a case study on the crisis-response strategies employed by...
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A CASE STUDY ON THE CRISIS-RESPONSE STRATEGIES EMPLOYED BY CATHAY PACIFIC AIRWAYS
IN THE LABOR DISPUTE IN MAY 1999
Catherine Lai
A Dissertation
Submitted
In Partial Fulfillment of the Requirements For the Degree of
Master of Arts in Communication
Supervisor: Dr. Jeffrey Wilkinson
School of Communication Hong Kong Baptist University
Hong Kong August 2000
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ACKNOWLEDGEMENT
This Dissertation was completed under the supervision of Dr. Jeffrey Wilkinson. I
would like to convey my greatest gratitude to Dr Wilkinson who supported me by guiding
me throughout the period and giving invaluable advice. I would also like to thank Ms
Katherine Wang, Corporate Communication Manager (Public Relations) of Cathay Pacific
Airways, and Ms Paula Johnstone, Administrator of the Hong Kong Aircrew Officers
Association. Both of them provided me with a variety of materials, without which the
dissertation could not be completed. Their easy accessibility and willingness in
information sharing was much appreciated.
____________________________ Catherine Lai
M.A. in Communication
School of Communication Hong Kong Baptist University
Date:__________________________
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ABSTRACT
Communication plays a critical role in shaping public perceptions of a crisis and the
organization involved in that crisis. Crisis communication is more about managing the
public perception than managing the crisis itself. A recent research conducted by
Coombs has suggested a list of crisis-response strategies (public statements made after a
crisis) by synthesizing Benoit’s Image Restoration Strategy and Allen and Caillouet’s
Impression Management Strategy. This research studied the crisis communication
strategies employed by Cathay Pacific Airways in the labor dispute which broke out in
May 1999 in Hong Kong, and examined how these strategies fit in Coombs’
crisis-response guidelines. It also intended to study the effectiveness of these strategies
in shaping public perception. It was hoped that by analyzing a real-life case within a
corporate setting, the research could provide public relations practitioners with some
useful insights and references in developing the crisis-response strategies, so as to manage
the public perception more effectively during crisis.
In this research, a case study method was used to examine the topic outlined.
Findings of the research suggested that a mixture of crisis-response strategies, instead of
one single strategy, was used by the organization in shaping public perception. Although
the effectiveness of individual strategy varied, a combination of strategies could be more
appropriate in achieving the communication objective of managing public perception.
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TABLE OF CONTENTS Page Chapter One – Introduction ………………………………………………………… 4 Chapter Two – Theoretical Framework……….………………………………….. 14 Chapter Three – Methodology……………………………………………………. 19 Chapter Four - Findings 1. Crisis-response strategies
- Transcendence……………………………………………………….. 24 - Clarification…………………………………………………………. 27 - Repentance…………………………………………………………... 33 - Remediation…………………………………………………………. 35 - Praising Others……………………………………………………… 36 - Distance Strategies………………………………………………….. 39
2. Approaches - Proactivity…………………………………………………………… 40 - Consistency………………………………………………………….. 41 - The use of media as a communication channel……………………… 42
Chapter Five - Conclusions………………………………………………………….. 46
- Implications - Limitations
References………………………………………………………………………….. 49 Appendices
I - Organization chart of Cathay Pacific Airways…………………….. 51 II - Decision flowcharts for crisis-response strategies selection………. 52 III - Interview questions .………………………………………….…… 54 IV - Transcript of the interview……………………….……………..… 55
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CHAPTER ONE - INTRODUCTION
1.1 Introduction
When a crisis breaks out, it always creates a negative effect on an individual or an
organization, though the level of impact varies. Crisis is an event that threatens the
image of an organization (Barton, 1993). It may also threaten the survival of that
organization, and cause damages, both tangible and intangible. It is necessary for the
organization to repair such damaged image in order to restore the public confidence after
a crisis happens. Very often, communication shapes public perception of a crisis and the
organization involved in the crisis (Russ, 1991).
Coombs (1995), recognizing there have been a lot of researches on the structural
aspects (the form) of crisis management, including precise guidelines on how to plan for a
crisis and whom to communicate, suggested an underdeveloped area of research – what
organizations say to public after a crisis occurs (the content). By synthesizing Benoit’s
Image Restoration Strategy and Allen and Caillouet’s Impression Management Strategy,
he created a list of crisis-response strategies and developed a set of guidelines for
appropriate use of a given strategy. William Benoit examined facework (interpersonal
efforts to repair images) and apologia (the rhetorical genre of self-denfese) and suggested
the Image Restoration Strategy. Allen and Caillouet examined the impression
management strategies which could help control audience members’ perception of a
situation. The common ground for these two models was “perception management”.
Riding on this common ground, Coombs proposed an integration of the two strategies and
suggested the crisis-response strategies, which was outlined in Chapter Two.
Coombs’ study on the crisis-response strategies and guidelines was a major attempt
to analyze the symbolic aspect of crisis management. These strategies and guidelines
were used to examine one of the most well known crises in Hong Kong in recent years.
By linking up theoretical aspect with actual application in crisis communication, this
research aimed at offering value and insights to public relations practitioners a
theory-based crisis management approach, as well as contributing to the evaluation of
effective perception management during crises.
1.2 Selection of the case
In this research, the crisis-response strategies were applied to analyze a real-life case in
Hong Kong – the labor dispute of Cathay Pacific Airways in May 1999 in Hong Kong.
This labor dispute was the result of Cathay Pacific’s intention to implement a wage cut
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among some of its aircrew. This particular case was chosen for the research due to the
following characteristics it possessed:
1. The elements of crisis in this case:
As mentioned earlier, crisis threatens the image of an organization, threatens the
survival of that organization, and cause damages, both tangible and intangible. It is
always unwelcome and sudden. The organization is caught by surprise, thus creating
anxiety and tension within the company as it often breaks out within a very short period
of time and catches much attention from the media and public. The organization is
obliged to restore its reputation through a series of measures afterwards.
The elements of this labor dispute coincided with the above-mentioned elements of
crisis. The flight service of the airline was seriously disrupted and its commitment to
customer service failed. It damaged the company’s image by challenging its credibility
(intangible). It created loss in its business (tangible) when the company was forced to
cancel dozens of flights in the three-week dispute. It was also the headline story for the
media and received extensive media coverage throughout that period.
The development of the labor dispute also corresponded with the crisis life cycle model
(Gonzalez-Herrero and Pratt, 1996). Crises pass through phases of birth, growth,
maturity and decline. In Cathay Pacific’s labor dispute case, the crisis broke out when
the company publicly announced the salary concession proposal to its aircrew on May 26
(birth). It grew when the aircrew started reporting sick on May 28 (growth), escalated
when the airline’s operation was being disrupted seriously in the first few days (maturity),
and ended when the airline won the negotiation by successfully requiring the aircrew to
accept the offer (decline).
2. Uniqueness of the case:
The case is interesting in terms of the positioning of this labor dispute, and how both
sides communicated it. The aircrew did not formally go on strike. They merely
reported sick, although the ultimate result was the same as if they have gone on strike.
For Cathay Pacific, they did not position the labor dispute as a crisis, although looking
back they thought they should have activated the crisis management mechanism at the
very beginning (Journal of Hong Kong Public Relations Professionals Association,
September 1999).
1.3 The Case
1.3.1 Background of the company
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Cathay Pacific Airways is the largest Hong Kong-based airline company founded in
Hong Kong in 1946 by two enterprising adventurers, American Roy C. Farrell and
Australian Sydney H. de Kantzow. It first operated chartered passenger and cargo flights
to Manila, Bangkok, Singapore and Shanghai and even as far as Australia and the UK.
Two years later in 1948, it was taken over by the Swire Group. Until the 1960’s Cathay
Pacific’s customers tended to be mainly business travelers. In the 1960s, the airlines
expanded its business to leisure travel business.
By the 1980s, it has become a fully-fledged international airline. Today, it operates
60 aircraft, serving 47 destinations in 28 countries/ territories. Cathay Pacific has an
annual turnover of HK$26,610 million in 1998, and HK$28,702 million in 1999. The
company employs almost 14,000 staff, including 5,500 cabin crew, 3,800 Hong
Kong-based ground staff, 3,300 staff in ports around the world, and 1,300 aircrew. The
1,300 aircrew were further categorized into A and B-scales, with the former consists of
over 700 staff. In September 1999, the number of passengers it carried exceeded
800,000.
1.3.2 Background of the case
The Asian financial crisis swept the region in 1997 and caused disastrous effects to
governments, corporations as well as individuals. Travel industry became one of the
hardest hit areas due to a sharp decline in the number of tourists, both in-bound and
out-bound. As one of the major players in the travel industry, Cathay Pacific recorded a
loss of HK$542 million in 1998 due to the economic downturn and slump in passenger
volume. It was critical for the company to improve its competitiveness and, thus, cost
reduction was one of the measures they planned to implement.
In order to increase its competitiveness, Cathay Pacific carried out a list of cost
reduction measures starting January 1998, when it made 760 Hong Kong based ground
staff redundant. Extra redundancies during the year increased the number to around
1,000, or 25% of all Hong Kong ground staff.
