Cathay Pacific and Dragonair experiment with fare offerings, but is structural change in the wings?

Cathay Pacific publicly remains steadfast that its business is on track despite growing LCC pressure and long-haul competition, all affecting yields while constraining Cathay and its Dragonair subsidiary in new, lower-cost markets.

The view may be to shore up investor confidence as largest shareholder Swire looks to sell, but beneath the surface Cathay is apparently implementing new initiatives to try to keep a hold on the budget-conscious market.

The carrier has launched "Fanfares", limited-offer and typically last-minute travel deals. More recently it has offered discounts on business class and premium economy travel, only to the Hong Kong market, which has long felt "hub captive" as Cathay commanded a yield premium for non-stop flights.

But these offerings focus on fare cutting and not cost-cutting or structural changes to its business that will enable it to compete more effectively without sacrificing profitability. The pattern occurred in America and Europe before airlines realised their costly operations could not take lower-cost competition head-on. Although a mature airline, on this front Cathay is seemingly going through adolescence, with some awkward bumps along the way.