The Future of Cathay Pacific Aviation Research Proposal Research Proposal

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Running head: FINAL AVIATION PROJECT REPORT36FINAL AVIATION PROJECT REPORTExecutive SummaryThe 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 Kong’s 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 pandemic’s 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 airline’s annual reports. The most significant source has been the annual reports issued by the airline’s 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 airline’s 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 government’s 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 Kong’s Role as a Hub in Aviation after China Takes Control of Hong KongIntroductionThe 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…

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…Runninghead:FINALAVIATIONPROJECTREPORT36FINALAVIATIONPROJECTREPORTExecutiveSummaryTheonsetoftheCOVID-19pandemicbroughtdevastatingcalamityfortheglobaleconomy,affectingeveryscopeoftheeconomy.Amongtheindustriesprimarilyaffectedbythepandemicistheaviationindustry.Withmanycountriesacrosstheworldimposingtravelbanstocontainthespreadofthevirus,theAsian-Pacificregionwasnoexception.AmongthemostaffectedairlinesintheregionwasCathayPacific,whichisasignificantcomponentofHongKong’saviationhubandthegeneraleconomicgrowthoftheregion.Thisresearchpaperhasfivesegments:theintroduction,literaturereview,methodology,analysis,andconclusion.Theintroductionpartofthisresearchpaperprovidesthebackgroundinformationtotheresearchstudy,providingashorthistoryofCathayPacificandanoverviewofthepandemic’simpactonitseconomy.Thenextsegmentistheliteraturereview.Sevenpiecesofliteraturerelatedtothetopichavebeenreviewedtoprovidebackupinformationtoenhancetheunderstandingoftheresearchtopic.Themethodusedforthedatacollectionisthequalitativemethod,andadditionalinformationisobtainedfromseveralsourcessuchaspublicationsandtheairline’sannualreports.Themostsignificantsourcehasbeentheannualreportsissuedbytheairline’smanagement.Afterdataiscollected,asystematicanalysisofinformationisdonebylookingatthedataobtainedandcomparingthesame,afterwhichinferencesaremadeandlogicalconclusionsdrawn.Thisincludesdataontheairline’sperformanceintermsofcargoandpassengercapacitiesandtheroleplayedbyHongKongintheaviationindustryoftheregion.Conclusionsaremaderegardingthefutureoftheairline,basedontheanalysisoftheempiricaldata.Theconclusionisthattheairlinewillbouncebacktoitsglorydaysoncethepandemicandthecurrentglobalfearareoverduetothesurvivalstrategiescurrentlyunderwaycoupledwiththegovernment’ssupport.Aspartoftheconclusion,tworecommendationshavebeenmadetoseeabrightfuturefortheairline.AviationResearchProposal:TheFutureofCathayPacificafterthePandemicandHongKong’sRoleasaHubinAviationafterChinaTakesControlofHongKongIntroductionThewakeoftheCOVID-19pandemichasbroughtunprecedentedcalamityfortheglobaleconomy,affectingeveryscopeoftheeconomy.Amongtheindustriesprimarilyaffectedbythepandemicistheaviationindustry.Manycountrieswereforcedtoimposetravelbansduetohowfasttheviruswasspreading,andHongKongwasnotexemptedfromthisrequirement.Thisimpositionimmediatelyledtoadrasticdropinaviationservicesandpassengervolumes.Asaresultofthepandemic,nearlyeveryairtravelstoppedbetweenlate2019andearly2020.TheAsianregionwasnotanexceptionsincealmosteveryscheduledinternationalflightwassuspended(Park,Villafuerte&Abiad,2020).Moreover,manycountrieswithinthecontinentandacrosstheworldimplementeddomesticflightsbantocontainthevirusandlowerorcontainitsspread.Inthe2020annualreportissuesbyCathayPacific,thechairmanstatesthattheglobalpassengertrafficisnotexpectedtoreturntoaverageduringpre-Covid-19timesuntilsometimein2024.Thisisaccordingtotheestimationbythe“InternationalAirTransportAssociation(IATA)(Tisdall,Zhang&Zhang,2021).Theeconomicdownturnstartedwiththediminishingimpactofthetourismandthetravelsectorsglobally,andtheairlinesacrosstheworldtookabadhitbecauseofthis.Asstatedearlier,thepandemichashadtremendousimpactsontheglobaleconomy.Ideally,everyeconomicshockorblowtoonecountryquicklyspreadstoothercountriesduetolinkagesbroughtaboutbyglobalization.Accordingtoareportmadebythe“UnitedNationsConferenceonTradeandDevelopment(UNCTAD),theglobaleconomyestimatedlosswasabouttwotrillionUSdollars.Thisincludedthelossrecordedbytheaviationindustryduetothegroundedaircraftandtravelbansascountriessoughttocontainthespreadofthevirus(Tisdall,Zhang&Zhang,2021).Usually,airtravelisconsideredthesafestmeansoftravel.However,thepandemichasresultedinsomesubstantiallay-offsandsignificantcuts.Airlines’operationswerealsoaffectedlargely,whichledtotherecordingoflossesofuptobillionsofdollars.CathayPacificAirlineofHongKongisnotanexception.BackgroundoftheResearchTopicCathayPacificAirwaysofHongKongistheflagbearerofthecity,withitscentralhubandheadofficeinHongKong(Tsui,Yuen&Fung,2018).Itssubsidiariesandoperationshavecargoandpassengerservicesscheduledtoover190destinationsinover60countriesglobally.SomepassengerfleetsoperatedbyCathayPacificincludeBoeing777,AirbusA350,AirbusA330,andAirbusA321neo.Theairline’scargorunstwoBoeing747models.Theairlinewasestablishedin1946inHongKongandhascontinuouslyexpandeditsgrowthintheregion’saviationhubtowhatitcurrentlyis.AmongthemostsignificantconquestsoftheairlineistheacquisitionofDragonair,whichtookplacein2006,September28th.ThismeantthattheairlinewouldgainmoreaccesstothemainlandChinamarketandfurthergaveitmoreopportunitiestoshareresources.Theairline’sDragonairwasrebrandedin2016andbecameknownasCathayDragon(Malkanietal.,2005).However,thewakeoftheCovid-19pandemicnegativelyimpactedtheglobaleconomyandledtodrasticchangesandneardownfalloftheonce-giantairline.Thepandemicseemedtohavebroughttheairline’sgloriousdaystoanend.TheCOVID-19pandemichashadadevastatingeffectontheaviationindustry,resultingfromthetravelbanandtheglobaleconomicdownturningeneral.AsofOctober2020,themajorityoftheairlines’internationalflightsintheAsianregionremainedsuspended,withaconsiderableportionoftheregion’saircraftforpassengersstillgrounded.Asof2020,CathayPacificAirwaysofHongKonghadalreadyrecordedawhoopinglossofHK$21.6B,approximately2.8billionUSdollars.Theairline’schairmanin2020issuedastatementwherehemadeclaimsof2020beingthemoststressfulyearintheairline’shistory(morethan70yearsofoperations).Intheannual2020reportoftheairline,quarantinerequirementcoupledwiththetravelrestrictionsbroughtbythepandemicledtoanunprecedenteddisruptiongloballywithintheairindustry.Thegroupchairmanfurtherstatesthattheconsequenceshavebeendetrimental(CathayPacificAirwaysLimited,2020).Asidefromtheimpactsofthepandemic,theairline’soperationswerealsoparalyzedduetoseriesofprotests,suchasthe2019-2020HongKongprotests,inwhichCathayPacific’semployeesparticipated.Thisbroughtaboutthenegativepublicitythatfurthercontributedtothepandemic’sdetrimentalimpactsandaffectedthecompany’soperations.Thisledtoaverysharpdropinrevenueandprofits.Moreover,HongKongcityhasbeenaffectedbywhatmanycallthelargestprotestinthecity’shistory,aprotestinwhichovertwomillionpeopledemonstratedagainstthecriminalsuspects’proposedextraditiontomainlandChinain2019.Asof2020,HongKongwasstillgrippedbyapoliticalcrisisthatfurtheraffectedtheeconomyamidstthepandemic.Theseactivitiesbadlyaffectedthecity,addedtothealreadyfrustratingimpactsitwasfacingduetotheCovid-19pandemicturmoil.Thisledtoreduceddemandsandfewercustomersbecauseofthefearofpoliticalinstability,furtherparalyzingtheairline’soperationsandthecityingeneral.DuringtheCovid-19pandemic,theairlinewasforcedtoreduceitsinternationalflights.Generally,thisharmedtheindustryasawholeandthedemandforflights.Italsocausedairtravelbansglobally.AsofMarch2020,thegrouphadalreadyslashedabout96%offlightsforthreeconsecutivemonths:March,April,andMay.Moreover,theairline’sHongKongExpresshadsuspendeditsflightoperationsduetoreducedflightdemand.Thesituationwasterriblethatatsomepointduringthepandemic,theairlineonlyrecorded582passengersinanentireday.AsofDecember2020,theairlinehadissuedareportinwhichastatementwasmadesayingthatthegroupexpectedthelossesincurredinthesecondhalfoftheyeartobeevenhigherthanthoseincurredinthefirsthalfoftheyear.Thiswasaresultofitsfleets’impairment,restructuringcharges,andlowdemand.Thereportissuedbythegroupinearly2021showsthattheairlinerecordedanannuallossfor2020wasatotalof2.8billionUSdollars,mainlyduetotheCovid-19pandemicrestrictions.Atthistime,theairlinefurtherannouncedthatithadplansofcuttingabout8500jobstominimizeitsoperationalcosts(CathayPacificAirwaysLimited,2020).AimsandObjectivesoftheResearchProjectThisstudyaimstoestablishafullassessmentoftheimpactoftheCOVID-19pandemiconCathayPacificAirlineLimitedofHongKongtounderstandandestablishthefuturefortheairlineafterthepandemic’srampagingeffects.TheresearchprojectalsoseekstoestablishthefuturefortheairlineduetoChinatakingoverHongKongandtheimpactsofthepandemic.Finally,thisresearchprojectisintendedtolookintotheroleofHongKongasahubinaviationandhowthatisexpectedtochangeasaresultofthementionedvariables.Toachievetheresearchobjectives,thisresearchproposalhasbeendevelopedasananalysisoftheCathayPacificwithinwhichtheaspectsoftheeconomicimpactsoftheCovid-19pandemic,theeffectsofthesameonCathayPacificoperationsandtheairline’sfuturecanbeinvestigated,andtheHongKong’sroleasahubintheAsia-Pacificregionandwhatthatlookslikeinthefutureaftertheairlinetakessuchblowsasthepandemic’sdevastatingimpacts.ResearchQuestionsThreeresearchquestionsaddressingoraligningwiththeresearchobjectivesareasfollows;1.WhatwillthefutureofCathayPacificlooklikeaftertheCovid-19pandemic?2.WhatimpactwillChinatakingcontrolofHongKonghaveonCathayPacificAirline’sfuture?3.WillHongKongstrengthenandmaintainitsroleasanaviationhubintheregionaftertheimpactofthepandemicandChinatakingcontrol?Theresearchquestionswillbeaddressedintwoempiricalstudies,inwhichthefirsttworesearchquestionswillbeaddressedinonesection,andthethirdresearchquestionshallalsobeaddressedindependently.Inaddition,theresearchshallincludehowHongKongairporthasgrownfromthedaysofKaiTaktoitscurrentpositionatChepLapKokandhowtheyaredevelopingtheairportforthefutureandhowthisislikelytoimpactCathayPacificmovingforward.ThisresearchisnecessaryfortheHongKonggovernmenttoknowwhatthefutureofCathayPacificlookslikeandthecity’sroleasanaviationhubintheregionandconsidertheimplicationsoftheresultsofthisresearchproposal.LiteratureReviewThissectionoftheresearchpaperiscrucialtoevaluatesomeoftheexistingliteratureontheresearchquestionsalreadyoutlined.Thissegmentshallbeginbyreviewingtheimpactofthepandemicontheaviationindustry,whichCathayPacificispartof,andestablishwhytheeffectshavebeentherebyanalyzingotherliteratureonhowandwhythepandemichasimpactedtheaviationindustry.ThepapershallfurthernarrowthisdowntoCathaypacific.Secondly,thisreviewshallfocusonwhatvariouspiecesofliteraturesayregardingHongKongasaninternationalaviationhub,andshallalsoindicatetheimplicationfortheresearchobjectivewithregardstothecity’sroleinaviationandanypossiblegapintheliteraturethatcouldnecessitatemoreresearchregardingthesame.Also,thispapershallexaminetheliteratureonthedevelopmentofHKIAfromtheKaiTakdaystoChepLakKok.Theliteraturereviewaboutthemethodologyemployedintheresearchpapershallalsodeterminetheirefficiency.AccordingtoareportdonebytheInternationalAirTransportAssociation(IATA),theaviationindustrywasamongthesectorsthatreceivedthemostsignificanteconomicblowbytheCovid-19pandemicandresultedinaverysharpdropinrevenues,operations,andprofitability.Someairlines,suchasCathayPacific,recordedtheworstperformanceinits70-yearhistoryofoperations.Thisisaccordingtoareportissuedbytheairline’schairman.Asalreadystated,theaviationindustryreceivedperhapsthemostsubstantialblow.EstimatesbyIATAindicateanapproximatedropof44percentinpassengercapacityandhencerevenuesasofMarch2020.Thisresultedfromtheairlineindustrycollapsingmainlyduetothetravelbansimposedbycountriesworldwideasacontainmentmeasuretocurbthespreadofthedeadlyvirus.UpdatedanalysesbytheIATAfurtherindicateadropinrevenuesbybillions,upto314billiondollarsin2020alone.Thisrepresentsa55%declineinpassengerrevenuecomparedto2019(Park,Villafuerte&Abiad,2020).Theindustrycontinuedtobenegativelyaffectedbythepandemiceventhoughtheotherindustriesstartedreceivingrestrictioneaseupinthesecondhalfof2020.Themajorityofthegovernmentworldwidestartedeasingupthebanandrestrictionsonpeople’ssocialinteractions.Thissawhotels,restaurants,shops,andothersocialspacessuchasevents,libraries,andgyms.Thereopeningoftheeconomywas,however,scheduledtotakeplaceinphases.Theopeningoftheseeconomiessignificantlyimpactedtheeconomysinceitstimulatedincreaseddemandforservicesandproducts.Thisledtothediminishingofthenegativeimpactsashadbeenpredicted.This,however,didnothaveapositiveeffectontheaviationindustry,astheimpactoftheblowremainedunchanging.Thisisbecausetravelrestrictionswerenoteasedupimmediatelyastherestoftheeconomiesandwereeaseduplastaftertheindustryhadcontinuedwallowinginthenegativeimpactsofthepandemic.Evenaftereasinguptravelbans,thesituationdidnotgetanybetterimmediatelysincepeoplewerestillscaredoftakingflights.Thefearofflightsgrippedpeopleduetothespreadofthevirus,whichtakesplacealotfastinanenclosedenvironment(Tisdall,Zhang&Zhang,2021).AccordingtoPark,Villafuerte&Abiad(2020),thetwomainelementsthatactedasthedrivingforcetoreducedpassengerdemandandthepoorperformancerecordedbytheaviationindustry,ingeneral,aretwo;travelrestrictionsandoveralleconomicdevelopment.Travelrestrictionshadthemostsignificantimpactontravelingbyair,whichnegativelyaffectedairlinesworldwide.Travelrestrictionsfurtherdeepenedtherecessionimpactonthedemandforairtravel,withthemostsevereeffectseeninthesecondquarterof2020,betweenAprilandJune.AsofApril2020,thetotalnumberofflightsacrosstheworldhaddroppedby80percentcomparedto2019,withAprilalonerecordingasharpdropof90percent.Theauthoralsoindicatesthattheglobalaviationindustryrecoverydependedonwhetherthegovernmentsworldwidewouldeaseseveretravelrestrictions,whichwasthemainobstacletoincreasedpassengerandcargodemands.Thisdidhappenwhensevererestrictionswereremovedandallowedtheglobalairlineoperationstocontinue,eventhoughatarelativelyslowerrate.Thisismainlybecausethingshavenotentirelyresumednormalcy.Theupturnindemandstartedinthethirdquarterof2020.However,onlyasmallnumberofairlinesresumedoperations,withtheinternationalmarketsremainingsluggishsincecross-bordertravelrestrictionswerestillinplace.AssMalkanietal.