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Following key takeaways from this very interesting lecture held by John:

– Aviation is a steady growing business
– China passenger domestic market surpassed USA
– Aviation a key driver for logistics and SCM
– Air-cargo represents 1-2 % of total cargo volume
– Air-cargo represents 30 % of value of cargo
– Traveling is important part of Hong Kong Life
– Cathay is 72 years old
– Cathay is young spirited
– Aviation is a dynamic Business
– Skytrax: Cathay Pacific ranked 4 times top of the list
– Aviation is a tough business requiring reinventing business

Airline (and Aviation) Management Issues:

People Management (exposure):
– Big businesses (+20k)
– Cooperation between departments
– Services delivered by people
– Consistency
– Good process (top down)

Business Tactics and Propositions:
– Motivation of consumers
– Ability to change proposition
– Market Research: Neuro Science (emotional)

Positioning of the brand:
– Coke (as an example)
– The most powerful brand building comes from actually using the product/service
– Product or service you want to sell must support the brand positioning
– If it does not support the position you want , any marketing is waste
– Product must deliver

Respect and Disrespect for process:
– There must be coordination
– How do we produce, service, etc.
– Process how to review and change processes
– Within a culture you have to empower staff (book: Moments of Truth: Jan Carlsen, SAS)
– Balance process with odd occasion where process does not work

What makes aviation so difficult?
– Since aviation started (brothers Wright), every airline struggles
– Warren Buffet’s rule number 8: never invest in airlines (aviation is complicated: pilots, cabin crew counter, etc. – most customers do not see this)
– Warren Buffet changed his view: Khan 1970 closed political office, deregulation:

1. Airlines face monopolistic business (one airport, two machine providers, etc.)
   – Michael Porters 5 forces (see: link)
   
2. Unit of sale vs profit is not the same thing
   (e.g., Coke: 1 case sales vs. profit is known)
   – Airline is based on per flight utilization
   – Probability (tickets into flight probability)
3. High fixed Cost low marginal cost
   – Led to consolidation in the USA
4. Aviation is not decreasing but increasing government involvement
   – From Governments’ Point of view: to develop their airport
   – Fallacy of composition
   – Development strategies at different places
   – industry not governed by commercial factors
5. Differentiation and Segmentation
   – Some airlines tried just being business class airlines (failed)
   – Hard to segment parts of the business
   – Cathay Pacific has to play in all segments
   – Low cost carriers set up by big airlines failed after 3 yesrs
   – Competing against each other
   – Figure out how you make your main brand compete in themain carrier market
   – people choose the proposition in the market place

NATURE OF SERVICE BUSINESSES
– Airlines depend on repeat customers
– It is about the repeat part of the repeat business
– When I pick up e.g. a phone, people say it’s a good choices
– Air transportation is based on memory of the trip
– Good memory or not
People involved spice up the variance
You do not feel that it is chaotic – just another person
– Recognition at different times inflight asking if they can help (beginning, after, during)
– Mr. Slosar asked the Cathay Pacific’s Marketing Department for the reasoning of contact at different times
– Interaction with the customer (without process / guidance when)
– Mr. Slosar asked to change this (with process / guidance when)

DIGITAL
– Internal use of data
– What’s the best way at looking at data
– How does the business really work
– Not only B2C with consumer
– Customer analysis (+1million Asia Miles Customers )
– Big data Tracking over 300 data points per aircraft
– Failure modes (e.g. 200 hours engine failure regressed)
– In each year, Cathay Pacific used to have 40 inflight engine shutdowns – now, after big data, only one.

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