FINAL AVIATION PROJECT REPORT

Executive Summary

The onset of the COVID-19 pandemic brought devastating calamity for the global economy, affecting every scope of the economy. Among the industries primarily affected by the pandemic is the aviation industry. With many countries across the world imposing travel bans to contain the spread of the virus, the Asian-Pacific region was no exception. Among the most affected airlines in the region was Cathay Pacific, which is a significant component of Hong Kongs aviation hub and the general economic growth of the region. This research paper has five segments: the introduction, literature review, methodology, analysis, and conclusion. The introduction part of this research paper provides the background information to the research study, providing a short history of Cathay Pacific and an overview of the pandemics impact on its economy. The next segment is the literature review. Seven pieces of literature related to the topic have been reviewed to provide backup information to enhance the understanding of the research topic.

The method used for the data collection is the qualitative method, and additional information is obtained from several sources such as publications and the airlines annual reports. The most significant source has been the annual reports issued by the airlines management. After data is collected, a systematic analysis of information is done by looking at the data obtained and comparing the same, after which inferences are made and logical conclusions drawn. This includes data on the airlines performance in terms of cargo and passenger capacities and the role played by Hong Kong in the aviation industry of the region. Conclusions are made regarding the future of the airline, based on the analysis of the empirical data. The conclusion is that the airline will bounce back to its glory days once the pandemic and the current global fear are overdue to the survival strategies currently underway coupled with the governments support. As part of the conclusion, two recommendations have been made to see a bright future for the airline.

Aviation Research Proposal: The Future of Cathay Pacific after the Pandemic and Hong Kongs Role as a Hub in Aviation after China Takes Control of Hong Kong

Introduction

The wake of the COVID-19 pandemic has brought unprecedented calamity for the global economy, affecting every scope of the economy. Among the industries primarily affected by the pandemic is the aviation industry. Many countries were forced to impose travel bans due to how fast the virus was spreading, and Hong Kong was not exempted from this requirement. This imposition immediately led to a drastic drop in aviation services and passenger volumes. As a result of the pandemic, nearly every air travel stopped between late 2019 and early 2020. The Asian region was not an exception since almost every scheduled international flight was suspended (Park, Villafuerte & Abiad, 2020).

Moreover, many countries within the continent and across the world implemented domestic flights ban to contain the virus and lower or contain its spread. In the 2020 annual report issues by Cathay Pacific, the chairman states that the global passenger traffic is not expected to return to average during pre-Covid-19 times until sometime in 2024. This is according to the estimation by the International Air Transport Association (IATA) (Tisdall, Zhang & Zhang, 2021).

The economic downturn started with the diminishing impact of the tourism and the travel sectors globally, and the airlines across the world took a bad hit because of this. As stated earlier, the pandemic has had tremendous impacts on the global economy. Ideally, every economic shock or blow to one country quickly spreads to other countries due to linkages brought about by…

Running head: FINAL AVIATION PROJECT REPORT

FINAL AVIATION PROJECT REPORT

Executive Summary

The onset of the COVID-19 pandemic brought devastating calamity for the global economy, affecting every scope of the economy. Among the industries primarily affected by the pandemic is the aviation industry. With many countries across the world imposing travel bans to contain the spread of the virus, the Asian-Pacific region was no exception. Among the most affected airlines in the region was Cathay Pacific, which is a significant component of Hong Kongs aviation hub and the general economic growth of the region. This research paper has five segments: the introduction, literature review, methodology, analysis, and conclusion. The introduction part of this research paper provides the background information to the research study, providing a short history of Cathay Pacific and an overview of the pandemics impact on its economy. The next segment is the literature review. Seven pieces of literature related to the topic have been reviewed to provide backup information to enhance the understanding of the research topic.