(2005)putforth,theseconddriverforthelowpassengerdemandistheoveralleconomicdevelopment.Asmentionedearlier,theCovid-19pandemichaddevastatingimpactsontheglobaleconomysincethemajorityoftheinternationaleconomicactivitieswereparalyzed,withtherestrictionsandbansthatvariousgovernmentsimplementedtravelbansamongothermeasuresworldwide,tocontainthespreadofthevirus.AccordingtotheearlyanalysesdonetoprojecttheimpactofthepandemicontheglobalGDP,therewasacontractionofabout7percentinthefirstandsecondquartersof2020.Thisisapproximatelydoublethe2009contractionduringtheworld’sfinancialcrisis.Thepandemic’seconomicshockwasmoresevereinthesecondquarterof2020whentheworld’sGDPfellbyanother6percent.Overall,theglobalGDPshrunkbyatotalof2.8percentin2020.Consideringtheimpactofthepandemicontheglobaleconomy,itwasrighttoassumethatpassengerdemandwouldlikelyfall.Eventhoughgovernmentshaveopenedupmostaspectsoftheeconomies,passengerdemandhasnotregainednormalcy,andassuch,demandisstilllower.However,whenthisyear’sperformanceiscomparedwith2020,thingsappeartobelookinggoodfor2021.TherehavebeenspeculationsaboutthedurationandseverityoftheCovid-19pandemicmainlybecausemanyvariablesareconstantlychanging.Thismakestheperiodandtherigorremainsuncertain.Malkanietal.(2005)writethattwoscenariosarelikelytodeterminetheconsequentialoutcomesorthepossiblepathsoftheaviationindustryafterthepandemic.Thefirstscenarioconsidersthattheindustry’sapproachtorecoverydependsonvariousfactors,includingconsumers’confidence,generaleconomicconditions,andgovernmentsupportorassistance.However,themostcrucialfactoristhemagnitude,duration,andcontainmentmeasuresforthepandemic.Thesefactorscouldbringforthafasterrecoveryratefortheaviationindustryingeneral.Thedevelopmentofthetwoscenarios,namelytheV-shapedpathandtheU-shapedpath,wasnecessarytoexploretheshort-termimpactsofthepandemicandthepotentialimplicationfortheaviationindustry.TheV-shapedscenarioreferstothestandardrecessionshape,representingasharpdropandashortcontractionperiod,afterwhichthereisasmoothrecoveryindicatingpositivegrowth.Previously,variouspandemicshavehittheindustrybuthadaV-shapedimpact,withthingsregainingnormalcywithinsevenmonths.ThemostsignificantpandemictohavehadsignificantimpactsontheindustryistheSARSthatcausedan8percentreductioninannualpassengerrevenueanda6billiondollarslossinrevenueinthePacificorAsiaAirlines.Covid-19hasalreadysurpassedthesefiguresandcontinuestorampagetheeconomy.Bythelastquarterof2020,thepandemichadalreadycausedadeclineofabout48percentinpassengerrevenues,translatingtoabout314billiondollarslossesinrevenues.ThePacificortheAsianregionhadalreadylostabout113billiondollars,approximately19timesthelossesincurredwhenSARSbrokeoutintheregionin2003(Yeungetal.,2010).ThesecondscenarioistheU-shapedscenariowhichaccountsforaprolongedcontractionperiodonlywithamutedrecoveryandashort-termoutlook.TheV-shapedscenariowouldhaveindicatedrecoverybylateJune2020,andthecapacitywouldhavegonebacktonormalbySeptember2020.However,thisdidnothappen.Thatisaroundtheperiodwhentheeconomicblowwasmorepotentontheindustry.UnliketheV-shapedscenario,theU-shapedscenarioindicatesaslowrecoveryratewithlimiteddemandgrowth,whichappearstobethesituationwiththeCovid-19pandemic.Thisisbecauseittooklongertoopenuptheeconomy,andeverafteropening,theoperationsarestillrelativelylower,onlyshowingasteadygrowthrate.NarrowingdowntoCathayPacificAirline,theimpactwasmoreorlessthesameasthatofthegeneralglobalindustry.Theairline’soperationsandperformancereduceddrastically,especiallyin2020,whenthecompanyfacedtheworsttimeinitshistory.Reducedcargoandpassengerrevenuesresultedfromthedecreaseddemandduetothepandemicandtravelrestrictionsandbans.Constantprotestsbyciviliansagainstthegovernmenthavefurthermadethesituationworse,buycreatingfear.MainlyaffectedwerethetravelersfrommainlandChina.TheairlineismostlikelytosuccumbtotheU-shapedscenario,prolongingthepandemic’simpactsfollowedbyasteadygrowthrate.Whileitmightbechallengingtoprojecttheairline’sfuture,thetrendhastakenadifferentturnwiththepandemic,mainlybecauseoftheprojecteddecreaseintheimpactofthepandemicontheglobaleconomy.Variousattemptsarebeingmadetodevelopavaccinethatcouldpotentiallymarktheendofthepandemicshouldtherenotbeanothervirusvariant.Ifthishappens,thentheremightbethehopeofreturningtocompletenormalcyafterthepandemicisover.However,theresultsobtainedbythisresearchpapershallprovideabetteranalysisofthesituationtobetterunderstandthefutureforCathayPacificandHongKongasanaviationhub.Furthermore,HongKongasaninternationalaviationhubhasbecomethecriticalaviationhubforcargoandpassengercapacitiesintheAsia-Pacificregionandthewholeworld.TheprimaryessentialdriversofestablishingHongKong’sroleasanaviationhubhavebeengoodairporttransportqualitiesbecauseofitsinfrastructureandtheliberalizedairtransportationpolicy.AnotherkeydriverhasbeenanexcellentstrategiclocationthathasideallyservedtheAsia-Pacificregion,theChineseMainland,andotherregions.Additionally,HongKonghasbeendevelopedasaninternationalaviationhubpartlybecauseofitsopennesspolicy.Thepolicyallowsthecitytobeopentoitsforeigncompetitioncomparedtotheotherairports.Thishasgiventhecitytheupperhand,forcingtheairportauthoritytoimprovetheairportservicesandinfrastructure.Thishasimprovedthebenefitsthattheaviationhubprovidestoairlinesinoperationandtoairpassengers.Thishashelpedbuildtrustbetweentheaviationhubandtheairpassengersandhasincreasedbothcargoandairpassengers(Tsui,Yuen&Fung,2018).Intheprecedingfewyears,theairportoperationsofHongKongandotherissuesrelatedtotheseaffairshavebeensubjecttoresearch.Forexample,threestudiesinvestigatedairpassengers’servicequalityandstandardsbytheHongKongInternationalAirport(HKIA)(Yeungetal.,2010).Thestudiesallhadthesameconclusion;thatHongKongoffershigh-qualityservices.Therefore,thecityhadcontinuouslysecuredandattractedpotentialandexistingairpassengerswhouseHongKongtotheirdestinationsworldwide.HongKong’stouristarrivaldemandhasalsobeenunderinvestigationanditspossibleimplicationonHongKong’saviationindustryandgeneraleconomicgrowth.Commontothestudiesconducted,tourismwasestablishedasanotheressentialfactorcontributingtothecity’sdevelopmentandisprimarilyfacilitatedbyairtravel,whereHongKong’saviationhubcomesin.Thetwo,tourismandaviation,playtheirrolesinterchangeablyandalsoaffecteachotherinterdependently.Thismeansthattourismfacilitatesthegrowthoftheaviationindustry,andtheaviationindustryalsofacilitatestourismbyprovidinganeasieraccessroute.TheseactivitiescombinedplayanessentialroleintheeconomicdevelopmentofHongKongandtheAsia-Pacificregioningeneral.ThereisalsoexistingliteratureinvestigatingHongKong’saviationindustry’saircargoindustry,particularlytheinternationalaircargohubofHKIA.Thisliteraturehadauniformconclusion,maintainingHongKongastheregion’sleadingglobalaircargohub.ThisindicatesthatHongKong’saviationhubcanhandleaircargowithextensivecargonetworksandproperlydesignedfacilities.ThisisfurtherattributedtoChina’smassivehinterlandanditsfast-growingeconomy,coupledwiththeexcellentstrategicpositioningthatallowsitaccessfrommainlandChinaandtheAsia-PacificregionandtheliberalizedHongKongairtransportpolicy.Moreover,HongKonghas,forthelongesttime,beenconsideredtheleadingairtransporthubintheregion.Chapman&Georgoulias(2010)agreethatHongKonghadplayedasignificantroleinairtransport,keepingitsedgeasthemostcriticalairtransporthubinAsiaforlogisticcompaniessuchastherenownedDHLandotherlogisticfirmsagainstitsstrongestcompetitorintheGreaterBayArea.CompaniessuchasDHLExpresshavealwayspreferredHongKongmainlybecauseofitshighestnumberofscheduledflightsglobally.Moreover,thehigherflightfrequenciesandfastercustomsclearancehavefurtherhelpedHongKongcityretainitsroleandpositionwithinitsaviationhub.Efficiency,reliability,andspeedareamongthecriticalconsiderationsforassessingperformance,mainlyusedbylogisticcompanies.HongKong’sexportsandimportsaretransportedbyairsincetheyaretime-sensitive.Asaresult,aserviceknownastheExpressdeliveryservicewasdevelopedtoprovidevalue-added,personaldelivery.Itensuresthatthedeliveryofgoods,services,merchandise,andotherparcelsisdonerightandontime.Hence,reliableandfastdeliveryisanessentialcomponentofaflexibleserviceeconomylikeHongKong’s.ThishashelpedtolandHongKongpartnershipdealswithlogisticcompaniessuchasthosementionedabove.Thishashelpedtoincreasetherevenue.DuetotheeconomicactivitiesofHongKong’saviationhub,thecityplaysasignificantroleinthegrossdomesticproduct(GDP)ofHongKong,China,andtheAsia-Pacificregionoverall(Chapman&Georgoulias,2010).However,variousfactorssuchascompetitionfromotheraviationhubswithintheAsiaPacificregionhavebeenidentifiedbynumerousresearchasthefactorsthatcouldpotentiallyundermineHongKong’sroleasanaviationhub(Kan,2012).Therehasbeenminimaltonoresearchregardinganydiseaseoutbreaksthatcouldunderminethecity’saviationhub.Thisindicatesagapinresearchthatshouldbetakenintoconsideration.Thisgapimpliesthatthetownwasnotreadilypreparedtodealwithandsailthroughahealthpandemicsuchaswhattheworldiscurrentlybattlingagainst.Covid-19struckinthelastquarterof2019,andtheimpactsofitseconomicblowarestillvisible,particularlyintheaviationindustry.Thefinancialgustshitsostrongthattheglobaleconomyisstillinshambles,tryingtoregainwhatoncewas.Thelackofresearchonthepotentialoutbreaksthatcouldhaveacripplingimpactontheaviationindustryworsenedthesituation.Hadtherebeenresearchonthetopic,thentherecouldhavebeenmeasuresalreadyputinplaceandimplementedduringtheonsetofthepandemic,mainlybecausethepandemic’soutbreakanddurationwereunpredictable.Thiscouldhavehelpedavertsomeofthedireconsequencesespeciallyconcerningthelossofbillionsofrevenues.Furthermore,thedevelopmentofHKIAtowhatitistodayhastakenplaceoverdecades,fromtheoldKaiTakAirportofHongKongtothecurrentChepLapKok.Themaingoalofthisconstructionwastomeettheexpectedgrowthintheairtrafficcapacity.Overthepastfewdecades,HKIAhasrecordedasteadygrowthrateintheairtrafficcapacitytoitsgloriousdaysbeforethewakeofCovid-19.However,reportsindicatethatthisshallnotstopthedevelopmentofHKIA.Aplanistodevelopathirdrunwaytoaccommodateanyprojectedairporttrafficpostthepandemicto2030andbeyond.ThishasbeendonewiththemainaimofsecuringandmaintainingHongKong’sstatusasthemostsignificantaviationhubintheentireAsia-Pacificregion.ThiswillalsoprovideasubstantialboosttotheeconomicdevelopmentofHongKongandtheregioningeneral.Ontheresearchmethodologyselectedforthisresearchproject,thequantitativemethodwaschosenbecauseoftheexistingevidenceonitssignificance.Thecentralimportanceofquantitativeresearchisthatithelpstoproduceobjectivedatathatcanbeanalyzedandcommunicatedthroughnumbersandstatistics.Itisalsodonesystematicallyinawaythatcannotbeeasilyreplicated.Mostimportantisthatithelpscommunicatedata,enhancesaclearunderstandingofworldevents,andhelpsattainmoreexcellentknowledge.Thedataobtainedcanbefurtherrepresentedgraphicallyforaccessiblecommunicationandinterpretation(Kan,2012).ResearchMethodologyThemethodologyemployedforthisresearchprojectwasquantitativeresearchthatallowedfordataproductionthatcouldbeanalyzedandcommunicatedeasily.Additionalinformationontheresearchprojectwasobtainedassecondarydata.Quantitativemethodsofanalysiswereselectedduetotheircharacteristicsthatallowaresearchertoconcentratemoreonacollectionofquantifiabledata.Furthermore,statisticalmethodswereappliedtogenerateandrepresentresearchdatainnumericalformforeasycommunicationandanalysis.Tofacilitateaneasierunderstandingoftheresearchdatabyanindividualinterestedinthisresearch,researchdatashallbedisplayedinagraphtoprovideanexcellentvisualandclearunderstandingandinterpretationofthedatacollected.ThedatawasobtainedontheperformanceofCathayPacificintermsofpassengerandcargocapacitiesandrevenuesbeforeandduringthepandemictogenerateacomparisonthatwouldfacilitatetheunderstandingoftheeconomicimpactthepandemichashadontheairline.Theresearchdatashouldalsohelpprojecttheairline’sfutureafterthepandemicisoverandothervariablessuchasChinatakingcontrolofHongKong.Hence,thedatacollectedhelpedconductaproperanalysisoftheprospectsoftheairline’sperformance(Tisdall,Zhang&Zhang,2021).Forthisresearch,datawerecollectedintwophases.Thefirstphasedinvolvedcollectingdataontheairline’sperformancebeforethepandemicstruckupuntilthelastquarterof2020.Thedatacollectedonthesamewascompared,andinferencesweredrawnthatledtologicalconclusions.Thedatawascollectedtoincludehedgingcost,cargocapacity,passengercapacity,andtheoveralloperationsoftheairline.Datainvolvingtheairline’splansofcuttingoffemployeestoreduceitsoperationalcostswerealsocollectedandincludesthetotalnumberofcutoffsmadebythecompany.Thedataobtainedwerethenusedtocompileacomprehensiveanalysisoftheairline’scurrentstatusandprojectitsfuturebasedonitsexistingmeasures,trends,andstrategies.Thesecondphaseofthecollectionofdatawassecondarydatacollection.Inthisphase,informationwasobtainedfromdifferentsources,includingvariousarticlesandotherpublicationsontheresearchtopic,coupledwithinputfromtheairline’swebsiteandtheannualreportsissuedbytheairline.Thiswasnecessarytoproviderelevant,credible,andreliableinformationsothatanyoneinterestedinthisresearchisnotmisledinanyway.Informationwasaboutvariousissuesofinterestforthestudy,suchasHongKong’sroleintheaviationhubanditsfutureconsideringthecurrentsituationandChinatakingoverHongKong.Theissueofprotestsanddemonstrationsisdiscussedindetailinthefollowingsections.Theinformationobtainedalsounderwentasystematicanalysissimilartothedataobtainedinthefirstphaseoftheresearch,andinferencesweredrawntomakelogicalconclusions.Secondarydatawasfoundtobecrucialforbothphasesofdatacollection.Theairline’sannualreportswerefoundtobeveryvitalforprovidingresearchdataforthetwophases.However,alimitationisthattherewasaninabilitytoobtainverysensitiveinformationduetoalackofaccess.FindingsTheresearchfindingsanddataarerepresentedinthefollowingcharts.TheabovearerepresentationsofCathayPacific’sperformanceintermsofsharesandprofitsbeforethepandemicandduringthepandemic.Itcanbeseenclearlythattheairlinehasrecordedmassivelossessincethepandemicstruck.AnalysisofFindingsTheresultsofthisresearcharelaidoutindifferentportions,withthefirstportiontalkingaboutthepandemic’simpactonCathayAirlines.ThereportissuedbyCathayPacificcontainsastatementmadebythegroup’schairman,statingthattheirpassengerrevenuesdrasticallyreducedin2020,resultingfromthelowdemand.Also,thecompany’soperatingcapacityremainsbelow10percentforthemoresignificantpartof2020.Despitethisstruggle,itoccasionallyhadaslightlyhigherdemandpercentage,particularlyduringthesummerperiods.StudentstraveledtotheUnitedKingdomandotherEuropeanareasfromChina’sMainlandandHongKong.Nonetheless,thesummerperiod,usuallywhentheairlineisatthepeakofitsoperationsannually,remainedanextremelychallengingyearin2020.Evenmoredisturbingisthattheairline’spassengersrecordedasteepdecreaseof83percentin2020from2019,whiletherevenuepassengerkilometerreduced85.1percent.Theairline’sassociatesandsubsidiarieswerenotspared,andbothrecordedmassivelosses,uptobillionsofdollars.Forinstance,HKExpresshada1723millionHongKongdollarlossin2020alonewiththetravelcontractions.Overall,Cathay’ssubsidiariesrecordedaperformanceworsethanthatof2019duetothereducedpassengercapacitycoupledwithdecreasedcargotraffic.Thecargobusinesswasalsoaffectedterribly;itrecordedaslightlybetterperformancein2020thanin2019.Itdidbetterconsideringtheimpactofasignificantreductionincapacityprovidedbypassengersyearlybeforethepandemicstruck.Thisslightincreaseresultedfromtheairline’sstrategyofcontractingservicesfromAirHongKong,anall-all-cargosubsidiaryoftheairline,ofcarryingselectedcargowithinthepassengercompartmentsofparticularaircraft.SomeseatsweremovedintheeconomyclasscompartmentstocreatemorecargoinfourBoeing777-300ERs.Theairlinealsoputinplacevariousmeasuresthatwouldhelpitnottocompletelycollapsebecauseofthepandemic,suchasreducingcapacityandfreezinghiringwhiledeferringcapitalexpenditureandsuspendinganycostthatwasconsiderednotcriticalfortheairline’soperations(CathayPacificAirwaysLimited,2020).Moreofthestrategiesthatmightfurtherhelpthecompanyregaincontrolofitsoperationsandensureitstaysinbusinessinyearstocomedespitetheblowbythepandemicarediscussedindetaillaterinthissectionoftheresearch.Projectingtheairline’sfuturemightstillhaveafutureofoperationalgloryduetotheairline’srecapitalizationandgovernmentbail-out.Themaingoaloftheairline’sbail-outbythegovernmentwastoprotecttheairlinethatwasonceagiantintheaviationhubandfurtherprotecttherolethatHongKongplaysasanaviationhub.Thiswould,inturn,ensurethesurvivalofHongKong’seconomicfuture.Thisisastatementthatthefinancechiefissued.Theairline’spossiblecollapsewouldbedetrimentaltotheCity’saviationsectorsincetheairlinecontrolsoverhalfofthetotalpassengertraffic,coupledwiththefactthatitcarriesasignificantportionofthecargointheregion’sfinancialhub.Theairline’sbail-outcameaftertheCity’sofficialssawtheairline’spossiblecollapse,whichwouldfundamentallybeaconsiderablethreattoHongKong’saviationsector.ThegovernmentdecidedtocometoCathay’srescueaftertheblowsittookfromthepandemiccoupledwiththeprotestsfromlate2019thatfurtherexacerbatedtheimpactsofthepandemicontheindustry.InJune2020,AirChina,SwirePacific,andCathayPacificstoppedtheirstocktradependingtheannouncementregardingtherecapitalizationandbail-out.TheannouncementwasmadejointlybetweenCathayPacificandtheHongKonggovernmentregardingarecapitalizationplanof39billionHongKongdollarsonJune10th,2020.TherescuepackageincludedHK$19.5dividendshareswiththepayingpreferenceissuedtotheHongKonggovernmentandanadditional1.95billionHongKongdollarsofwarrants.Thisgavethegovernmentasixpercentstakeintheairline.Theairlinealsoreceivedanextra7.8billionHongKongdollarsasabridgingloan.However,astatementissuedbytheHKSARgovernmentfinancesecretarysaidthatthegovernmentdidnotintendtobecomealong-termshareholderoftheairline.ThisprovesthatHongKong’sgovernment’sprimaryinterestwasinhelpingtheairlinecomebacktoitsfeetbyofferingitfinancialsupporttobridgefurtherthegapcreatedbytheairline’slossesduetotheparalyzingimpactsthatthepandemichadbrought.ThishashelpedtheairlinesailthroughthechallengingtimesithasfacedsincethepandemicasitcontinuestorecoverthelossesitincurredanditsinitialpositionintheAsianaviationhub(CathayPacificAirwaysLimited,2020).However,thepandemiccontinuestorampagetheeconomy,eventhoughtheresultsareincomparabletothoseoflate2019andthefirstquarterof2020.Thismeansthattherecoverypacefortheairlineisstillindeterminate.Nonetheless,theairlineisoptimisticaboutrecordingsometremendouspositiveimprovementsintermsofoperationsandprofitmarginsbytheendofthisyear.Domesticmarketscontinuetoreopenafterdiscoveringthevaccinethatslightlyrelievedtheworldfromtherampagesofthepandemic.Thishasbroughtaboutthereopeningofmanydomesticroutes;eventhepassengertrafficstillliesbehindpre-pandemiclevels.Despitethis,theairlineismostlikelytorecoverlossesincurredentirely,butonlyafterthepandemic.Toachievethis,theairlinehasdevisedseveralstrategicmeasurestocutitsoperationalcostsandachievelosseslowerthanthoseof2020.Todate,theairlinethatwasonceagiantintheregionisstillinsurvivalmode,tryingtoregainthelossesincurredbetween2019and2020,whichwerethemostcriticalyearsfortheairline.Asstatedabove,thecompanyhasmadeseveralattemptstocopewiththeimpactsofthepandemic,suchasvaccinationforthestaffmembersandcost-saving,someofitstoppriorities.AsofMay2021,thecompanycutabout5900jobsandcloseditsregionaldragonbrandtocutcostsandincreaseitscargoflights.Thisisamovethatnearlyeveryairlineintheindustryimplementedtocuttheiroperationalcostsandmaximizeprofits.Thisisbecauseeventhoughtheimpactsofthepandemicareslowlyreducingandtheglobaleconomyistryingtogetbacktonormaloperationsagain,theairlinesarestillsufferingfromtheeconomicdownturnbroughtbythepandemic.Tosavecostandmaximizeprofits,theairlinewillchangecontractswithitscabincrewsandthepilotsandcutjobsandthedragonbrand.Also,thecompanyhadmadeplanstocutabout8500positions,inclusiveofthe5900jobsandadditional2600positionsthatwereunoccupiedasof2021.Thisstrategywasexpectedtosavethecompanyapproximately2.2billionHongKongdollars.Toimplementthis,theairlinebeganitsjobcutsinApril2021byclosingitsCanadaPilotbase.TheairlinestartedconsultingwithitspilotsonitsNewZealandandAustralianpilotbasesonthesameday.Thisconsultationwasaboutthebaseclosureofthementionedjurisdictions.TheairlinepilotswhohadtherighttoworkandliveinHongKongwereofferedcontinuedemployment,whilethosewhodidnothavethesaidrightfacedredundancy.ThecompanyannouncedareviewofitsUSAandEuropebaseswithinthesamedaylaterin2021.Anothercost-savingstrategytakenupbytheairlineinvolvedtheclosureofitsFrankfurtPilotbase,whichtookplaceonMay12th,2021.ThistookplaceunderthesameconditionasthatofCanada,whereonlythepilotswiththerighttoworkingandlivinginHongKongcontinuedbeingonthecompany’spayrollwhiletherestfacedredundancy(CathayPacificAirwaysLimited,2020).Also,duetothecripplingimpactoftheCovid-19pandemic,CathayPacificwasforcedtoshutdowntheoperationsofCathayDragon,initiallyknownastheDragonair.ThistookplaceinOctober2020.TheDragon’soperationswereshutdownandmergedwiththeparentairlineduetosevereeconomicproblemsandasharpdecreaseincustomersorpassengers,clearlyimpactingthepandemic.Thiswouldmarktheendofthe35yearsofoperationforthesubsidiary.CathayDragonhadinitiallybeeninchargeofoperatingmostoftheairline’sflightstoandfromChina.However,thepandemicalonedidnotcontributetotheshuttingofDragonair’soperations.Thisisbecauseitwasalreadyfacingchallengingtimesevenbeforethepandemichit.Itsoperationshadalreadybeenaffected,anditwasalreadyfacingreduceddemandsresultingfromtheprotestsbytheciviliansagainsttheHongKonggovernment.Thissignificantlyreducedthenumberofmainlandtravelersduetofearcreatedbythepoliticalunrestatthetime.Accordingtotheairline’schiefexecutiveofficer,restructuringbecameafundamentalprinciplethattheairlinehadtoimplementtoensureitssurvivalasthepandemiccontinuesdevastatingtheeconomy.Thesestrategiesimplementedbytheairlineseemedtohaveworkedinachievingtheairline’sobjectiveofcuttingcosts.InJune2021,theairlineissuedareportthatsaidthatthecompany’slosseswithinthefirsthalfof2021wereexpectedtobelowerthanthatrecordedbythefirsthalfof2020.Thisresultedfromthecost-savingstrategies,coupledwithanincreasingdemandforcargoflightsin2021.Shouldsuchtrendscontinueincreasing,thentheairlinewillmostlikelyregainitsoperationsandprofitabilityasitoncedidbeforetheCovid-19pandemicstrucktheeconomy(CathayPacificAirwaysLimited,2020).Consequently,thingsarelookinggoodforCathayPacific,withthestrategiesitisputtinginplacetoimproveitsperformanceandthegovernmentprovidingitwithaboost.ThisonlyshowsthatCathayPacificisstillnotdonebutshowsclearindicationsofrisingsteadilytoitsformergloriousdays.Itwillundoubtedlytakeafewyearsduetothesteadygrowth(asaresultoftheU-shapedscenario),butthereareclearindicationsthatsometimeafter2024,theairlineshouldbounceback.ChinaTakingcontrolofHongKongandtheImpactontheFutureofCathayPacific.ChinatakingcontroloverHongKonghashadsubstantialimpactsontheCity’saviationhub,mainlyaffectingCathayPacific.WiththeconsequencesalreadysufferedbytheairlineoriginatingfromtheCovid-19blow,anotherchallengethatcanmakeitlosebillionsdoesnotshowagoodpicturefortheairline’sfuture.Asof2020,theairlinehadreceivedprotestsagainstChina’spositionintakingcontrolofthehub.Thisfurtherparalyzedtheairline’soperations,exacerbatingthelossesalreadyseenduetothepandemic.AreportthatCathayPacificissuedrevealsthattheimmigrationcountershadtobeclosed,andtheairlinefurtherhadtosuspenditsinternationalflights.TheairlinewasforcedtogiveintothethreatscomingfromtheChineseMainland(CathayPacificAirwaysLimited,2020).Accordingtoareportissuedbytheairline’schairman,thecompanyhadbeenmandatedtofollowtheCivilAviationAuthorityofChina(CAAC).ThereportfurtherstatedthattheCAAChasjurisdictionovertheairline.Thecompany,therefore,isobligatedtofollowingtherequirementsofthisbody.Thismeansthattheairline’semployeesarealsoundertheobligationtofollowtheguidelinesandconditionsoftheCAAC.Sucharetheissuesthatledtostrikesinwhichsomeairlinestaffwererelievedoftheirdutiesandevensawtotheresignationoftwoseniorofficialsoftheairline.Asaresultoftheprotests,China’saviationregulator,theCAAC,orderedCathayPacifictosuspendanystaffmemberwhoparticipatedinthedemonstrationtosupportdemocracyintheterritory.ThedemandmadebyBeijingalignedwithapeacefulprotestattheairportinHongKonginwhichthousandsofpeopleoccupiedtheairport’sterminal.ThesituationofChinatakingcontrolfurthercausedCathayPacificpressure.Thisoccurredafterthestate-runpressofChinafuelledmoreprotestswithhashtagssuchas“#BoycottCathayPacific,”whichtrendedoneveryChinessocialmediaplatform.AsofAugust2019,HongKonghadhadseveralweeksofprotestsagainstChinatakingcontroloftheterritory.HongKongmightbepartofChina,butHongKongcitizensaremoreautonomousthantheotherChinesecitizensontheMainland.Morejudicialindependenceandafreepressareavailable,andactivistshadfeltsthatsuchfreedomswerebeingincreasinglyeroded.ThepressureonCathaybyChinawasalsofuelledbecausesomeoftheairline’semployeeswerepartoftheprotests.Suchpublicnegativitieshadabadinfluenceontheairline’sreputationbeforetheimpactsofthepandemicstartedbeingfelt.SuchnegativitieswouldnotbehealthyforCathay’sfuture,andasolutionwasthereforenecessary.Itwouldbedetrimentaltotheairline’soperationsandwouldcosttheairlinesmillionsoflosses.Itisessentialtodevelopvariouswaystoavoidsuchoccurrences,eveniftheairline’sfutureshouldrecordapositiveperformance.TheRoleofHongKong:TheAviationHubanditsFutureHongKongplaysacrucialroleasahigh-endinternationalaviationhub.HongKong’scomprehensiveglobalairnetworkfacilitatestheflowofbothcargoesandpassengersthroughHongKong.TheCityisalsoanimportanthubsinceitunderpinsthedevelopmentofalargevarietyandcategoriesofeconomicactivities,particularlylogisticsandtrading,tourism,andfinancialservices,amongothers.Forinstance,in2012alone,HongKongInternationalAirport’s(HKIA)economiccontribution,encompassinginduced,indirect,anddirectcontributions,summeduptoatotalof94billiondollars(Tsui,Yuen&Fung,2018).Thisrepresentsabout4.6%ofthetotalgrossdomesticproduct(GDP)ofHongKong.BeforethewakeoftheCovid-19pandemic,HKIAwasasourceofemploymentforabout78000people,whoreliedonitastheirprimarysourceoflivelihoodandcontributedtotheCity’seconomicgrowthandChinaasawhole.Thepandemichascausedmanyeconomicdisruptions,andasstatedearlier,theaviationindustrywasamongtheworst-hiteconomies.UnliketheChineseMainlandandtheUnitedStates,HongKongislimitedbyitsphysicalarea(Chapman&Georgoulias,2010).Thismeansthatitlacksasizeabledomesticmarketwithintheindustrytohelpitcarrytheburdenoflossesincurred,unliketheUSandtheChineseMainland.ThesignificantreductioninflightsandthelargenumbersoffleetsparkedtheHKIAresultedinsubstantiallossesthatHongKongborealone.Addedtotheimpactofthepandemic,thesocialunrestinHongKonginthesecondquarterof2019haslefttheentireaviationindustrycripplingwiththeeffectsofthesame.Asaresult,theHKIAhasfacedchallengesthatmanysignificantairportsworldwidedidnotface.AreportissuedbytheAirportAuthorityindicatesthattheairtrafficmovementsandthepassengershandledinthe2019-2020fiscalyearwere377,420and60.9million,respectively.ThisrecordforcedHKIAoutofthelistcalled“Top10passengersairportsintheworld”.AnotherbadeconomichitonHongKongistheinternationaltradedisputeswhichresultedinfreightvolumesfallingby7.3%toafinalfigureof4.7milliontons.AnotherfactorthathasaffectedHongKong’sstatusisthedrasticreductioninthenumberoftouristsduetotravelrestrictionsandareducednumberofairpassengerswhowoulduseHongKongtogettotheirdestinations.AsprobablythemostimportantHongKong’sairline,andthemostsignificantdriverofaviationdevelopmentinHongKong,CathayPacificisfacingsomeunprecedentedfiscalandoperationalpressure.ThegovernmentsawtheneedtoaddressthischallengesinceitcouldharmHongKong’saviationhubandsubsequentlyharmthecity’seconomicactivities.ThiswouldbedetrimentaltoHongKong’sgeneralinterests.Therefore,governmentsworldwidehavetriedtosupporttheirsignificantairlines,andHongKongwasnotleftbehind.AnannouncementwasmadeonJuly9thregardinginvestmentintoCathayPacifictoupholdHongKong’sstatusandroleasanaviationhubwhilegeneratingincomeforthegovernmentatthesametime.Thisbroughtasurgeofhopeandreliefforthecompany.Accordingtothefinancialsecretary,CathayPacificplaysasignificantroleinHongKong’saviationhubrole.Asaresult,thedecisiontoinvestinthegroupwasprudenttohelpthegroupovercomethechallengesresultingfromthepandemic.ThiswouldensureacontinuedcontributiontoHongKong’sroleandoveralleconomicdevelopment.ThisisamovemadetoensurethattheroleplayedbyHongKongasaninternationalaviationhubdoesnotwitherawaybuttoensurethattheCitycontinuesthrivingeveninyearstocomedespitethechallengesitcurrentlyfaces.ThefinancesecretaryfurtheraddedthattheaviationindustryiscriticaltotheCity’seconomicdevelopmentandtheregion.Theinvestmentwould,therefore,signifythegovernment’sdeterminationtoupholdHongKong’sstatus.Inlightoftheseevents,onecandeducethatHongKongasanaviationhubstillhasafuture,afterall,consideringthattheaviationindustryhadstartedbouncingbacktothedayswhenoperationsweresignificantbeforethepandemic.Theperformancerecordedfor2021alreadyindicatesprofitabilityfromlastyear.This,coupledwiththegovernment’ssupport,meanstherevivalofHongKong’saviationhubandtheeconomyingeneral.Moreover,aplanistodevelopathirdrunwaytoaccommodateanyprojectedairporttrafficpostthepandemicto2030andevenbeyond.ThishasbeendonewiththemainaimofsecuringandmaintainingHongKong’sstatusasthemostsignificantaviationhubintheentireAsia-Pacificregion.ThiswillalsoprovideasubstantialboosttotheeconomicdevelopmentofHongKongandtheregioningeneral.HowHongKongAirporthasgrownfromtheDaysofKaiTaktoChepLapKokandhowthisisdevelopingtheAirportfortheFutureThe1900shadseenmanypoliticaldisagreements,mainlybecauseofthepowertocontrolHongKong.Followingthesedisagreements,adeclarationwasmadein1984,whichestablishedHongKongtobeaspecialadministrativeregionandwasultimatelycontrolledmainlybyBeijingfrom1997.ThisbroughttensiontotheBritishandtheChinese(Chapman&Georgoulias,2010).TheBritishwantedtomaintaincompleteaccesstotheempire,andChinadesiredtostrengthenitscontroloverHongKong.Undersuchcircumstances,in1989,thethenBritishgovernoralreadystartedpromotingtheconstructionofanewairporttopromoteinternationalconfidenceinthetransitionofHongKong.TheChineseinsistedthattheyaregivenapprovalrightsonthefinancingfortheHKIA.ThisresultedfromtheirfearthattheBritishwouldmainlyusetheairporttobeconstructedtodrawtheireconomy’sfinances.Becauseofthecity’shistoricalplace,HongKongwasestablishedasperhapsthemostsignificantcityinthesouthernpartofChina.Variousstudiesinthe1940santicipatedanewsitefortheexistingKaiTak,andproposalswerelatercommissionedfromtheBritishengineersbythegovernmentofHongKong,ultimatelyoptingfortheextensionofthesinglerunway.By1973,theHongKonggovernmenthadalreadychosenChepLapKokasadesirablereplacementsite,butthelackoffinancesdidnotseethishappeninginthe1970s.Towardsthe1980s,itwasalreadyclearthatHongKongwouldrelapsetotheChinese;hence,airportrelocationbecameapivotaltransitionpiece.TheairtrafficcoupledwiththedemographictrendssignaledHongKong’seconomicimpactintheregion.Forinstance,by1995,HongKongtookchargeofhandlingthree-quartersofthetotalproductsconveyedfromtheChineseMainland.Asthecitywasincreasinglybecomingamongthemostdenselypopulatedcitiesworldwide,thousandsofhomeswereputinthepathsofcommercialaircraftduetotheresidentialconstruction.Thiswasinconvenientanddangerousandhelpedtofacilitatethemovetoanewsite.Despitethepoliticaldisagreementsandthedivisions,policymakerswhohadthecriticalinfluenceandwereinchargeoftheprojectputtheirdifferencesasideandagreedontheextentoftheseriousnessofthesituation,whichrequiredchange.ThemainfactorthatservedasadrivingforcefortheteaminchargewasthesuccessfultransitiontoHongKong.ManypeopledescribedthisnewprojectasHongKong’sjewel,abeautytobehold,andamassiveundertaking.Accordingtotheairport’sofficials,thereclamationoftheChepLapKokwouldbeamongthemostsignificantprojectsevertobeundertaken.Itwouldincludetheairportitself,bridgesandtunnelsconnectingKowloonandtheIsland,additionalfreightandcargoterminals,andarailconnection.InJuly1998,CathayPacific’sflight887landedatthenewlyconstructedChepLapKok.Everypartyinvolvedtookasighofreliefsincethefinancialengineering,politicalstruggle,andhardworkofeveryoneinvolvedhadfinallypaidoff.TeammemberswereproudthattheHongKongInternationalAirport’ssuccesslaybehindtheproject’sinnovationasanupcomingairportdevelopmentmodel.ThesuccessoftheprojectalsolayprimarilyinitsroleinHongKong’spoliticaltransition.OneofthemajorsuccessplayersforthenewairportwasagentlemancalledJohnKaskarda.Thisgreatvisionaryplayedasignificantroleintheairport’sdevelopment,inwhatwouldalsoshapeitsfuture.Accordingtohim,accessibilitywouldbethecriticalcomponentoflocation,anideathatallowedtheairporttodevelopfinanciallyandbecomeaneconomicallyindispensableprojecttothewholeregion.By2000,theairporthadgrowntoaccommodate45millionpeoplecomparedtothe35millionitcouldhandlewhenitwasnewlyconstructed.The“2040HKIAMasterPlan”compiledbytheairportauthorityplacedtheannualpassengerdemandtobeapproximately87million(Chapman&Georgoulias,2010).TheChepLapKokairporthas,overtheyears,broughtalotofdevelopmentstotheairportandHongKong’seconomicgrowth.Ideally,ithasplayedasignificantroleinHongKong,maintainingitspositionasaninternationalaviationhubandCathayPacific’sdevelopment.Forinstance,beforethepandemichit,commercialcargohadrecordedanannualgrowthfrom1.6millionwhentheairportwasofficiallylaunchedto2.4milliontonseveryyear.ThisgrowthhasovertheyearsforcethegovernmentofHongKongtomaximizeeconomicbenefitsandconsidertheairport’sprojects.Duetotheairport’sexpansionovertheyears,revenuecreationalsotookinventiveforms.Theairportauthorityestablishedasubsidiary,theAVSECO,tochargeeverycomplexsecurityservice.AlogisticscenterwasalsoestablishedasaresultofthepartnershipwithDHL.By2004,theprojecthaswonseveralinternationalawards,suchastheSilverMedal,amongothersignificantawards.Thetremendousgrowthoftheairporthasopenednumerousopportunitiesfortheairportforitsfutureoperations,withincreasingpassengerandcargocapacityannually,beforethewakeofthepandemic.Oncethepandemicisover,thingsareexpectedtoregainnormalcy,inwhichmoredevelopmentandgrowthshouldbeexpectedinthefuture(Chapman&Georgoulias,2010).TheImpactoftheAboveonCathayPacificMovingForwardBeforethepandemicstruck,projectionsweremaderegardingtheairline’sfutureandHongKongasanaviationhub.SuchpredictionshadincreasedperformancefuelledbytheChepLapKok,