Quality Management: Cathay Pacific Airways Essay

Introduction Cathay Pacific Airways is an international airline registered and based in Hong Kong, offering scheduled cargo and passenger services to over 80 destinations around the world. They are deeply committed to Hong Kong, where the Company was founded in 1946. They continue to make substantial investments to develop Hong Kong’s aviation industry and enhance Hong Kong’s position as a regional transportation hub. In addition to their fleet of aircrafts, these investments include catering, aircraft maintenance and ground handling companies, as well as their corporate headquarters at Hong Kong International Airport; Cathay Pacific and its subsidiaries and associate employ 25,000 staff in Hong Kong. The airline’s two major shareholders are both Hong Kong companies listed on the Hong Kong Stock Exchange, as is Cathay Pacific itself. Cathay Pacific is the major shareholder in AHK Air Hong Kong Limited, an all cargo carrier that offers scheduled services in the Asia region, and is a shareholder in Hong Kong Dragon Airlines Limited. They are also a founding member of the one world global alliance whose combined network serves over 570 destinations worldwide. Other members of one world are Aer Lingus, American Airlines, British Airways, Finnair, Iberia, LanChile and Qantas. Quality Management Defined In a total quality setting, Quality is as determined by the customer and employees produce it. Thus quality of a service is the customer’s perception of the degree to which the service meets their expectations Six-sigma quality is a standard and a philosophy of customer satisfaction. The six-sigma philosophy requires an ongoing audit mechanism that identifies opportunities for improvement and changes in customer expectations. Emphasize the importance of customer satisfaction. Define a quality goals and objectives and translate these into actual service and service delivery activities. There are some types of goals and objectives need to consider. -To satisfy customers. -To encourage continuous improvement. -To respect social and environmental needs. -To foster a collective commitment to quality. -To improve the efficiency of service delivery. -To clearly define customer needs and expectations. -To look for opportunities to improve service quality. Define service quality responsibilities and give your personnel the authority to carry out these responsibilities. Make sure that senior management retains the responsibility for developing, measuring, auditing, and improving your service quality system. Various interviews and customer surveys conducted throughout the year, customers are invited to participate in the Cathay Pacific Voice of the Customer survey, conducted multiple times per year to determine where customers are satisfied and where they can improve. These survey results are then used to develop plans to act on your suggestions, improving the solutions and experiences customer get from Cathay Pacific. They greatly increased customer satisfaction with Cathay Pacific service. Customer Expectation In a total quality setting, customers define quality and employees produce  it. Customers were considered outsiders who used a company’s products and suppliers were outsiders who provided the materials needed to provide the good service. Every organization has both internal and external customers. An external customer is the one spoken to in the traditional definition. An internal customer is any employee whose work depends on that of employees whose work precedes theirs. Cathay Pacific Airways have much different kind of customers and with any age. Cathay Pacific have sponsor young people from Asia to attend a special ecological course in South Africa. Over 190 students from around the world have traveled here to study Chinese language and culture at the Chinese University of Hong Kong. In addition, they sponsor the student exchange programmers at the Chinese University of Hong Kong and the City University of Hong Kong respectively. Also they can be a businessperson or people who is going just for tourist. Each year Cathay Pacific sponsor wheelchair athletes from Hong Kong to compete in the 10km wheelchair race in Vietnam. The organization’s survival depends on the customer. Customers who are satisfied with the quality of their purchases from an organization become reliable customers. So customer satisfaction is essential. Providing high quality service ensures customer satisfaction. Companies have to look to customers when they set standards for measuring quality. Products and services need to be improved with time to meet the varying need of the customers. To clarify how customers perceive quality, there are summarizes the four foundations of perceived quality: Product Quality, Service Quality, Brand Image and Personal Cost. Customers perceive quality on the following basic tangible principles: 1. Performance 2. Features 3. Reliability 4. Serviceability 5. Durability 6. Appearance 7. Customer service Customers expect to have a best service with lower price. Therefore Cathay Pacific always believes in Service Straight from the Heart. From their front-line staff to those behind the scenes, the dedication of every person at Cathay Pacific remains the driving force behind our service. It’s about treating people as individuals and treating them like your best friend. They call it Service Straight from the Heart because it stems from within. Thus their staff led their personal lives in the same way they embrace their professional one with