The method used for the data collectionis the qualitative method, and additional information is obtained from several sources such as publications and the airlines annual reports. The most significant source has been the annual reports issued by the airlines management. After data is collected, a systematic analysis of information is done by looking at the data obtained and comparing the same, after which inferences are made and logical conclusions drawn. This includes data on the airlines performance in terms of cargo and passenger capacities and the role played by Hong Kong in the aviation industry of the region. Conclusions are made regarding the future of the airline, based on the analysis of the empirical data. The conclusion is that the airline will bounce back to its glory days once the pandemic and the current…

Running head: FINAL AVIATION PROJECT REPORT

FINAL AVIATION PROJECT REPORT

Executive Summary

The onset of the COVID-19 pandemic brought devastating calamity for the global economy, affecting every scope of the economy. Among the industries primarily affected by the pandemic is the aviation industry. With many countries across the world imposing travel bans to contain the spread of the virus, the Asian-Pacific region was no exception. Among the most affected airlines in the region was Cathay Pacific, which is a significant component of Hong Kongs aviation hub and the general economic growth of the region. This research paper has five segments: the introduction, literature review, methodology, analysis, and conclusion. The introduction part of this research paper provides the background information to the research study, providing a short history of Cathay Pacific and an overview of the pandemics impact on its economy. The next segment is the literature review. Seven pieces of literature related to the topic have been reviewed to provide backup information to enhance the understanding of the research topic.

The method used for the data collection is the qualitative method, and additional information is obtained from several sources such as publications and the airlines annual reports. The most significant source has been the annual reports issued by the airlines management. After data is collected, a systematic analysis of information is done by looking at the data obtained and comparing the same, after which inferences are made and logical conclusions drawn. This includes data on the airlines performance in terms of cargo and passenger capacities and the role played by Hong Kong in the aviation industry of the region. Conclusions are made regarding the future of the airline, based on the analysis of the empirical data. The conclusion is that the airline will bounce back to its glory days once the pandemic and the current global fear are overdue to the survival strategies currently underway coupled with the governments support. As part of the conclusion, two recommendations have been made to see a bright future for the airline.

Aviation Research Proposal: The Future of Cathay Pacific after the Pandemic and Hong Kongs Role as a Hub in Aviation after China Takes Control of Hong Kong

Introduction

The wake of the COVID-19 pandemic has brought unprecedented calamity for the global economy, affecting every scope of the economy. Among the industries primarily affected by the pandemic is the aviation industry. Many countries were forced to impose travel bans due to how fast the virus was spreading, and Hong Kong was not exempted from this requirement. This imposition immediately led to a drastic drop in aviation services and passenger volumes. As a result of the pandemic, nearly every air travel stopped between late 2019 and early 2020. The Asian region was not an exception since almost every scheduled international flight was suspended (Park, Villafuerte & Abiad, 2020).

Moreover, many countries within the continent and across the world implemented domestic flights ban to contain the virus and lower or contain its spread. In the 2020 annual report issues by Cathay Pacific, the chairman states that the global passenger traffic is not expected to return to average during pre-Covid-19 times until sometime in 2024. This is according to the estimation by the International Air Transport Association (IATA) (Tisdall, Zhang & Zhang, 2021).

The economic downturn started with the diminishing impact of the tourism and the travel sectors globally, and the airlines across the world took a bad hit because of this. As stated earlier, the pandemic has had tremendous impacts on the global economy. Ideally, every economic shock or blow to one country quickly spreads to other countries due to linkages brought about by globalization.

According to a report made by the United Nations Conference on Trade and Development (UNCTAD), the global economy estimated loss was about two trillion US dollars. This included the loss recorded by the aviation industry due to the grounded aircraft and travel bans as countries sought to contain the spread of the virus (Tisdall, Zhang & Zhang, 2021).

Usually, air travel is considered the safest means of travel. However, the pandemic has resulted in some substantial lay-offs and significant cuts. Airlines operations were also affected largely, which led to the recording of losses of up to billions of dollars. Cathay Pacific Airline of Hong Kong is not an exception.