wheretheHKIAiscurrentlysituated.Itwasestimatedthatby2040,HKIAwouldhandleabout87millionpassengers,376000ATMs,and8.9milliontonsworthofcargo.ThiswouldtranslatedirectlyintothebenefitsandprofitsthatCathayPacificwouldharness.Thiswouldmainlybefuelledbytheschedulingflexibility,connectivity,enhancedcapacity,andHongKong’sadvantageinadditiontoHongKong’srapiddevelopment.Theairporthasseengrowthinairtrafficandincreasedcargoandpassengercapacitiesovertheyears,andthetrendwasprojectedtoincreaseevenmoreintheyearstocome,asstatedearlier.Currently,thereareplanstodeveloptheairportbyconstructinganotherrunwaywhichisexpectedtobeoperationalby2024.Eventhoughthepandemicmighthaveputsomeoftheprojectsonholdanddisruptedtheprojections,theairportremainsacrucialplayertothefuturesuccessofCathayPacific,especiallyasitgoesthroughthejourneyofgoingbacktoitsnormaloperations.Hence,thedevelopmentoftheairportisofgreatsignificancetoCathayanditsoperations,aswellasrevenueandprofitability(Zhang,2003).ConclusionThisresearchpaperaimedtoestablishthefutureofCathayPacificafterthepandemicandchinatakecontrolofHongKongandHongKong’sroleasanaviationhubandwhatitsfuturealsolookslike.Thispaperhasgeneratedthepandemic’simpactonCathayPacificandHongKong’sinternationalaviationhub.TheresearchpaperhasfurtherestablishedthemeasuresthatCathayPacifichastakenandthestrategiesthatithasimplementedtocutoperationalcosts,evenastheystrivetogetbackonitsfeet.Thepaperhasestablishedthatthefirsthalfof2021hasbroughtlucktotheairlinesinceoperationshadslightlyincreasedlastyear.Also,theresearchpaperhasestablishedthatthestrategiesimplementedbytheairlinetocutcosts,suchaslay-offs,havefurtherhelpedthecompanysave.AsacriticalplayerinHongKong’sdevelopmentandaviationindustryatlarge,theairlinehasalsoreceivedboostingfromthegovernmenttohelpitgetbackonitsfeet.BeingthemostsignificantairlineinHongKong’saviationhubandHongKong’skeydriverofeconomicdevelopment,CathayPacificAirlineLimitedhasreceivedseriouseconomicblowsfromthepandemic,leadingtowhatthegroup’schairmansayshasbeenthemostchallengingperiodofoperationsintheairline’sover70yearshistory(MELAS&MELASOVÁ,2020).Theairlinerecordedtheworstdropinbothcargoandpassengervolumes.Thefirstfewmonthsof2020werethemostchallenging,withtheairlineonlyplungingapassengerloadof99.6percenttoabout458perday.Thefirstquarterof2020sawtheairline’spassengerloadsfallingby64.4percentfrom2019.Cargoloadswerealsoaffectedbytheeconomicblow,fallingby26.6percentcomparedto2019.Thisresultedinatotallossofuptobillionsofdollars.Tomitigatethepandemic’simpactonCathayPacific,theHKSARgovernmentannounceditsplansofrecapitalizingtheairlinebyinvesting27.3billionHongKongdollarsfromthegovernment’slandfund.QuestionswereraisedconcerningwhythegovernmentwaslendingahelpinghandtoCathayPacificwhilenumerouscompanieswerealsofacingchallengingtimesduetotheblowfromthepandemic.Thecurrentcommercialbondmarketshavebeenshuttingairlinesthatcannotgainthegovernment’ssupportandthegovernment’sshareholders.Thishasthepotentialofmakingthebusinessgounder.Inresponse,theHKSARfinancialsecretaryissuedareportinwhichhemadetheirpositionclear.Accordingtothereport,CathayPacificistoosignificantconsideringHongKong’shubstatusandaviationindustryfailure.ThisisbecauseCathayPacifichandlesabout41%ofcargoandabout57%ofHongKongInternationalAirportpassengers.CathayPacifichasanextensivelyglobalairnetworkandhas14cargoterminalsand49passengerterminals,amongothersaroundtheworldthatHongKongowns.ThesestatisticsmeanthatCathayPacificissimplyanairlineandasignificantkeyplayerforHongKong’sdevelopmentandhelpsenhanceandmaintainitspositionasanaviationhubinternationally.ThefinancialsecretaryemphasizedthatitwasnecessarytoinvestinCathayPacifictopromoteandmaintainHongKong’sstatusandgeneralgrowth.FrombothperspectivesofdevelopingHongKong’saviationindustryandthecity’sinterests,Cathay’sbail-outwasjustifiedandtimelytopreventtheairlinefromgoingunder.ThishappenedinJune2020.ThelawstatesthatthegovernmentmustprovidenecessarymeasuresandconditionstosustainHongKongasalocal,regional,andinternationalaviationhub.Additionally,theindustrycanboostthecity’seconomicdevelopment,tourism,hotel,travelers,andotherindustries.ThiswillgotheextramileinconsolidatingHongKong’sreputation.Therefore,thegovernmentshouldformulatediversifiedandlong-termobjectivesfordevelopingtheaviationindustryandtheothersectorsoncethepandemicandsocialunrestareover.Also,withtheroleplayedbytheHKIA’scurrentlocation,thatis,ChepLapKok,theairline’sfutureoperationsshoulddowellbecausethatopensnumerousopportunitiesforincreasedairtrafficandcargoandpassengercapacity.MoredevelopmentsoftheregionshouldtranslateintobetterdealsfortheairlineandHongKonginGeneral(MELAS&MELASOVÁ,2020).Inconclusion,thepandemichashaddevastatingimpactsontheairlineandaviationindustryingeneral.Theviruscontinuestospreadeventhoughseveralattemptsarebeingmadetodiscoverapermanentsolutiontogetridofthevirus.Inthemidstofallthis,economiesareslowlyopeninguptoresumenormalcy,eventhoughtheglobaleconomyhasnotfullyopened.Theglobaleconomystillgrapplestorecoverthelossesincurredbetween2019and2020.Thismeansthatthepassengercapacityshallremainrelativelylowbutbetterthanthatof2020.Thecargocapacityshould,however,recordsomesignificantimprovements.Asmentionedearlier,thefirsthalfof2021hasalreadyseentheairlineregisterabetterperformancethanlastyear.Shouldthistrendcontinue,coupledwiththegovernmentsupportintermsofrecapitalizationandbail-outissuedinthepreviousyearinJune,theairlineisexpectedtobouncebacktoitsgloriousdayssometimeafter2024.Theseefforts,coupledwiththosealreadydiscussedearlier,willseethattheairlinestillhasafutureafterall.ThiswilldirectlyimpacttheeconomicdevelopmentofHongKongcityanditsaviationindustry,ensuringthatbothcontinuethrivinginyearstocome.RecommendationsHongKong’sroleasanaviationhubisfartoocriticalfortheregion’sdevelopmenttobeneglected.ToconsolidateHongKong’sposition,thereisaneedtobuilditsmanagementtrainingabilityanddevelopaviationfinancingservices,aircraftleasing,andhighvalue-addedcargotransportation.Moreover,expandingaviationeducationinindustrialization,promotingindustryfinancing,andestablishingdisputesettlementcentersshouldalsobeafocalareafortheHongKonggovernmenttohelpsettledisputesbeforetheygettoapointwhereitwouldparalyzetheoperationsoftheaviationindustry.Thegovernmentshoulddothistocentralefficientandhigh-qualityservicesthatwouldattractcargoandpassengersthroughoutandfortheindustry’ssuccess.Currently,thereisa“three-runwaysystem”thathasbeenscheduledtokickoffin2022.Itisprojectedtostartoperatingin2024.Ifthisbecomessuccessful,theoverallcargoandpassengervolumeofHKIAwillexpand,whichrepresentsapromisingfuturefortheairlineandHongKong’saviationhub.Duetocompetition,itisnecessarytoputeffortsthatwillmaintainHongKong’sreputation.Thistranslatestousingtheyearsbefore2024tocooperateandcoordinatewithotherairportsintheregion.Thisshouldhelptounifyresourcesandallocatethesameeffectforeveryinvolvedpartytohaveawin.

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