Hotel Essay
Name: Leung Ngai Yiu Student ID: 14087108D Seminar: SEM001 Words: 1043 Topic: Challenges of Hong Kong’s full service airlines facing today
Introduction:
As the Asia aviation hub, the development of Hong Kong’s airlines is rapid and successful. As for the full service airlines, it is the traditional airlines offering onboard meal service, checked bag allowance and etc. There are some renowned full service airlines, such as Cathay Pacific, Dragonair, Hong Kong airline, etc. According to the annual report of Cathay Pacific 2013, the full year profit is HKD2.62 billion which partly proves the successful development of Hong Kong full service airlines. Behind the success, some challenges are waiting for the Hong Kong’s full service airlines as well. This essay will further explain the challenges of Hong Kong’s full service airlines facing. Table1: Fuel impact on operation costs
Challenge 1: The persistently increase in the price of fuel
Without doubt, there is a closer link between the price of oil and the full service airlines. According to the research done by IATA in 2012, 33% of the operating costs in airlines are fuel. In fact, the price of fuel is increasing continuously. Take cruel oil as an example. It increased near 400%, from US$28.8 per barrel in 2003 to US$110 per barrel in 2012. The high price of fuel will increase the portion of jet fuel in the operation cost. In the short run, the operation cost will be increased and the service provided will be affected due to the cost-cutting measures. In other words, increasing price will reduce the competitiveness and the profit of the airlines. In the long run, the airlines will suffer the financial pressure, or even be forced to go out of business. 6 years before, 6 American airlines went into liquidation when the oil price was the highest in the history. This proves that high price of fuel maybe inhibit the development of HK
Introduction:
As the Asia aviation hub, the development of Hong Kong’s airlines is rapid and successful. As for the full service airlines, it is the traditional airlines offering onboard meal service, checked bag allowance and etc. There are some renowned full service airlines, such as Cathay Pacific, Dragonair, Hong Kong airline, etc. According to the annual report of Cathay Pacific 2013, the full year profit is HKD2.62 billion which partly proves the successful development of Hong Kong full service airlines. Behind the success, some challenges are waiting for the Hong Kong’s full service airlines as well. This essay will further explain the challenges of Hong Kong’s full service airlines facing. Table1: Fuel impact on operation costs
Challenge 1: The persistently increase in the price of fuel
Without doubt, there is a closer link between the price of oil and the full service airlines. According to the research done by IATA in 2012, 33% of the operating costs in airlines are fuel. In fact, the price of fuel is increasing continuously. Take cruel oil as an example. It increased near 400%, from US$28.8 per barrel in 2003 to US$110 per barrel in 2012. The high price of fuel will increase the portion of jet fuel in the operation cost. In the short run, the operation cost will be increased and the service provided will be affected due to the cost-cutting measures. In other words, increasing price will reduce the competitiveness and the profit of the airlines. In the long run, the airlines will suffer the financial pressure, or even be forced to go out of business. 6 years before, 6 American airlines went into liquidation when the oil price was the highest in the history. This proves that high price of fuel maybe inhibit the development of HK