the report, but they refused to do anything. I called their luggage service hotline for week and never pick up, left so many messages no call back. Email them they kept saying they will not be responsible. Cathay flight ticket pricing at all-time high, service at all time low even reducing check in luggage quota and requiring extra, but their revenue post COVID is at all time high!!! Never fly with this airline, worst experience ever!!!!!!!!!!!”

Data analysis (matched with the comment)

According to Figure 2 of SAS Enterprise Miner analysis in the appendix, the terms ‘luggage’ and ‘+damage’ have high correlation of 0.286 and 0.192 with the text topic of ‘luggage, +time, high, +damage, time high’.

Challenge

The challenge faced by Cathay Pacific in the aspect of the baggage transportation system is the need for more attention to customer benefits and experience. The comment by Johnny Hyk on Cathay Pacific's Facebook page highlights instances where the airline did not take responsibility for customers' damaged luggage. This lack of responsiveness and refusal to address luggage-related issues negatively impact the customer experience and indicate a decline in service quality. To address this challenge, Cathay Pacific needs to improve its baggage handling procedures and overall baggage transportation system, ensuring prompt and satisfactory resolution of luggage-related issues while prioritising customer satisfaction and benefits.

Opportunity 1 – Entertainment Devices

Comment

“I am most satisfied with the AVOD (Audio and Video On Demand) system on the A321neo because it features 4Kmon, Bluetooth connectivity, and Type C charging.”

Data analysis (matched with the comment)

According to Figure 4 of SAS Enterprise Miner analysis in the appendix, the terms ‘+wait’ and ‘entertainment’ have high correlation of both 0.279 with the text topic of ‘entertainment, +wait, +month, lhr, complaint’.

Opportunity

The comment about the AVOD system on the A321neo presents an opportunity for Cathay Pacific regarding entertainment devices. The customer expresses satisfaction with the system's features, such as 4K resolution, Bluetooth connectivity, and Type C charging. This positive feedback indicates Cathay Pacific has invested in high-quality entertainment technology to provide passengers with a better in-flight experience. Building on this opportunity, Cathay Pacific can continue to upgrade and innovate its entertainment devices and system across its fleet, incorporating the latest technologies to provide passengers with a wide range of entertainment options, seamless connectivity, and convenient charging capabilities. Cathay Pacific can attract and retain customers by consistently offering an exceptional entertainment experience, so as to strengthen its overall brand image as a modern and enjoyable air travel provider.

Opportunity 2 – Food Quality

Comment

“Have u tried the chicken pie before? U said thankful...... Do u know the taste just like you are eating shit, I'm not talking about the type of food, I'm talking about the TASTE!!! I rather a fruit with just a bread or muffin is better than that PIE”

Data analysis (matched with the comment)

According to Figure 5 of SAS Enterprise Miner analysis in the appendix, the terms ‘+cabin’ and ‘entertainment’ have high correlation of both 0.279 with the text topic of ‘+time, terrible, june, cabin food, multiple’

Opportunity

The comment about the dissatisfaction with the taste of the chicken pie presents an opportunity for Cathay Pacific to focus on improving its food quality. The customer expresses disappointment, comparing the taste to eating something unpleasant. This feedback highlights the importance of providing delicious meals during flights. To make use of this opportunity, Cathay Pacific can invest in enhancing its food offerings to ensure the taste and quality of the meals meet customer expectations. This can be achieved by working closely with renowned chefs, sourcing high-quality ingredients, and conducting regular taste tests and feedback surveys to continuously improve the in-flight dining experience. Eventually, Cathay Pacific can create positive word-of-mouth through its satisfying meals, attracting more passengers and fostering customer loyalty.

Proposed IM/IS Solutions

Cathay Pacific faces various challenges and opportunities in its operations. Two significant challenges include a deficient baggage transportation system and an incomplete complaint mechanism could negatively impact customer satisfaction and the airline's reputation. On the other hand, opportunities exist in the form of entertainment devices and food quality, enhancing the passenger experience can e Cathay Pacific from its competitors. Cathay Pacific can benefit from implementing new information management solutions to address these challenges and leverage the opportunities.

Solution for Challenge 1 (Baggage transportation system) - Real-time Baggage Tracking System

Implementing a real-time baggage tracking system can benefit Cathay Pacific in building trust by offering customers a transparent way to track their luggage. Technologies such as RFID tags or barcode scanning enables passengers to receive real-time updates on the location and status of their bags through mobile apps. Customers can reduce their anxiety caused by lost or mishandled luggage. This can create positive customer reviews, and new customers who are looking for its convenience can be attracted to choose Cathay Pacific. This information management solution helps Cathay promote its business as a reliable and customer-centric service provider.

Solution for Challenge 2 (Incomplete complaint system) - Customer Relationship Management System

Implementing a CRM system and automatic response system can enhance the complaint systems. By incorporating a CRM system, the airline can efficiently manage customer interactions and track relevant data, such as marketing information, order tracking, and after-sales service functions. This allows Cathay Pacific to review and analyse customers’ needs for personalised communication.

