CATHAY PACIFIC SEEKS TO MAKE ITSELF MORE ASIAN

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HONG KONG-As the territory returns to China in 1997, Cathay Pacific, previously viewed as British, is remaking itself with a decidedly more Asian image.

Among the world's five most profitable airlines, Cathay has changed its agency and its stripes after nearly 50 years. Known as the airline of choice for Western expatriates, the company is now trying to cultivate an image as the preferred carrier of discerning Asians without alienating Western customers. Cathay's overhaul has extended even to its ad agency: In mid-1993 Cathay hired McCann-Erickson Worldwide as its agency after 10 years with Leo Burnett Co.

Cathay's passenger profile has changed dramatically since it began operation in 1946, as the Western expatriate traveling between Asia and Europe has been steadily replaced by the Asian passenger. In the past five years alone, Cathay's percentage of Asian travelers has grown from 69% to 80% as the Asian economy has grown.

Despite this, Cathay had retained a Western image, said Tim Fitzsimmons, general manager-marketing and sales.

The Swire Group, which owns a 51.8% share in the airline, has vast interests in property and travel in Asia, but the parent company, John Swire & Sons, is based in the U.K. Cathay's Western image was further reinforced by Western-style food, entertainment and inflight services.

Cathay therefore is repositioning to the "winning Asian airline," said Mr. Fitzsimmons, recasting its estimated $25 million in advertising spending in a new September campaign and introducing new in-flight services and facilities aimed at Asians.

Although the airline's revenues show an upward trend over the past several years-$3.08 billion in 1993, up from $2.99 billion in 1992-profits have been declining. They fell 23% to $298 million in 1993 from $388 million a year earlier.

Despite the slide, Cathay is still among the top four most profitable airlines in the world, according to Air Transport World. Only three airlines have higher net profits: Continental ($2.6 billion), TWA ($623.8 million), Singapore Airlines ($510.5 million) and British Airways ($423.3 million).

As Cathay sees it, an important reason for its decline in profits is the fact that the carrier is based in one of the most expensive cities in the world. On the other hand, its location in Hong Kong places the airline within four hours flight time from half the population of the world and in what is arguably the fastest-growing region today.

Another step in Cathay's Asian metamorphosis is the new "brushwing" logo which took three years to research and design. The new logo replaces its similarly green and white 20-year-old design but is based on an East Asian calligraphic motif to create the symbol of a bird in flight, underlining the new sense of an Asian identity.

The new logo, designed by Landor Associates' Hong Kong office, deepens the former green to a more bluish shade.

Cathay's print advertising, likewise, uses a brushstroke rendering of a bamboo plant and simple calligraphy in the copy: "In Asia, flexibility is a strength," says the copy. "And with over 650 flights per week to and from Hong Kong, no one gives you more strength than Cathay Pacific. The heart of Asia."

The airline's two new TV ads focus on Asian dance and music in Asian settings with the "Heart of Asia" tagline. A new spot for the company's business class also brings into play the brushwing stroke, using that illustration technique to demonstrate the airline's new seating and personal TV.

"A minimum standard is required from every airline which enters the market," Mr. Fitzsimmons said. "What is more likely to influence travelers are services such as personal TV systems, phone and fax facilities in the air and entertainment and food."

Cathay is also careful to bill itself as the "Asian international airline," to avoid alienating non-Asian flyers.

There is good reason to focus on Asians since the carrier's most important revenue earner is its Asian network. In this region, Cathay competes primarily with Singapore Airlines, Thai Airways and Japan Airlines. The longhaul routes to Europe, Canada and Australia will become more important as income levels rise in Asia, increasing outbound tourism.

But Mr. Fitzsimmons denied that Cathay's changes are in any way related to the territory's imminent return to China. "Our future is based in Hong Kong," he said.

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