In December 1998, Hong Kong-based ground staff was requested to raise their
productivity by working 2 hours a week longer for a pay rise. In January 1999, cabin
crew was also requested to increase their working hours from 72 a month to 76 a month in
return for a pay rise. Aircrew was the next group of staff the company would like to
seek concessions from.
1.3.3 Understanding the case
According to a presentation made by Ms Quince Chong, Manager, Corporate
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Communication of Cathay Pacific, to the Hong Kong Public Relations Professionals
Association, the company divided the development of the labor dispute into three stages:
preparation, building-up, and outbreak (Journal of Hong Kong Public Relations
Professionals Association, September 1999). The preparation stage ran from June 1998
to February 1999 when the company first approached the aircrew for a salary concession.
The build-up stage ran from March 15, 1999 when Cathay Pacific first issued letter to its
aircrew about the plan for salary concession, until May 26, when Cathay Pacific
announced the revised salary-repackaging plan publicly. The outbreak stage was from
May 28 when the first batch of aircrew reported sick, until June 11, when the aircrew
responded to the salary-repackaging offer.
The description of the case was based on the above categorization, and on the
consolidated information from archival materials including Cathay Pacific’s press releases
from May 29 to June 15, 1999, news clippings of the same period, and the Journal of
Hong Kong Public Relations Professionals Association.
1.3.4 Major players in the labor dispute communication
The major spokesmen from Cathay Pacific speaking to the media included David
Turnbull, Deputy Chairman and Chief Executive, Tony Tyler, Director Corporate
Development, and Philip Chen, Director and Chief Operating Officer. Sometimes there
were anonymous spokesmen being quoted in the newspapers, who often were the
personnel from the Corporate Communication Department, led by Quince Chong the
manager. The aircrew was represented by the Aircrew Officers Association, with
Captain Ted Pleavin as Chairman and John Findlay as the General Secretary. The latter
was also the spokesman for the Association. An organization chart of Cathay Pacific
was included in the Appendix I.
1.3.5 Stage One: Preparation (from June 1998 to February 1999)
The management of Cathay Pacific Airways first approached the Aircrew Officers
Association, the aircrew representatives, for salary concessions from its senior aircrew in
June 1998, as part of its efforts to improve the company’s competitiveness. The
company recorded a loss in 1998 due to the economic downturn and the management has
identified cutting the operating cost as one of the measures to improve competitiveness.
The term “preparation” was defined by Cathay Pacific’s Corporate Communication
Department. At this stage, the preparation work conducted by the Department has been
focused on collecting background information in order to assist the mass media in
understanding the case from the company’s perspective. Such information included the
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salary comparison of pilots around the world, and backgrounder on the negotiation. The
Department also predicted that the case would catch media attention. Therefore it
arranged media training sessions for the company spokesmen in order to improve their
media skills. Not much public information was available at this stage, as it was an
internal process for the company to prepare itself for the salary concession move.
1.3.6 Stage Two: Building-up (from March 15, 1999 to May 26, 1999)
On March 15, 1999, Cathay Pacific officially proposed salary concessions for
approximately half of its aircrew, or over 700 A-Scale pilots. The proposed plan to the
Aircrew Officers Association included:
- Concessions asked of senior aircrew in Hong Kong to be lowered by 8% in one year.
- Aircrew was given 8 years to exercise the stock options.
- The “B” Scale salary for aircrew who joined the airline after 1993 was increased by
7.1% over the next two years.
Cathay Pacific and the Aircrew Officers Association then negotiated for more than
nine weeks on the proposed salary concession plan. However, both sides were not able
to achieve any agreement. The company then proposed a revised offer after
incorporating the Association’s suggestions. Some of the terms included:
- Concessions asked of senior aircrew have been lowered to an average of 7% from 8%.
These are now phased in over 2 years instead of 1.
- Aircrew was now given 10 years to exercise the stock options, up from 8 years.
- The “B Scale” salary for aircrew who joined the airline after 1993 was increased by
7.1% to 10.2% over the next 2 years.
This revised offer was sent to each aircrew because as required by the labor law,
individual signature was needed once changes have been made to the employment
contract. The company then announced the revised salary-repackaging offer to the
public, with an aim to allow the public understands the case from the company’s
perspective. Pilots were required to either accept the revised proposal by June 11, or
choose an improved Voluntary Separation Scheme.
Cathay Pacific held a press conference on May 25 to announce the plan in order to let
the public understand their position. At the press conference, Tony Tyler, Director
Corporate Development, expressed that the company hoped that individual aircrew will
respond positively to their improved appeal and help the company to position itself as a
strong, competitive airline for the future. He also explained that the number of
passengers was well below that of 1997, and airfares were still being undermined by
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intense competition. Thus the company had to take further action to improve their
long-term competitiveness if it wished to secure the future welfare of the company and its
staff.
On the other hand, the Aircrew Officers Association was dissatisfied that Cathay
Pacific terminated the discussion on May 24 with the Association, but approached
individual staff instead, requesting them to reply on the revised plan. They demanded
that the improved offer should include a guaranteed pay increase for the next seven years.
John Findlay, spokesman of the Association, said the aircrew would rather terminate their
employment agreement than to accept the proposal. He also hinted that the 1,300
aircrew might go on strike.
It is noteworthy that both sides gave a different interpretation to the status of
negotiation. The company thought that the revised offer has already incorporated the
Association’s suggestions. It is thus an “improved” offer which should be acceptable to
the aircrew. The company asked individual staff to reply as it was necessary to get
individual’s signature when changes were made to the employment contract. However,
to the Association, the revised offer was not the best deal for the aircrew, and negotiation
should have been continued. By approaching individual staff, it meant that the company
wanted to split up the aircrew.
1.3.7 Stage Three (from May 28, 1999 to June 11, 1999)
On May 28, “pressurized” by the company’s move to cut their salaries, some pilots
reported sick. John Findlay of the Aircrew Officers Association explained that the
aircrew was “threatened” by the company to accept the offer and they faced great pressure
on their future. Under such condition, the aircrew was unable to guarantee that they
could fly safely. As responsible pilots, they therefore applied for sick leaves. Cathay
Pacific was forced to cancel three flights because its aircrew reported sick. The flights
affected were from Hong Kong to Bangkok, Bangkok to Hong Kong, and from Hong
Kong to Tokyo. But all passengers were transferred to other Cathay Pacific flights.
David Turnbull, Deputy Chairman and Chief Executive of Cathay Pacific appealed for the
aircrew’s understanding by explaining that the company recorded loss in 35 years and
wage cut could reduce cost by HK$1.5 billion. According to the survey results released
by the company, the aircrew in Cathay Pacific had an average income of HK$2.4 million,
who were among the highest paid in the world.
Tony Tyler, Cathay Pacific’s Director Corporate Development, said that the company
“has tried their best to negotiate an agreement” with the Aircrew Officers Association and
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they have incorporated many of the Association’s proposal in the improved offer.
However, no company could afford to guarantee pay increases for the next seven years, as
the Association demanded.
On May 29, over 40 aircrew reported sick, affecting more than 400 passengers.
John Findlay warned that suggesting aircrew to accept the proposal would make more
aircrew go on sick leave and thus affecting more passengers. He added that the priority
of aircrew was flying safety. They needed to rest if they were not feeling well. He also
noted that the salary package of senior aircrew would be reduced by 18-20% with the
salary concession.
On the same day, Cathay Pacific announced the temporary suspension of booking
service on all flights for two weeks, as well as the suspension of its in-town check-in
service at the Airport Express Line. 16 flights were cancelled and all affected passengers
have been transferred to other Cathay Pacific flights. The airline also opened its
passenger enquiry hotline to enable passengers to find out the latest information.
On May 30, 31 flights were cancelled. John Findlay of the Aircrew Officers
Association apologized for affecting the passengers. However, he reiterated that if
Cathay Pacific would re-start the negotiation, the number of aircrew applying for sick
leave would be reduced.
Philip Chen, Cathay Pacific’s Director and Chief Operating Officer, commented that
the salary concession offer was fair enough under such economic condition. He urged
the aircrew to consider the public interest, customer service, as well as the company.
David Turnbull, Deputy Chairman and Chief Executive, said the situation was still under
control with 213 flights operated as scheduled. He hoped that the aircrew would
co-operate with the company during this difficult time.
Over the last four days, the increase in aircrew reported sick has forced the airline to
cancel around 100 flights. On May 31, the company reached agreements with four
airlines to provide aircraft for charter flights. The four airlines were Dragonair, Japan
Airlines, Malaysia Airlines, and Vietnam Airlines. Tony Tyler said the company was
pleased to introduce the charter aircraft so swiftly and they would help the company get
more passengers to their destinations.
On the following two days, Cathay Pacific reached agreements with other airlines to
provide charter aircraft to replace its own flights. On June 3, the company has
successfully lined up with 10 airlines to operate 27 flights on its behalf. Cathay Pacific
operated a total of 61 flights with its own aircraft, bringing the total number of flights
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operated to 75% of the original schedule of 117 flights. As the airline’s operations have
stabilized with the assistance of other airlines, the company announced on June 4 that it
reopened bookings on selected regional routes.