Introduction of automatic response systems, such as online chats on the official website, social media platforms, or email, can promptly address customer inquiries and complaints. These systems can provide immediate responses to common questions to reduce making repeated calls or sending emails for routine issues. Moreover, suppose the automated system cannot resolve a customer's problem. It can transition to real-time communication with customer service personnel to address complex concerns and issues.

Cathay Pacific can increase customer satisfaction and loyalty by providing immediate and efficient customer service. Responsiveness of the automated response systems can improve customers' experience when customers are encountering difficulties or seeking assistance.

Solution for Opportunity 1 (Entertainment devices) - Social Media

Active social media engagement about entertainment devices can benefit Cathay Pacific in promoting its business. Actively monitoring social media platforms for passenger feedback and suggestions helps the airline gain valuable insights into customer preferences and areas that require improvement. When Cathay Pacific promptly addresses issues or concerns raised through comments, reviews, or messages, customers can have a better entertainment experience.

Moreover, sharing updates and showcasing the latest features of their entertainment devices on social media platforms generates excitement and interest among potential customers. Positive engagement on social media can lead to increased brand visibility and customer engagement and, eventually, attract new customers looking for a top-notch entertainment experience. This information management solution allows Cathay Pacific to leverage social media as a powerful marketing tool, building a positive brand image and promoting the business to a broader audience.

Implementing business intelligence analytics and menu customisation through information management systems can help Cathay Pacific promote its business by enhancing food quality. Business intelligence tools can be used to analyse data related to food quality feedback so the airline can identify specific areas for improvement based on customer preferences, trends, and satisfaction ratings. This data-driven approach enables Cathay Pacific to make informed decisions regarding ingredients, cooking techniques, and menu options, ensuring that meals meet passenger expectations.

Furthermore, implementing information management systems to gather and store passenger preferences, dietary restrictions, and special meal requests allows Cathay Pacific to personalise menu options and provide tailored dining experiences. The collected data help the airline ensure that passengers receive meals that suit their tastes and dietary needs, enhancing their overall dining experience.

By combining business intelligence analytics and menu personalisation, high-quality food can be provided. Individual passenger needs can be met by consistently improving food quality based on data insights. As a result, new customers who value customised experiences will be attracted.

Solution for Opportunity 2 (Food quality) - Business Intelligence Tools

IS Platforms for Information Flow and Management

Cathay Pacific effectively utilizes various digital platforms to streamline information flow, enhance customer satisfaction, and promote seamless collaboration with employees and partner companies. The airline leverages four primary platforms, including its website, mobile apps, social media, and cloud-based systems, to achieve these goals.

On the aspect of employees, Cathay Pacific has developed a centralized portal for employees, similar to Canvas we are using, which is for accessing and sharing information. This cloud-based platform allows employees to conveniently access various documents, policies, procedures, and resources, ensuring access to the most up-to-date information. The airline enhances information flow and promotes efficiency by providing a single platform for information exchange.

On the side of customers, in order to improve the customer experience, Cathay Pacific offers self-service features on its website and mobile apps. These features allows customers to manage routine tasks such as online booking, seat selection, check-in, and reservation management on their own. Shifting basic inquiries and transactions to self-service platforms reduces the workload for customer service agents, so that they can focus on more complex issues and provide faster resolution times.

Cathay Pacific also leverages social media platforms like Facebook and Instagram to engage with customers in real-time. Using social media, the airline can promptly respond to customer inquiries, address concerns, and assist. Social media platforms allow Cathay Pacific to build customer relationships , then foster brand loyalty.

In terms of partner companies, Cathay Pacific employs a cloud-based partner extranet to facilitate efficient communication and collaboration. This platform includes messaging tools, discussion forums, and shared calendars, so partners and the airline can effectively coordinate in the extranet. The partner extranet also provides a space for joint project management, document co-authoring, and version control for enhanced collaboration and knowledge sharing among partner companies.

The advantages of leveraging these platforms are improved information flow, enhanced customer experiences, and efficient communication and collaboration with employees and partner companies. These benefits contribute to Cathay's overall success.

Conclusion

This report analyses Cathay Pacific in aspects of the company - business model, industrial structure analysis (Porter's Five Forces Model), social media comments, and identified problems and opportunities. Additionally, information management and information systems (IM/IS) solutions are shown to address the challenges and the opportunities.

The industrial structure analysis shows moderate bargaining power of consumers, high bargaining power of suppliers, moderate competition from vendors of substitutes, weak competition from new entrants, and moderate competition from existing rivals.

The analysis of social media comments collected from Cathay Pacific's official Facebook page recognises challenges regarding the baggage transportation system and the incomplete complaint system. Opportunities were also identified, which are the implementation of entertainment devices and improvements in food quality.

Eventually, IM/IS solutions are recommended for two challenges and two opportunities, including a real-time baggage tracking system for better baggage transportation process, a customer relationship management system to improve the complaint system, leveraging social media to enhanced entertainment offerings, and implementing of business intelligence tools to improve food quality. Moreover, IS platforms can be used for adequate information flow and management.