fervor, integrity and optimism This positive lifestyle may stem from an exercise regimen in the quest to stay fit and alert and always ready for the next big challenge and to deliver expectations. It could revolve around a continuous thirst for knowledge that leads to self-improvement and improving the lives of others. Or else it may be a personal passion for traveling that offers incredible insight on what makes an unforgettable travel experience. Reputation is something that can be good or bad for a Cathay Pacific by customers. It is built upon the competitive elements such as quality, reliability, delivery and price. Once a Cathay Pacific acquires a bad reputation for quality, it takes a very long time to change it. Reputations good or bad can quickly become national reputations. Customers tend to remember only the bad quality they receive. For example: If 99 % of flights arrives is on time, the customer will only remember the 1%  of flight arrives late. Quality and customer satisfaction may not be enough to hold on to customers. Cathay Pacific must also build relationships with customers. Customer retention is a more accurate reflection of an organization’s success than quality or customer satisfaction. Customer retention is affected by factors that the company can control, like service improvements, and factors that are controlled by the marketplace, like pricing flexibility. Strong relationships with customers can increase retention by asking customers the right questions, really listening to what they have to say, and providing feedback to them on the results of action plans. Quality and customer satisfaction are still very important, but customer retention should be the organization’s ultimate test of success. Customer satisfaction is achieved by producing high-quality services that meet or exceed expectations. The key to establishing a customer focus is to put employees in touch with customers so that customer needs are known and understood. Scholtes’s six-step strategy for identifying customer needs is as follows: speculate about results, develop an information gathering plan, gather information, analyze the results, check the validity of conclusions and take action. Customer needs are not static. Therefore, constant contact with customers is essential in a total quality setting. Whenever possible, this contact should be in person or by telephone. Written surveys can use, but they will not produce the level of feedback that personal contact can generate. Measuring customer satisfaction alone is not enough. Many customers who defect are satisfied. Cathay Pacific should measure customer retention. They should go beyond satisfying customers to creating value for them in every supplier customer interaction. Cost of Quality Cost of quality as defined by Crosby â€Å"Quality Is Free†, Cost of quality is the amount of money a business loses because its product or service was not done right in the first place. In early April, Cathay Pacific reduced their passenger capacity in response to the fall in passenger traffic arising from the SARS outbreak. They cancelled 45% of their passenger flights and parked 22 aircraft. The integrity of their network was maintained, although services to Fukuoka and Sapporo were temporarily suspended. This is the business loses by the suddenly SARS occur or a badly performed service, businesses lose money every day due to poor quality. Quality is the confluence of customer expectation and realization. It is essential that every organization is aware of the cost of quality, which awareness must. In Cathay Pacific, the lowest possible level of defects, which can be achieved only by an aggressive search for and elimination of the sources of error, is a prerequisite for an internationally competitive performance. There have four major areas of the cost of quality: Prevention, Appraisal, Internal Failure, and External Failure. Prevention involves costs of any effort to eliminate defects in service. When providing service, an excellent service with strong planning can certainly prevent the occurrence of errors and other problems down the line. Appraisal includes the cost of measuring, evaluating and auditing services to assure conformance with requirements. If a defect occurred on the assembly line, the defect was thrown out irrespective of the cost of materials and labor. Internal failure refers to costs required to evaluate or correct service not conforming to requirements prior to furnishing services. This could include rework, operations corrective actions, re-inspections, and labor losses. In Cathay Pacific, this can include the need for rescheduling different flights when they are interdependent and errors occur, e.g., in the computer system. Reports have to be rewritten. Other internal failure occurs when errors in  wrong data affect other departments within the Cathay Pacific. External failure refers to the cost of failure after furnishing services to customers. This includes complaints, liability, goodwill, and both lost sales and customers. If customers are lost, this type of failure is most expensive, especially considering that new customers are estimated to be five times as expensive to acquire as the cost to maintain existing customers. Quality Program The reason of SARS arising in early April, Cathay Pacific reduced their passenger capacity in response to the fall in passenger traffic. Cathay Pacific Airways have to implement preventive measures to guard against the spread of Severe Acute Respiratory Syndrome (SARS) at airports served, in provision