Meanwhile, John Findlay of the Aircrew Officers Association blamed the
management for causing these flight disruptions and claimed that the management was
too unreasonable to suggest a cost reduction of HK$1.5 billion. He added that the
aircrew would go on strike if one single pilot were being fired. He commented that the
management was too tough and had no intention to negotiate.
On June 3, pressurized by the media, Labor Department intervened, with an aim to
force both parties to go back to the negotiation table. Cathay Pacific was asked to meet
with Labor Department to discuss the situation faced by the company and its need to be
competitive for the long-term well being of the company and its staff. Tony Tyler,
Director Corporate Development, expressed the company’s readiness to discuss with the
Aircrew Officers Association. He stated that the company approached the meeting with
an open mind, which should enable both sides to clarify misunderstandings, raise any
concerns, and hear any new proposals.
On June 5, Cathay Pacific held discussion with the Aircrew Officers Association
under the auspices of Labor Department. The role of Labor Department was to act as a
mediator to force both sides to negotiate more constructively and realistically.
Meanwhile, the airline reopened more destinations for booking due to the increasing
stability of its operations. The in-town check-in counters at the Airport Express stations
have also been re-opened.
Discussion went on and no progress has been made so far. The Aircrew Officers
Association blamed the company for not respecting the employment agreement. The
airline noted that the aircrew suggested an extreme proposal, which was impossible for
the company to cope with. The airline has prepared a contingency plan to arrange
charter flights if both sides could not reach any agreement.
On June 10, Cathay Pacific finally reached an agreement with the Aircrew Officers
Association on the company’s salary repackaging offer at the meeting convened by the
Labor Department. The main details of the agreement were highlighted as follows:
- The salary concessions asked of A-scale pilots remain unchanged, as do the stock
options. These concessions average 7% for A-scale pilots based in Hong Kong and
18-22% for those on bases outside Hong Kong.
- B-scale pilots received salary increases over the next three years of 4%, 4% and 3%
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for Second Officers, and 5%, 4% and 3% for First Officers.
Cathay Pacific noted that the total salary package would give the company savings of
approximately $1.4 billion over the next ten years. In return, the company agreed to a
number of improvements in the contract of employment for aircrew. Contractual
stability, one of the aircrew’s major concerns, was ensured as the company committed not
to change certain allowances and entitlements for the next three years. Returning the
jobs on Cathay Pacific freighters to CX aircrew requested by the Association was also
discussed and agreement has been made.
Tony Tyler, Director Corporate Development commented that both sides had made
concessions in contributing to the agreement. The aircrew received protection on their
job by accepting the wage cut. The airline increased competitiveness by achieving
savings.
John Findlay of the Aircrew Officers Association described the reaching of the
agreement as a win-win situation. He added that both sides have sacrificed.
On June 15, Cathay Pacific announced that its aircrews have unanimously accepted
the revised salary-repackaging offer, while 45 aircrew chose the Voluntary Separation
Scheme. The agreement also brought to an end the two-week disruption to the airline’s
operations due to aircrews reporting sick. By the time Cathay Pacific restored full
service on June 18, it was recorded that over 1,000 flights and thousands of passengers
have been affected.
1.4 Focus of Research
Communication plays a critical role in shaping public perceptions of a crisis and the
organization involved in that crisis. Crisis communication is more about managing the
public perception than managing the crisis itself. In this research, the study focused on
how Cathay Pacific Airways uses the communication strategies during the two-week
crisis in order to shape the public perception and to win the sympathy from the public. It
is hoped that by analyzing a real-life case within a corporate setting, the research could
provide public relations practitioners with some useful insights and references in
developing the crisis-response strategies, so as to manage the public perception more
effectively during crisis.
The analysis of the communication strategies Cathay Pacific used was based on
Coombs’ crisis-response strategies, a model synthesizing Benoit’s Image Restoration
Strategy and Allen and Caillouet’s Impression Management Strategy. A theoretical
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perspective of these strategies was given in Chapter Two.
The research also contains the following sections: Chapter Three provided an
account of the method used in data collection for the case. Chapter Four summarized the
primary findings of the study, as well as conclusions that were drawn. And Chapter Five
discussed the implications of the case for public relations practitioners in managing public
perception more effectively, and its limitations. The transcript of interview with the
spokesman from the airline involved in the crisis communication process was included in
the appendices.
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CHAPTER TWO – THEORETICAL FRAMEWORK
2.1 Theoretical framework
As mentioned in Chapter One, analysis of this research was analyzed using the
framework of Coombs’ crisis-response strategies which were derived from Benoit’s Image
Restoration Strategy and Allen and Caillouet’s Impression Management Strategy. Thus,
this chapter focused on introducing the concepts related to these perception management
strategies. This research took a qualitative data collection approach. Unlike the
literature review section of researches using a quantitative approach, this chapter aimed
not to offer a critique of existing theories and models, but to outline the theoretical
framework related to the strategies. In this chapter, impression management, image
restoration and crisis-response strategies integrating the first two strategies were
discussed.
How will an organization respond during crises? Specifically, what should be the
“appropriate” responses for Cathay Pacific during the labor dispute? The discussion
could perhaps start by understanding how human beings communicate. People
communicate with an intention. Clark and Clark (1977, in Benoit, 1995) declared that
“speaking is fundamentally an instrumental act”. Communicative acts are intended to
attain goals important to the communicators who perform them. Hence, it is appropriate
to understand communication as a goal-directed, purposeful, or intentional activity.
Very often, maintaining a favorable reputation is a key goal of communication
(Benoit, 1995). The need for discourse designed to restore our reputation arises because,
as human beings, we inevitably engage in behavior that makes us vulnerable to attack.
Our vulnerability to criticism leads to threats to our face, which motivates a reaction from
the actor. Thus, one of the basic motives of communication is purification of an image.
Impression management strategies are helpful in attaining the objective of restoring
one’s reputation. Impression management is concerned with the behaviors people direct
toward others to create and maintain desired perceptions of themselves (Gardner and
Martinko, 1988). These behaviors at a personal level include ingratiation,
self-promotion, exemplification, intimidation, and supplication to appear likable,
competent, dangerous, morally worthy, and pitiful respectively (Jones and Pittman’s,
1982). The use of these impression management strategies was examined in a research
study through assessing the leadership effectiveness of 27 world-class leaders (Gardner &
Cleavenger, 1998).
Just like individuals, organizations also engage in impression management.
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Individuals and organizations use similar strategies to protect their images (Allen &
Caillouet, 1994). Public relations practitioners and other organizational spokespeople
attempt to craft a positive public image (Cheney, 1992) for an organization threatened by
an accident, scandal (Marcus & Goodman, 1991), or crisis. In shaping the public image,
spokesmen provide accounts explaining the unanticipated or untoward behavior (Scott &
Lyman, 1968). Impression management strategies could answer an audience’s explicit
or implicit questions, and to control audience members’ perception of a situation
(Schonbach, 1990).
At an organizational-level, impression management strategies that attempt to
discharge the organization from failure and accentuate the positive meanings of
problematic events include excuse, justification, ingratiation, intimidation, apology,
denouncement, and factual distortion (Allen & Caillouet, 1994). In Allen and Caillouet’s
study that examined the impression management strategies used by an organization in
crisis, it was found that “no apologies were present. Different impression management
strategies occurred in messages directed to different stakeholders. Intimidation was used
with special interest groups. Denouncement strategies were embedded in messages to
competitors, special interest groups, and suppliers”.
In another study by the same authors conducted on impression management
strategies employees use (Allen & Caillouet, 1996), it was found that ingratiation
strategies usually occurred in the more public statements, and justification strategies were
most common in interview data.
Apart from impression management, Benoit’s theory of image restoration also
attempted to offer ways for an individual to restore or protect one’s reputation. There are
several approaches to restore a positive image: 1) deny the truth of the accusation; 2)
evade full responsibility for the act or event being criticized; 3) reduce the perceived
offensiveness of the act or event; 4) offer corrective action; 5) sacrifice a scapegoat; and 6)
mortification.
Although the actual strategies vary, both impression management and image
restoration aim at protecting the image of an individual or an organization. It is
especially needed when an organization is faced with events that hurt its image, like the
crisis faced by Cathay Pacific.
A crisis can pollute the positive aspects of an organization’s image. Thus, one of
the primary objectives of crisis management is to maintain an organization’s image – the
public perception of the organization (Mitroff & Pearson, 1993). The task of the crisis
16
manager is to try to protect the current positive aspects of an image from corruption by
the negative aspects associated with a crisis (Barton, 1993). The best way to protect the
organizational image is by modifying public perceptions of the responsibility for the crisis
or impressions of the organization itself (Coombs, 1995).
Based on the works of Allen and Caillouet on impression management strategies and
Benoit on image restoration strategies, Coombs suggested an integrated model by
combining the two strategies. The approaches were summarized as follows:
1. Nonexistence strategies
Nonexistence strategies seek to eliminate the crisis. If no crisis exists, there is no
reason for the negatives associated with “the supposed crisis” to tarnish the organization’s
image. Arguments are made that the crisis does not exist. The objective is to show that
there is no link between the said crisis and the organization. The strategies included
denial, clarification, attack and intimidation.
2. Distance strategies
The distance strategies, which include excuse and justification, acknowledge the crisis
and serve to create public acceptance of the crisis while weakening the linkage between
the crisis and the organization. The crisis becomes acceptable to the publics, and
minimal negative feelings are transferred to the organization. If the link is weak, the
negatives attached to the crisis will have a reduced chance of tarnishing the organization’s
image.
3. Ingratiation strategies
The ingratiation strategies seek to gain public approval for the organization. Public
approval is sought by connecting the organization to things positively valued by publics.
The strategies include bolstering (reminding publics of the existing positive aspects of the
organization), transcendence (placing the crisis in a larger and more desirable context and
define it in terms of some larger goal that the publics accept) and praising others.
4. Mortification strategies
The mortification strategies attempt to win forgiveness of the publics and to create
acceptance for the crisis. They include remediation (giving compensation or help),
repentance (asking for forgiveness), and rectification (taking action to prevent a
recurrence of the crisis in the future).
5. Suffering strategy
The suffering strategy is to win sympathy from publics, a positive rather than a
negative is drawn from the link to the crisis. Suffering portrays the organization as an
17
unfair victim of some malicious, outside entity.
Of all the strategies listed above, the first one – non-existence strategies were not
found in the case of Cathay Pacific as there was no way that the company could deny that
a crisis did happen. The use of other strategies by the airline was examined in detail in
the following chapter.
2.2 Application of the crisis-response strategies in Cathay Pacific’s case
The repertoire of crisis-response strategies is composed of messages designed to
repair organizational images (Coombs, 1995). Different crisis-response strategies should
be used depending on situations in order to achieve the best result. In deciding which
the kind of strategies to be used by an organization during crisis, Coombs explained that
there were four central factors that affect the attributions publics make about the crisis:
crisis type, veracity of evidence, damage and performance history. The first factor
referred to whether the crisis is intentional/ unintentional and external/ internal in nature.
The second related to whether the evidence is true, false or ambiguous. The third was
about the seriousness of the damage made in the crisis. The last referred to the past
performance of an organization. Each aspect has a potential impact on strategy
selection.
Coombs suggested some guidelines for an organization in selecting appropriate
strategies. The decision flowcharts for strategy selection were spelt out in Appendix II.
According to the decision flowchart, the appropriate strategy that Cathay Pacific used
should be mortification. This strategy was predicted by matching Cathay Pacific’s crisis
case with the above four factors, which were listed as follows:
Crisis type: transgression
This is an intentional action taken by an organization that knowingly place publics at
risk or harm. Cathay Pacific foresaw that the salary concession proposal would receive
strong opposition from its aircrew. But as “part of the measures to increase the
company’s competitiveness”, it was something that has to be done. The company
realized that the aircrew would respond negatively to their proposal, even to an extent that
an industrial action would be taken, and passengers would be inconvenienced. Thus the
crisis type matched with that of a transgression.
Veracity of evidence: true
There is no doubt that the crisis happened and substantial true evidence of flight
disruptions causing inconvenience to passengers was found.
18
Damage: major
The damage was serious - passengers’ schedules were disrupted, the organization’s
image was injured, and the local tourism industry was affected.
Performance history: negative
It was not the first time Cathay Pacific was involved in disputes with its employees.
Its cabin crew took a 17-day strike back in 1993 during which the government was forced
to intervene.
2.3 Summary
In short, the main objective of using crisis-response strategies is to manage the
public perception by creating a favorable image for the organization and minimizing the
negative effect the crisis has on the organization. The crisis-response strategies
synthesizing Impression Management Theory and Image Restoration Theory are helpful
in understanding why and how corporations react during crisis. It provides useful
theoretical guidelines in managing the public perception. It also provides hint on the
type of strategy that the airlines should use. In Chapter Four, the use of these strategies
by Cathay Pacific were given in detailed account.
19
CHAPTER THREE – METHODOLOGY
3.1 Selection of the right approach
The purpose of the research is to understand the communication strategies used by
Cathay Pacific Airways during the labor dispute. Put it in the form of a research
question, the following was suggested: “what were the communication strategies used by
Cathay Pacific during the labor dispute and how were these strategies being used?”
As the research question focused on understanding the communication strategies
used, a qualitative research approach was preferred to a quantitative approach as the
former focuses on understanding a phenomenon. The former approach aims at
producing qualitative data: observations not easily reduced to numbers, as opposed to the
statistical data the latter produces which aims at quantification. The strength of
qualitative research lies in its comprehensiveness of perspective it gives researchers. By
going directly to the social phenomenon under study and observing it as completely as
possible, they can develop a deeper and fuller understanding of it (Babbie, 1998).
Among the different qualitative research methods, a case study approach was
selected for this research. A case study is an empirical inquiry that investigates a
contemporary phenomenon within its real-life context, especially when the boundaries
between phenomenon and context are not clearly evident (Yin, 1994). It allows an
investigation to retain the holistic and meaningful characteristics of real-life events. The
key words here are “real-life” and “context”. Case study method is used when the
researcher deliberately wants to cover contextual conditions – believing that they may be
highly pertinent to the phenomenon of study.
Merriam (1988, in Wimmer & Dominick, 1997) listed four essential characteristics
of case study research:
- Particularistic: the case study focuses on a particular situation, event, program, or
phenomenon, making it a good method for studying practical, real-life problems
- Descriptive: the final result of a case study is a detailed description of the topic under
study
- Heuristic: a case study helps people to understand what’s being studied.
- Inductive: many case studies attempt to discover new relationships rather than verify
existing hypotheses
A case study approach was suitable for this research because the above four
characteristics could be applied to this specific case:
- Particularistic: it focuses on one particular real-life event, that is, the labor dispute
20
- Descriptive: it seeks to provide a detailed account of the communication strategies
used by the airline
- Heuristic: by analyzing the communication strategies employed by the airline, it tries
to provide public relations practitioners with insights on the use of such strategies
- Inductive: by testing the data against the crisis-response guidelines listed in the early
chapter, it aims at analytic generalization
By using a case study approach, it can provide a full sense of actors’ motives that
eventuate in specific decisions and events (Feagin, Orum, Sjoberg, 1991).
A primary distinction in designing case studies is between single- and multiple-case
designs. Yin (1994) points out the rationale for single-case designs: first, when it
represents the critical case in testing a well-formulated theory. Second, when the case
represents an extreme or unique case, and third, when it is a revelatory case which allows
the investigator to observe and analyze a phenomenon previously inaccessible to scientific
investigation.
The case of Cathay Pacific justified the use of a single-case study because it
represented both the first and second circumstances: first, it was used to test against the
crisis-response guidelines suggested by Coombs. And second, the case was unique in
terms of the actions positioned by the aircrew. They did not call for a planned industrial
action explicitly. They merely reported sick. And hence the company’s statements
and reaction was required to focus on the sickness of the aircrew instead of a strike.
For a single-case study, there can be two types of designs – holistic and embedded.
The former uses a single unit of analysis and the latter multiple units of analysis.
Whether a researcher should take a holistic or embedded approach depends on the unit of
analysis decided. And the definition of the unit of analysis is related to the way the
initial research questions have been defined (Yin, 1994). In Cathay Pacific’s case, the
research question asked about the strategies of the “company”, which is a single unit of
analysis. Therefore in this case, a holistic approach was taken because the main unit was
the organization as a whole.
3.2 Data Collection
One important aspect of the case study data collection is the use of multiple sources
of evidence to systematically investigate individuals, groups, organizations, or events.
As mentioned earlier, the key words for a case study are “real-life” and “context”.
Hence, the inclusion of the context as a major part of a study means that the study cannot
21
rely on a single data collection method but will likely need to use multiple sources of
evidence (Yin, 1993).
The use of multiple sources of data is preferred because it offers triangulation of the
phenomenon under study. Multiple sources also help the case study researcher improve
the reliability and validity of the study (Wimmer & Dominick, 1997).
There are at least four sources of data that can be used in case studies: documents,
which include letters, memos, minutes, agendas, historical records, etc. Interview, which
includes questionnaires and intensive interviewing. Observation/ participation, and
physical artifact (Wimmer & Dominick). No single source has a complete advantage
over all the others. Thus the use of two or more sources converging on the same set of
facts should be applied.
Among these multiple sources, the first two sources have been used to collect data in
this case: documents and interviews. In this case, three types of documentation were
collected. They included public information, like press releases and press materials;
documents collected from the company, like annual reports and employee newsletters; and
newspaper clippings that featured the labor dispute. The main use of documents is to
corroborate and augment evidence from other sources (Yin, 1994).
The second source was interview, one of the most important sources of case study
information. A qualitative interview is an interaction between an interviewer and a
respondent in which the interviewer has a general plan of inquiry but not a specific set of
questions that must be asked in particular words and in a particular order. It is
essentially a conversation in which the interviewer establishes a general direction for the
conversation and pursues specific topics raised by the respondent. In-depth interview
gives the subject of the interview more freedom to direct the flow of conversation. It is
also more flexible, iterative, and continuous, rather than prepared in advance and locked
in stone (Rubin and Rubin 1995).
