Cathay Pacific to spend HK$2 billion on e-business

Cathay Pacific rises above escalating oil prices and aims for the sky with its new e-business ventures
Cathay Pacific Airways will invest HK$2 billion ($256.5 million) on more than 30 e-business ventures over the next three years. Most will be launched during the next six months as part of the airline's goal to become Asia's leading e-business air carrier. The HK$2 billion figure excludes spending on infrastructure, and will be financed "internally", according to Cathay Pacific's director and chief operating officer, Philip Chen, who declined to reveal further details on the matter.

Cathay Pacific's e-business projects include a newly launched flagship website, a cargo website with online booking and tracking capabilities, an e-procurement project, and the launch of a global corporate intranet. The airline conservatively estimates that it will reduce total expenditure by more than HK$500 million a year by 2003 as a result of its e-business projects. Cost savings from procurement and distribution will make up the bulk of the savings. The airline also expects that incremental revenue will be generated through its websites, and by creating customer loyalty through new service tools.

"Give me a word and we can link it with e-business and Cathay Pacific," boasts Chen of the airline's aggressive strategies. "We are serious about becoming the leading e-business airline in Asia and we are well on the way to making e-business an integral part of all our operations."

Cutting out the middleman

As in most industries, the internet has been used as a tool to cut out the middleman. Cathay Pacific estimates that between 25% and 30% of its sales will be made online by 2005, and its flagship website, with personalized pages for frequent flyers, will induce more direct sales. But Chen is adamant that travel agents will still play a major role as a sales channel. "We aim for fair and competitive prices and will not undercut travel agents," says Chen. "We expect most bookings to still come from travel agents." The airline is working on a site for travel agents in Asia, allowing exclusive access to information on fares, schedules, special offers and package holidays.

Other enhanced services for passengers include electronic ticketing, internet check-in, flight information and reminders via WAP, and in-flight email.

Cathay Pacific estimates that 30% to 50% of its procurement will take place over the internet within the next three years through its participation in Aeroexchange, a purchasing portal with 12 other airlines, Asia2B and MartPOWER.

Another new initiative is a cargo website which aims to improve track and trace functions. Cargo agents will be provided with automatic status updates via email, track shipments though mobile short message services and book cargo space online.