of in-flight service, and related to its ground and in-flight personnel. In any business, also need to continuous improvement to keep survival in the world. Quality Function Deployment (QFD) is an approach to continual improvement that brings customers into the design of services. It translates what the customer wants into what Cathay Pacific provides. A QFD matrix takes shape of a house. An example will show in the next page. QFD yields the following benefits to Cathay Pacific that is interested in continual improvement: customer focus, time efficiency, teamwork orientation and documentation orientation. QFD also makes use of several specialized tools including Affinity diagrams, which are used to promote creative thinking. The interrelationship diagraph is used to bring logic to the process of identifying relationships among ideas. The tree diagram identifies all tasks that must be accomplished to solve a problem. Matrix diagrams are used to identify connections among responsibilities, tasks and functions. Cathay Pacific can use QFD to closely monitoring the SARS situation in adjustments to its flight schedule, according to passenger demand. That’s why they can identify the problems of SARS and find out the solution to eliminating the problem happen occur again. Cathay Pacific can implement measures to guard against the spread of the SARS virus as follows: Protective measures for all staff in all functions: ?Wear surgical mask and latex gloves every time that work is conducted on the aircraft upon flight arrival from an affected country as determined by the World Health Organization (WHO). ?Check-in staff providing passenger service at airports in affected countries must wear surgical masks at all times when providing service provision. -After work has been completed, staff must cleanse their hands thoroughly with clean water and disinfecting soap. -Used surgical mask and latex gloves must be disposed of in a specifically designated container, labeled accordingly. -Disinfecting spray must be used on all flights returning from countries considered affected areas. Measures related to in-flight service provision: -Disinfecting spray must be used on flights departing from countries considered affected areas. -Cabin crew must observe passengers for SARS symptoms related to the respiratory system, such as high fever, coughing, sneezing, and provide surgical masks for passengers to wear. -Cabin crew must separate the passenger suspected to have SARS symptoms from other passengers, or separate the passenger in a designated area, and inform  the International Communicable Disease Control Office under Cathay Pacific, before the flight lands. Measures related to customer service: Check-in and boarding gate staff working at airports in Taiwan, Singapore, Vietnam, China ?in Hong Kong, must observe passengers for SARS symptoms. If passengers are observed to have high fever, coughing, and difficulty breathing, they must provide a doctor’s letter stating they are fit to travel. If the passenger does not have a doctor’s letter, the physician on duty at the respective airport must be contacted to examine the passenger with related symptoms. If there is any doubt to the nature of the passenger’s illness, the passenger may be denied boarding. Difficulties or Limitation Customer information is the most important for continuous improvement. We have to collect reliable information to identify the cause of problem. This is difficult to ensure all the information is reliable. Sometimes the information is according by the service-testing editor for magazine or newspaper gives the service a try and writes an article pointing out weaknesses. Customer information falls into two broad categories: feedback and input. Feedback is given after the fact. In Cathay pacific, this means after a problem has been occur. Feedback is valuable and should be collected. However, it comes too late in the process to help ensure that customer requirements are met. Input is obtained before the fact. In Cathay pacific, this means during the problem happening. Collecting customer input during service provides allows changes to be made before the worst problem occurs. Collecting input is more valuable than collecting feedback. Conclusion The outbreak in mid March of atypical pneumonia or SARS had a devastating impact on Cathay Pacific passenger business. The interim performance of Cathay Pacific Catering Services (H.K.) Limited was badly affected by the outbreak of SARS. The company implemented stringent cost controls. All overseas flight kitchens were impacted by SARS and also implemented cost control measures. SARS had little effect on the airfreight business and the company reported a satisfactory interim profit. Hong Kong Airport Services Limited reported an interim loss due to the large number of flight cancellations. After an air quality monitoring programmed, undertaken in aircraft cabins, showed that the air is of a good quality. A comprehensive programmed to sort and recycle paper materials such as newspapers and in-flight menu cards has been implemented on all inbound flights. The impact of SARS resulted in a concerted effort to reduce energy consumption in Cathay City. Measures taken include temperature adjustments, reduced lighting and restricted availability of lifts and escalators. We can see the SARS had a little effect to the Cathay Pacific. Hence they need to use QFD to continual improvement that brings customers into the design of services. It translates what the customer wants into what Cathay Pacific provides.