An interview request was sent to the Corporate Communication Department of Cathay
Pacific Airways in late March, together with the list of interview questions. The
question list was supplied in Appendix III, and the following were aspects that were
examined:
- communication objectives
- communication strategies and significance of the strategies
- considerations the company had in communication plan development
- effectiveness of the strategies
22
- significance of managing public perception in communication plan development
- measures taken to reinforce its favorable image
The interview questions, mostly open-ended nature, have been designed to understand
the processes involved in developing the crisis-communication plan for the labor dispute
and crisis-response strategies adopted, as well as the evaluation of the effectiveness of the
strategies by the company itself. The interview also included questions about the
company’s evaluation of public perception management and significance of a favorable
image. The question list needed not be exhaustive, as it allowed flexibility for the
researcher to include additional follow-up questions depending on the response of the
interviewee.
The interview with the spokesman from the Corporate Communication Department of
Cathay Pacific was conducted on April 28. The interview was also tape-recorded to
facilitate the writing of transcript.
As another source to triangulate, a request to solicit press materials from the Aircrew
Officers Association was made after conducting the interview with the spokesman from
Cathay Pacific.
3.3 Data Analysis
Data analysis consists of examining, categorizing, tabulating, or recombining the
evidence to address the initial propositions of a study. Unlike statistical analysis, there
are few fixed formulas or cookbook recipes to guide the analysis of case studies. Very
often, it depends on an investigator’s own style of rigorous thinking, along with the
presentation of evidence and consideration of alternative interpretations (Yin, 1994).
According to Yin, there were two general strategies to guide researchers in choosing
among different techniques: one was relying on theoretical propositions, and the other
was developing a case description. The latter was often used only when the theoretical
propositions were absent. Hence, in this specific case, the first strategy was more
appropriate.
He also suggested four dominant analytic techniques that can be used:
pattern-matching, explanation-building, time-series analysis, and program logic models.
For the case of Cathay Pacific, the first technique – pattern-matching, which is one of the
most desirable strategies, was used.
The data collected were analyzed and categorized by matching them against Coombs’
list of crisis-response strategies. But to give a whole picture of the communication
23
strategies used, findings that are not categorized under Coombs’ definition have also been
included and discussed.
As a validating procedure, the draft report was sent to the interviewee in early May for
verification and further inputs. Often, the opportunity to review the draft also produces
further evidence, as the informants and participants may remember new materials that
they had forgotten during the initial data collection period (Yin, 1994).
The validation process also included cross-examination of data collected from
different sources like documentation and information from the Aircrew Officers
Association.
24
CHAPTER FOUR - FINDINGS
In this chapter, the communication strategies employed by Cathay Pacific Airways
during the labor dispute were discussed and analyzed. This chapter consisted of two
parts – part one outlined the crisis-response strategies, and part two examined the
approaches that relate to the use of these communication strategies. Analysis of the use
of strategies and approaches was given after each description.
4.1 Crisis-response strategies
The following gave an account of the crisis-response strategies employed by Cathay
Pacific Airways during the labor dispute. The categorization was based on Coombs’ list
of crisis-response strategies, where appropriate.
4.1.1 Transcendence
Transcendence is one of the ingratiation strategies seeking to gain public approval
for the organization. Public approval is sought by connecting the organization to things
positively valued by publics. Transcendence tries to place the crisis in a larger, more
desirable context. It helps to create identification with publics when organizations and
publics share the values associated with the larger context.
In 1998 and 1999 the whole economy of Hong Kong was hard hit by the Asian
economic downturn and a majority of the working population suffered from salary freeze,
wage cuts and even lay-off. This gloomy economic environment provided a good
leverage point for Cathay Pacific Airways. The strategy of transcendence was the most
prominent element employed by the airline in explaining its request for salary concessions
of its aircrew.
From day one when the issue was made public to the resolving of the crisis, the
airline continuously emphasized that the decision was made in order to increase the
company’s long-term competitiveness. As the spokesman of the airline put it:
“The key message of the company is clear – as a commercial organization, we need to stay competitive, maintain our cost structure at a low level, and use the savings to reinvest in our network or product to increase competitiveness. This message copes with the overall economy of Hong Kong.”
The spokesman further explained the meaning and significance of the term
“competitiveness” and put it within the context of the Hong Kong economy at that time,
when organizations strived to conduct business more cost-effectively, and individual
strived to secure one’s job:
25
“We have the same key message throughout the incident – competitiveness. This term captured the situation of Hong Kong at that time. It is not inclined to either side. Companies need to be competitive, and employees need to be competitive also.”
This message of competitiveness was further reinforced when in April, the airline
announced a loss of HK$542 million in its 1998 annual report, its first full-year loss
recorded in 35 years since it was listed in Hong Kong. It gave a sense of urgency to the
airline to implement cost-savings measures in order to let the company stay competitive in
the industry.
The company’s need to improve competitiveness was endorsed by spokesman of the
Aircrew Officers Association, who commented in a media briefing on June 6 that “the
pilots recognize the need to cut costs. We negotiated in good faith to meet management
cost-savings objectives, which we understand, and fully support”.
Given the need to improve competitiveness, one of the methods was to reduce
operating cost. In an information deck prepared for the media by the company, it was
revealed that “aircrew represent 10% of Cathay Pacific’s staff but account for nearly 40%
of total staff costs”. A financial analyst interviewed by Next Magazine (Next Magazine
issue no. 483) also pointed out that staff costs represented for 29% of Cathay Pacific’s
operating cost in 1998. It was the highest expense category compared to other categories,
which included flights (24%), fuel (14%) and aircraft maintenance (10%). Salaries of
the aircrew accounted for 45% of the staff costs.
The spokesman also compared the salary of the aircrew with the people in Hong
Kong:
“Pilots know they are well-paid. A large number of Hong Kong people earn around $10,000 each month, but pilots have a package of over one million plus other fringe benefits. In that economic environment, it is difficult to seek support for this group of well-paid people who said they are dissatisfied with a wage cut.”
It is in fact unreasonable and inappropriate to compare the salaries of a majority of
the local people with the pilots. Such comparison has no common ground or common
parameter. However, the spokesman linked the two groups together in order to find a
justification for the company’s action - the pilots’ salary was not competitive enough, and
given the economic difficulty when most of the people earn an average salary, pilots
should already be grateful of how they are treated.
Apart from the general public, employees were also the targets for the airline when
26
the company used the tactic of transcendence. In addition, the value of “equality” was
highlighted, which may be helpful in gaining employees’ support. The airline
spokesman commented:
“Perception of other ground staff towards cockpit crew is that this group of people is well treated and enjoy a privileged position. If other colleagues suffer but not cockpit crew who consists of a higher salary expenditure, it is difficult to explain and difficult to make real savings in our cost structure.”
Evidence of what the spokesman referred to as “other colleagues suffer” can be
founded in the fact sheets distributed to the media. The fact sheet revealed that the
company has taken the following cost savings measures which posed different degree of
“sufferings” to its employees:
- Around 1,000 Hong Kong-based ground staff was made redundant in the year of 1998,
representing 25% of all Hong Kong ground staff
- Hong Kong-based ground staff was requested to raise their productivity – to work 30
minutes a day longer for a pay rise in December 1998
- Cabin crew was requested to increase working hours from 72 a month to 76 a month
in return for a pay rise in January 1999
This showed that aircrew was not the first and only staff group that was asked to
sacrifice. The spokesman added:
“Cockpit crew already knew that ground staff has got their salary frozen – although they were compensated by a one-off productivity increment – and cabin crew as well. Cockpit crew knew they are the next target.”
It implied that in the difficult situation faced by both the company and its staff,
“suffering”, which could help the company tackle its financial problems, was something
across the board. The argument of suffering could also pacify both pilots and non-pilots.
Pilots would not feel too bad when they knew that they were not the only group of people
asked to sacrifice. Non-pilots felt a sense of fairness when this group of “privileged”
people could not be exempted from salary concessions.
The researcher found that the use of transcendence was relevant in justifying the
company’s action. The leverage point and the argument that the company put forward
did reflect the real situation in Hong Kong. It also captured the shared value of the
people at that time when a lot of people in the society faced different level of sufferings.
The need to be competitive, the reason for asking a salary concession from the aircrew,
27
was also fact-based. There was a slogan frequently used in the community during the
economic downturn – “to work together at the time of painful difficulties”. This was the
thing the public positively valued. Hence the public increased the level of approval and
acceptance when the company’s argument was placed within the context of the economic
environment at that time.
4.1.2 Clarification
The strategy of clarification was seen as a reactive approach, which was used when
the airline tried to present the facts from the company’s perspective. This was usually
used after the other party gave their arguments.
The airline organized a press conference on June 1 hosted by Tony Tyler, Director
Corporate Development, to address certain points the Aircrew Officers’ Association made
during a press conference earlier on the same day. The Association members attended a
union meeting and agreed to vote on a strike motion should the company terminate pilots
who do not accept redundancy or a package of pay cuts by June 11. The Association
also disclosed the information of pilots’ salaries in the same occasion.