Background of the Research Topic

Cathay Pacific Airways of Hong Kong is the flag bearer of the city, with its central hub and head office in Hong Kong (Tsui, Yuen & Fung, 2018). Its subsidiaries and operations have cargo and passenger services scheduled.......hay Pacific include Boeing 777, Airbus A350, Airbus A330, and Airbus A321neo. The airlines cargo runs two Boeing 747 models. The airline was established in 1946 in Hong Kong and has continuously expanded its growth in the regions aviation hub to what it currently is.

Among the most significant conquests of the airline is the acquisition of Dragonair, which took place in 2006, September 28th. This meant that the airline would gain more access to the mainland China market and further gave it more opportunities to share resources. The airlines Dragonair was rebranded in 2016 and became known as Cathay Dragon (Malkani et al., 2005). However, the wake of the Covid-19 pandemic negatively impacted the global economy and led to drastic changes and near downfall of the once-giant airline. The pandemic seemed to have brought the airlines glorious days to an end.

The COVID-19 pandemic has had a devastating effect on the aviation industry, resulting from the travel ban and the global economic downturn in general. As of October 2020, the majority of the airlines international flights in the Asian region remained suspended, with a considerable portion of the regions aircraft for passengers still grounded.

As of 2020, Cathay Pacific Airways of Hong Kong had already recorded a whooping loss of HK$21.6B, approximately 2.8 billion US dollars. The airlines chairman in 2020 issued a statement where he made claims of 2020 being the most stressful year in the airlines history (more than 70 years of operation). In the annual 2020 report of the airline, quarantine requirement coupled with the travel restrictions brought by the pandemic led to an unprecedented disruption globally within the air industry. The group chairman further states that the consequences have been detrimental (Cathay Pacific Airways Limited, 2020).

Aside from the impacts of the pandemic, the airlines operations were also paralyzed due to series of protests, such as the 2019-2020 Hong Kong protests, in which Cathay Pacifics employees participated. This brought about the negative publicity that further contributed to the pandemics detrimental impacts and affected the companys operations. This led to a very sharp drop in revenue and profits.

Moreover, Hong Kong city has been affected by what many call the largest protest in the citys history, a protest in which over two million people demonstrated against the criminal suspects proposed extradition to mainland China in 2019. As of 2020, Hong Kong was still gripped by a political crisis that further affected the economy amidst the pandemic. These activities badly affected the city, added to the already frustrating impacts it was facing due to the Covid-19 pandemic turmoil. This led to reduced demands and fewer customers because of the fear of political instability, further paralyzing the airlines operations and the city in general.

During the Covid-19 pandemic, the airline was forced to reduce its international flights. Generally, this harmed the industry as a whole and the demand for flights. It also caused air travel bans globally. As of March 2020, the group had already slashed about 96% of flights for three consecutive months: March, April, and May.

Moreover, the airlines Hong Kong Express had suspended its flight operations due to reduced flight demand. The situation was terrible that at some point during the pandemic, the airline only recorded 582 passengers in an entire day. As of December 2020, the airline had issued a report in which a statement was made saying that the group expected the losses incurred in the second half of the year to be even higher than those incurred in the first half of the year.

This was a result of its fleets impairment, restructuring charges, and low demand. The report issued by the group in early 2021 shows that the airline recorded an annual loss for 2020 was a total of 2.8 billion US dollars, mainly due to the Covid-19 pandemic restrictions. At this time, the airline further announced that it had plans of cutting about 8500 jobs to minimize its operational costs (Cathay Pacific Airways Limited, 2020).

Aims and Objectives of the Research Project

This study aims to establish a full assessment of the impact of the COVID-19 pandemic on Cathay Pacific Airline Limited of Hong Kong to understand and establish the future for the airline after the pandemics rampaging effects. The research project also seeks to establish the future for the airline due to China taking over Hong Kong and the impacts of the pandemic.