In response to the comments made by the Association, the company prepared
briefing papers to offer explanation on certain issues. The clarification put forward by
the airline was presented in the format that started with a question, answered by a
description named as “myth”, followed by another description named as “fact”, then end
with a list of supporting points. Here is an extract from a document prepared by the
airline to the media which served as an example of a clarification:
28
Who was responsible for talks reaching an impasse? Myth: The management was never serious in undertaking talks with its aircrew. Fact: Cathay Pacific entered talks with its aircrew prepared to make significant concessions
to reach a deal. However, the critical area of salary concessions proved too difficult for the two sides.
- Cathay Pacific first approached the AOA to discuss salary concessions, compensated by stock options, in July 1998. It was March 1999 before the AOA even agreed to start talking.
- Cathay Pacific and representatives from the AOA held nine weeks of intensive negotiations between 23 March and 21 May. About 30 meetings took place. Each negotiating team consisted of three people, and was backed up by specialist professional advisers.
- The mood of the talks was sensible and constructive and substantial progress was made in many areas.
- The company’s plan would save about HK$1.5 billion over the next 10 years. The AOA’s proposal would cost the company about one billion over the same period. The two sides never managed to close this HK$2.5 billion gap.
- The management could not accept the AOA’s proposals as the commitment to future salary increases and provident fund contributions would have left the airline with a legacy of unmanageable costs.
- The company found it very disappointing that a deal could not be reached. This is not a complete surprise however as it would have been very difficult for the AOA to agree to long-term salary concessions.
The spokesman explained the intention of preparing this document and how they
anticipate the actions made by AOA:
“The presentation is to give a question and then supply with a lot of bullet points. ‘Myth’ is the response we expect from AOA, and then we present our arguments as ‘Facts’.”
There were a total of five categories which the airline intended to clarify. The
following were the “myth” and “fact” to the remaining four categories:
2. How well is Cathay Pacific aircrew paid?
Myth: Cathay Pacific pilots are not particularly well paid especially compared to pilots
working in Australia, UK and US.
Fact: Cathay Pacific aircrew is among the highest paid in the world.
3. What has Cathay Pacific done to address the downturn?
Myth: Cathay Pacific has not seriously tackled costs in other areas of the company, it is only
seeking concessions from aircrew.
Fact: The company has appealed successfully to all areas of the company except aircrew and
now it needs concessions from them to help secure the future welfare of the company and its
entire staff.
4. How bad is the financial situation facing Cathay Pacific?
Myth: Cathay Pacific is only undergoing a temporary downturn and will regain its earlier
levels of profitability once Asian economies recover.
29
Fact: The aviation industry is becoming vastly more competitive meaning Cathay Pacific must
take further steps to improve its profitability.
5. Is Cathay Pacific asking aircrew for a 14-year pay freeze?
Myth: Cathay Pacific is demanding that aircrew take a 14-year pay freeze.
Fact: Cathay Pacific is asking senior aircrew for concessions over 2 to 3 years. The situation
will be revised at the end of that time.
The researcher found that the use of clarifications was able to bring out the company’s
positioning. The clarifications were focused – explanations were given to issues raised
by the Association, and detailed – explanations were supported by facts and figures.
However, the use of words like “myth” and “fact” was not a clever choice as it
symbolized the management’s arrogance of ignoring the possible truth that lied in the
Association’s arguments. By labeling AOA’s arguments as “myth”, the management had
the belief that only their own arguments could be regarded as “truth”.
The clarifications were being recapped in the employee newsletter “CX World” issue
no.31 dated May 28. In this issue, the airline also made comments on an area which has
not been included in its press materials: the stock option scheme. On the issue of stock
option scheme, in a briefing paper the Association prepared to the media, it was disclosed
that “international financial advisers state that CX’s unusual option valuation criteria
inflates their values by 300%”. They condemned that the airline “developed its stock
option based simply on in-house information” and thus was “not accurate”. The
company refuted this statement and stressed, in the newsletter, that “the stock option
scheme was devised with the help of one of the world’s leading actuarial consultants.
Valuations were made in full accordance with standard valuation techniques”.
What the researcher found it noteworthy in the dispute regarding the stock option
scheme was that AOA challenged the valuation method of the company through the media
but Cathay Pacific clarified the issue through its employee newsletter. The company’s
intention was to stay consistent in its primary message – salary, and avoid diverting from
this key message by complicating the issue with other arguments. Employee newsletter
was the next available, but more appropriate channel for clarifying this question. After
reviewing the press coverage during that period, the researcher found that there was no
media pick-up on the dispute of valuation method. This showed that the company
successfully predicted that this issue was not of the media’s interest, and has made a right
choice by not bringing this up to the media.
When AOA argued that the company was not keen in the salary negotiation, the airline
30
reacted by publishing a time chart to show the actions the company has taken in the
negotiation. According to the time chart, the airline “approaches AOA to discuss salary
conation in June 1998”, but “in July, AOA refuses to hold a meeting with the company if
the issue of salary concessions is on the agenda”. On October 29, 1998, “Director Flight
Operations writes to AOA asking for resumption of talks. The AOA do not respond to
the letter”. It was not until March 23, 1999 that “intensive period of negotiations
between management and AOA commence. About 30 meetings are held over the
following 9 weeks”. According to the spokesman, the time chart has been regularly
updated during the two-week incident in order to present the media with the latest
information.
The researcher felt that the time chart was a good tool to let the media understand the
whole process of negotiation. There was objectivity in the element of “time” and
arguments could be better supported when a time frame was provided. The time chart
also spelt out what both sides did or did not do in the salary discussion process in a certain
time.
However, given its objectivity, “time” can still be manipulated. Both sides gave
different understandings to when the negotiation actually started. AOA’s media
information revealed that “the pilots recognized the need for cost cuts and negotiations
started in March 1999”. It is not surprising both sides did not have the same
interpretation on a large number of issues including this one. Such difference was
attributed to their intention to articulate their own justification more effectively. The
date June 1998 given by the company marked the first time the company proposed to hold
discussions with AOA. The company wanted to suggest that it has prepared to talk to
AOA for a long time, but AOA was indifferent to their proposal. AOA was to be blamed
because it refused to contribute efforts that could help the company cut costs. The date
given by AOA was the time when AOA really started to negotiate with the company.
The Association expressed that they participated in the discussions because they
“recognized the need for cost cuts”. They were just as supportive as other staff groups in
helping the company. But they were turned into victims due to the mishandling of the
management.
Also at the press conference held on June 1, AOA disclosed the salary of the pilots to
show that their salary was not as high as what the company described. The airline then
responded by releasing their set of data because it thought the data AOA revealed was
“misleading”. The airline’s Corporate Communication Department compiled a salary
31
comparison of its aircrew with other airlines back in June 1998, when the company first
prepared itself for the salary concession for its pilots. However, the salary data has not
been disclosed to the media until AOA made the pilots’ salaries public. The pilots’
salaries released to the media by Cathay Pacific and AOA are included in the following
tables.
Media information by the Aircrew Officers Association:
Actual Gross Compensation Examples
HK$ Second Officer 1 year with CX Age 27+
First Officer ‘B’ 10 years with CX Age 37+
Senior Captain ‘B” 17 years with CXAge 45+
Monthly Salary HK$30,072 HK$62,473 HK$125,803
Housing Allowance HK$24,000 HK$39,500 HK$65,000
Subtotal per month HK$54,072 HK$101,973 HK$190,803
75% of International schooling, say 2 children
- - HK$18,000
90% of local schooling at 2 children at ESF
- HK$14,000 -
13th month bonus HK$2,506 HK$5,206 HK$10,483
Per month HK$56,678 HK$121,179 HK$219,286
Per year HK$678,936 HK$1,454,148 HK$2,631,432
Media information by Cathay Pacific:
Typical cost of Employment for Hong Kong-based Aircrew on A-scale pay (HK$)
First Officer Junior Captain Senior Captain
Basic Salary $1,225,238 $1,639,662 $2,035,721
13th Month $102,103 $136,639 $169,643
Training Allowances - - $285,000
Outport Allowances $48,000 $48,000 $36,000
Total Cash Income $1,375,341 $1,824,301 $2,526,364
Housing Allowances $510,000 $510,000 $54,000
Children’s Education $40,500 $67,200 $150,500
Medical Allowances $8,787 $8,787 $11,700
Provident Fund $205,738 $275,327 $341,831
Total Cost of Employment $2,140,366 $2,685,615 $3,570,395
32
The above two tables showed an important and prominent inconsistency in the
selection of benefit items. The following four items that appeared in the company’s
version have not been included in AOA’s version: training allowances, outport allowances,
medical allowances and provident fund. The company also highlighted in the media
information that in addition to the basic salary, the aircrew also “receive significant
allowances”. This explained why the company thought the AOA’s data was inaccurate
because those allowances have not been counted by the AOA as part of the pilots’ total
compensation. The researcher would like to point out that the difference in the salary
data was attributed to the difference in the focus of comparison. The pilots’ focus was
compensation, while the company’s focus was cost of employment. Both of them
selected the data which were advantageous to their own arguments.
The company even went one step further to give a full list of the A-scale pilot’s
monthly salary from 1998-2000 projected, with breakdowns of grades and years of
services. By providing a set of detailed and factual information, the company attempted
to refute AOA’s argument that the pilots were not particularly well paid, and challenge the
accuracy of AOA’s data.
Such manipulation of data is commonly used in disputes, as each side involved needs
to bring out arguments favorable to its own so as to win support and sympathy. AOA
disclosed data to show that the pilots are not as highly paid as other people think. The
airline counteracted by releasing information to show that pilots have a high staff cost on
the company. The release of detailed information by the airline was effective in
clarifying issues that were misrepresented, but was detrimental to its relationship with the
aircrew.
Given the great difference in the salary data, it could perhaps be beneficial to solicit a
third party data to obtain a clearer picture of the issue. The cover story of Next
Magazine issue no.483 revealed that the average annual salary of a senior captain from
Cathay Pacific was HK$2.18 million in 1998, 40% higher than the pilots of the same rank
in the States, whose average salary was HK$1.2 million. Such data was solicited from
the 1998 statistics of Aviation Information Resources, Inc. in the United States.
It was also noteworthy that the tactic of clarification discussed here has a different
connotation and did not necessarily echo Coombs’ definition of clarification. Coombs’
tactic of clarification, which was under the category of nonexistence strategies, attempted
to explain why there is no crisis. Cathay Pacific’s tactic of clarifications had the main
33
objectives to clarify what they regarded as incorrect information given by the other side.
4.1.3 Repentance
Remediation, repentance and rectification are the three strategies under the category
of mortification. The strategies of mortification are necessary when the organization
involved in the crisis admits that the crisis has caused inconvenience to the public. It
attempts to win forgiveness of the publics and to create acceptance for the crisis. The
mortification strategies maximize concern for publics while minimizing the protection of
the organization’s image. All mortification strategies seek to redress the crisis in some
manner. The strategies acknowledge, either explicitly or implicitly, responsibility for the
crisis. Accepting responsibility for the crisis can hurt the organization’s image but
redressing the crisis serves as a foundation for repairing the organization’s image. In
Cathay Pacific’s case, repentance and remediation strategies were two of the three
mortification strategies used.
Repentance involves asking for forgiveness. The organization apologizes for the
crisis. The negatives associated with the crisis should be lessened as people accept the
apology and forgive the organization for its misdeeds. Repentance was used by the
airline when the flights were being disrupted. It can be seen from the airline’s daily
update of the status of flight cancellations from May 29 to June 15 distributed to the
media. The airline included an apology in each of the update. Here is the highlight of
the apologies included in the media releases. These apologies were given in the quotes
of Tony Tyler, Director Corporate Development. The subject of the media release is
given within brackets.
May 30
(The number of flights cancelled and passengers affected, and actions the airline has taken
to respond to the situation)
- We offer our sincere apologies to all those passengers who have been affected by
this unfortunate disruption. We are making every effort to minimize the delays
they have to face.
- We apologize to all those passengers who are being inconvenienced and we thank
them for their patience and understanding. I would like to assure everyone that
we are doing all we can to limit the impact of these disruptions on our passengers.
May 31
(Measures taken to remedy the situation)
- We are making every effort to limit the impact of disruptions on our customers,
34
and keep the situation under control. In the meantime, we apologize to
passengers for any delays they are experiencing and we appreciate their patience
and understanding at this difficult time.
(Agreement reached with four airlines to provide chartered flights, providing extra
capacity)
- I would like to convey our sincere apologies to the many passengers who are being
inconvenienced by the disruptions to our services. We thank them for their
patience and understanding.
June 1
(The airline operates 10 additional flights using aircraft leased from other airlines)
- We apologize to all those passengers who have experienced delays and we thank
them for their patience and understanding.
- In a press briefing on the same day: I would again like to convey our apologies to
all those passengers who are being inconvenienced by these disruptions. We are
aware that many passengers have been delayed and must find this as frustrating as
we do. We thank them for their kind patience and understanding, and assure
them we are making every effort to limit the impact of these disruptions.
June 3
(The airline operates more than 70% of its normal capacity)
- We again apologize to all those Cathay Pacific passengers who are being
inconvenienced by the continued disruptions. I would like to assure them we
are making every effort to ensure they reach their chosen destinations with the
minimum possible delay.
June 5 and 6
(The airline operates less than 80% of its normal capacity)
- We again apologize to all those passengers who have experienced delays and we
thank them for their patience and understanding in this difficult time. We are
pleased to say however that the determined efforts of our staff in arranging extra
flights have seen these delays diminish.
June 8
(The addition of five extra aircraft from other airlines)
- The increasing number of aircraft that are flying for us every day shows that our
efforts to keep our passengers moving are being successful. If passengers are
being inconvenienced, however, we do apologize to them and ask for their
35
understanding at this difficult time.
June 10
(Agreement reached with AOA on the issue of aircrew salaries)
- The airline again apologizes to the travelling public and the Hong Kong
community for the inconvenience caused by the recent disruptions, and will restore
normal Cathay Pacific operations as soon as possible.
June 15
(Aircrew’s acceptance of the negotiated offer)
- The airline apologizes to the travelling public and the Hong Kong community for
the inconvenience caused by the recent flight disruptions. It aims to restore all
its operations to normal by June 18.
The spokesman acknowledged the use of apology is important:
“What we can do is to apologize. We can’t control the situation as they are not officially on strike… In all labor disputes, unfortunately customers will be affected.”
For Cathay Pacific, apologies were not only important, but also a must. By issuing
apology statements, the company accepted its responsibility in the crisis. However, the
researcher doubted the effect of such apologies in helping to shape public perception.
Afterall, repentance could not solve the flight disruption and could not undo the damages.
Repentance also lost power when the incident dragged on. Even sincere apologies
would become cliché if the company failed to resolve the problem. Worsestill, it gave
the media and the public an impression that the company was only capable to speak
(apologize) but not to act (resolve the problem). Thus, repentance could work better if
the crisis breaks out and dies down within a short period of time. It loses its
effectiveness when the crisis drags on.
4.1.4 Remediation
Remediation, another mortification strategy, willingly offers some form of
compensation or help to victims. Negative feelings may lessen as the organization takes
positive actions to help the victims – publics injured by the crisis. On May 31, the
airline reported that they have taken the following remediation measures for affected
passengers:
- transferred passengers to other Cathay Pacific flights
- transferred passengers to flights operated by other airlines
- asked other regional airlines to operate large aircraft on their scheduled flights
36
- provided hotel accommodation to passengers who were delayed overnight
- finalized charter agreements with other airlines
Just like repentance, remediation was necessary, but it also failed in shaping a
favorable image for the company. Remediation was something the airline must do for
the traveling public in order to address the problem. Although the company actively
sought for improvement measures, the damage has been caused and could not be undone.
By the time when the crisis was resolved, it was reported that over 1,000 flights have been
affected. The severity of the damage imposed on the travelers was serious.
An examination of the media coverage also revealed that remediation was not
successful. Most of the coverage focused on the seriousness of disruption and disorder,
as well as the sufferings of passengers. Remediation actions failed although the
company has taken a series of measures to address the problem.
After the crisis was over, the airline announced to offer a “goodwill bonus of 8,888
Asia Miles” to passengers who fly with Cathay Pacific from June 19 until August 8, to
show “appreciation for the patience and understanding of its customers during the recent
flight disruptions”.
This was a strange and inappropriate action of remediation, as those actually suffered
and have their traveling plans affected during the two-week service disruptions have not
been compensated at all. It gave the public a feeling that the company was not serious in
addressing the problem faced by those affected travelers, and the goodwill bonus was only
some gimmicky treat to improve the company’s image.
4.1.5 Praising Others
Apart from the transcendence strategy, praising others is another tactic under the
category of ingratiation strategies. It is used in order to win approval from the target of
the praise. It is expected that the organization’s praise of the target group should lead
that group to like the organization.
The group of people that Cathay Pacific targeted at was its employees. Here is the
highlight of the appreciation the airline showed towards its employees who put in extra
efforts during the service disruptions. It can be seen from the airline’s daily update of
the status of flight cancellations from May 29 to June 15 distributed to the media. The
appreciation was included in each of the update and was also given in the quotes of Tony
Tyler. In some occasions, the remarks of appreciation were given right after the
apologies.
37
May 29
- We appreciate the many aircrews and other staffs whose efforts have helped us
keep the majority of our passengers moving to their destinations.
May 30
- I would like to thank the many aircrew and other Cathay Pacific staff who have
been working extra hours over the last few days to help keep our passengers
moving.
- I would like to thank the many aircrew who are performing their duties as normal
today, and also those aircrew who are not on duty but who have called in to offer
their help.
June 1
- (in a media briefing) I would again like to thank the sterling efforts of so many of
our staff. Here at the airport and in our operational departments both in Hong
Kong and overseas, many staff are working very long hours to help us keep
passengers moving. Their efforts are appreciated.