Finally, this research project is intended to look into the role of Hong Kong as a hub in aviation and how that is expected to change as a result of the mentioned variables. To achieve the research objectives, this research proposal has been developed as an analysis of the Cathay Pacific within which the aspects of the economic impacts of the Covid-19 pandemic, the effects of the same on Cathay Pacific operations and the airlines future can be investigated, and the Hong Kongs role as a hub in the Asia-Pacific region and what that looks like in the future after the airline takes such blows as the pandemics devastating impacts.

Research Questions

Three research questions addressing or aligning with the research objectives are as follows;

1. What will the future of Cathay Pacific look like after the Covid-19 pandemic?

2. What impact will China taking control of Hong Kong have on Cathay Pacific Airlines future?

3. Will Hong Kong strengthen and maintain its role as an aviation hub in the region after the impact of the pandemic and China taking control?

The research questions will be addressed in two empirical studies, in which the first two research questions will be addressed in one section, and the third research question shall also be addressed independently. In addition, the research shall include how Hong Kong airport has grown from the days of Kai Tak to its current position at Chep Lap Kok and how they are developing the airport for the future and how this is likely to impact Cathay Pacific moving forward. This research is necessary for the Hong Kong government to know what the future of Cathay Pacific looks like and the citys role as an aviation hub in the region and consider the implications of the results of this research proposal.

Literature Review

This section of the research paper is crucial to evaluate some of the existing literature on the research questions already outlined. This segment shall begin by reviewing the impact of the pandemic on the aviation industry, which Cathay Pacific is part of, and establish why the effects have been there by analyzing other literature on how and why the pandemic has impacted the aviation industry.

The paper shall further narrow this down to Cathay pacific. Secondly, this review shall focus on what various pieces of literature say regarding Hong Kong as an international aviation hub, and shall also indicate the implication for the research objective with regards to the citys role in aviation and any possible gap in the literature that could necessitate more research regarding the same. Also, this paper shall examine the literature on the development of HKIA from the Kai Tak days to Chep Lak Kok. The literature review about the methodology employed in the research paper shall also determine their efficiency.

According to a report done by the International Air Transport Association (IATA), the aviation industry was among the sectors that received the most significant economic blow by the Covid-19 pandemic and resulted in a very sharp drop in revenues, operations, and profitability. Some airlines, such as Cathay Pacific, recorded the worst performance in its 70-year history of operations.

This is according to a report issued by the airlines chairman. As already stated, the aviation industry received perhaps the most substantial blow. Estimates by IATA indicate an approximate drop of 44 percent in passenger capacity and hence revenues as of March 2020. This resulted from the airline industry collapsing mainly due to the travel bans imposed by countries worldwide as a containment measure to curb the spread of the deadly virus. Updated analyses by the IATA further indicate a drop in revenues by billions, up to 314 billion dollars in 2020 alone. This represents a 55% decline in passenger revenue compared to 2019 (Park Villafuerte & Abiad, 2020).

The industry continued to be negatively affected by the pandemic even though the other industries started receiving restriction ease up in the second half of 2020. The majority of the government worldwide started easing up the ban and restrictions on peoples social interactions. This saw hotels, restaurants, shops, and other social spaces such as events, libraries, and gyms. The reopening of the economy was, however, scheduled to take place in phases.

The opening of these economies significantly impacted the economy since it stimulated increased demand for services and products. This led to the diminishing of the negative impacts as had been predicted. This, however, did not have a positive effect on the aviation industry, as the impact of the blow remained unchanging. This is because travel restrictions were not eased up immediately as the rest of the economies and were eased up last after the industry had continued wallowing in the negative impacts of the pandemic.

Even after easing up travel bans, the situation did not get any better immediately since people were still scared of taking flights. The fear of flights gripped people due to the spread of the virus, which takes place a lot fast in an enclosed environmen