June 2
- With a growing number of replacement flights we are ensuring that more
passengers reach their destinations without delay. I would like to thank the
efforts of the many Cathay Pacific staff who have been working extra hours to
bring this about.
- (in a media briefing) I would also like to thank the efforts of so many Cathay
Pacific staff both here at the airport and throughout our many operational
departments in Hong Kong and overseas. Their efforts are certainly appreciated.
June 4
- I would like to thank our many staff – pilots, cabin crew and ground staff – whose
hard work has enabled us to take this step towards restoring full services.
June 5 and 6
- We are pleased to say however that the determined efforts of our staff in
arranging extra flights have seen these delays diminish and we appreciate their
hard work.
June 7
- The tremendous efforts of our staff over the past ten days have enabled us to be
more and more confident about the stability of our operations.
38
Cathay Pacific issued a press release on June 6 separately announcing recognition to
employees who put in extra efforts to help handle the service disruptions. It was
released that an extra allowance of up to HK$400 a day will be given to “those airport
staff and staff in other areas whose extra efforts are required to handle the disruptions.
Efforts from three groups of staff were highlighted:
- airport staff worked extra hours to explain the situation to passengers, and make
alternative travel arrangements
- a number of cabin crew whose flights have been grounded due to the disruptions have
volunteered to work answering calls to the passenger enquiry hotlines
- staff in the airline planning department worked extremely long hours arranging the
additional flights that are being operated on Cathay Pacific’s behalf by other airlines
The researcher thought that by praising its employees through the media, Cathay
Pacific tried to convince the public that the airline is a considerate employer. It also
suggested the company gained support from its staff more than AOA did. By praising
the aircrew who continued to work and who “are not on duty but who have called in to
offer their help”, it casted blame on the sick out aircrew that they were responsible for
increasing the workload of other pilots who did not join the sick-out action.
The company not only praised its staff externally, but internally, a more important
channel. The appreciation remark was the first key message in the synopsis of Tony
Tyler’s speech:
- I would also like to say a big thank you to everyone in the company, both in Hong
Kong and in the outports, who have worked so hard and gone the extra mile to
keep the airline going during the past two weeks.
- If it hadn’t been for your support, if we hadn’t been able to keep a high level of our
scheduled operations going with your help and the aircraft from other carriers we
assembled, we would also not have been able to reach this settlement.
- To the aircrew who continued to work during this period, I would like again to
express my respect and thanks. I know that many of you were torn between
showing support for your mates and the AOA, and upholding your professionalism
and dedication to our passengers. You chose to fly and I thank you.
- Another group of staff for whom I have nothing but the greatest admiration are the
staff in Crew Control, who worked 20-hours shifts to help us find aircrew to fly our
plans. While many others also worked long hours, these staff also had to bear
the brunt of very difficult conversations with some aircrew who were obviously
39
very angry with the company.
By praising these employees, the company hinted its dissatisfaction towards the sick
out pilots: they failed to “uphold their professionalism and dedication to passengers” and
they vented their anger on the staff in Crew Control. The company also did not believe
the pilots were really sick – the phrase “you chose to fly” implied that it was indeed a
matter of choice for the pilots, instead of a matter of sickness. Such query was also
reflected in a press coverage in SCMP (May 30, 1999) saying, “despite union denials of a
sick-out, Cathay Pacific doubted most of the pilots were genuinely sick”.
The researcher found that the tactic of praising others had limited effect in shaping
public perception. The media coverage during that period focused on the dispute and
little had been reported about the company’s action to praise its employees.
4.1.6 Distance strategies
The distance strategies acknowledge the crisis and serve to create public acceptance
of the crisis while weakening the linkage between the crisis and the organization.
Excuse is one of the distance strategies which tries to minimize the organization’s
responsibility for the crisis. The airline spokesman responded to the query of the press
saying the company was not well prepared for the possibility of aircrew going on strike:
”The media think that we didn’t prepare for the strike given the high possibility of strike. When we prepare for the proposal, we came up with different strategies for different scenarios. We have prepared a scenario that if we need to maintain the minimum service delivery during a flight, how many cockpit crews do we need, and whom can we rely on....It’d be better if they go on strike as by doing so, we can officially suspend their duties and know how many people can still be used. The problem of reporting sick is that we don’t know how many people will report sick. The number of report sick increased everyday and fluctuate.” “We can’t control the situation as they are not officially on strike.”
The company tried to minimize its responsibility in the flight disruptions by
suggesting that the problem lied in the aircrew’s side. As the pilots have not taken any
industrial actions, the company was put in a reactive position. The airline could only
wait to receive calls from the sick out pilots.
An industry player whom Apple Daily interviewed (Apple Daily May 31, 1999)
shared the same view with the company that the airline failed to activate their contingency
plan though it was in place, as the airline was not able to predict which aircrew would
report sick and which flight would be affected.
40
The researcher thought that the use of distance strategy was fair and acceptable.
The excuse proposed by the airline helped the public understand that the actions taken by
the company were limited.
4.2 Communication Approaches
In this section, the approaches that relate to the communication strategies were
discussed. Three major areas were highlighted: proactivity, consistency and use of
media as a communication channel between the company and the aircrew.
4.2.1 Proactivity
According to the airline, being proactive was critical to the success of the
communication in this incident. By doing so, the company’s arguments could be shaped
in a more favorable manner. After the airline has sent the revised offer to individual
aircrew, they organized a press conference on May 26 to announce it to the public. This
was how they justified their taking of this preemptive action:
“We organized the press conference as we expect AOA to disclose the offer and position the issue as suppression by the company… Rather than letting AOA position the issue as a company suppression, we prefer to explain the proposal to the public, which is a complicated one.” “We know that a press conference is needed once the Hong Kong-based aircrew received the letter…It’s due to the media environment in Hong Kong. Otherwise we don’t have the chance to position the campaign in a way we see it. It is more difficult after other people initiated it and we take a counter-argue position.”
Although the reason for holding the press conference was to “explain the
complicated proposal to the public”, the researcher thought that what was more true in the
spokesman’s statements was that the company’s intention to forestall AOA. The
company knew that if the pilots positioned the incident as company suppression first, it
would be detrimental to the company’s image. Thus, what the management could do is
proactively “position the campaign in the way we see it”, in order to take control of the
incident.
Moreover, the motivation to call for a press conference was questionable. The
reason given by the company was neither convincing nor appropriate. It could be
understood if both sides were rivals to each other. But it did not look right in the
employer/ employee relationship. It only disclosed the lack of trust and understanding
41
between the management and the pilots. It also reflected the management’s mentality of
treating its employees as rivals.
In addition, the airline believed that proactive communication played a part in
shaping media’s perception of whether the company was credible or not. The company
looked more credible if it could communicate in a proactive way and willingly share
information with the media:
“Our communication principle is to be as proactive and transparent as possible. For instance, what have we done to maintain the service level, we need to let the public know.” “If we are not proactive and transparent, reporters will think we have a lot of hidden agenda. It’s especially true with English paper reporters.”
The approach of proactivity was seen in the daily distribution of media releases, and
daily media briefings hosted by the company’s spokesmen. The company’s practice of
sharing information with the media was also evident in the press coverage, where a
majority of the press clips included comments made by the company spokesmen.
The researcher believed that there was, of course, an important guideline for being
“as proactive and transparent as possible” – the actions taken should help the company in
a positive way, like the building of a favorable image. In Cathay Pacific’s case, the
company should be proactive when it wanted the public to know their achievements
(“what we have done to maintain the service level”), or when it wanted to convince the
reporters that they do not have hidden agenda. Proactivity may not be necessary if it
could not offer any value to the shaping of a favorable image.
4.2.2 Consistency
According to Cathay Pacific, consistency was another issue that helped address the
question of whether the company was convincing or not. The airline believed that if the
company puts forward a set of messages consistent throughout the dispute period, it
would look more credible:
“Key messages of the company is clear cut – from lay off to this time – as a commercial organization, we need to stay competitive, maintain our cost structure at a low level, use the savings to reinvest in our network or product to increase competitiveness.” “AOA put out different messages in different times. In comparison we are more convincing because we are consistent.” “Our key messages and argument are consistent throughout the
42
incident. It only differs in the way we reinforce it.”
Evidence of what the spokesman referred to as “different messages in different times”
on the part of AOA can be seen in a statement made by AOA on June 6. In that
statement, the Association spelt out that the dispute was not “about pay and other aspects
of remuneration”. It was about three key issues: contract abuse, the company’s financial
position, and the pilots’ professional position. These issues were summed up as follows:
- Contract abuse referred to the management’s right to make unilateral changes to
pilots’ future conditions of employment.
- The company’s financial position referred to the management’s proposed levels of pay
are unrealistically low.
- The pilots’ professional position stressed that pilots are committed to the success of
the airline, passengers, safety and service.
This set of messages varied from what AOA has been using since the outbreak of the
incident. At the earlier stage, the Association argued that “it was unacceptable for the
airline to cut salaries after freezing pay for the past three years” (SCMP, May 29, 1999).
This contradicted with the statement mentioned above. The airline also refuted AOA’s
statement about these three key issues by reinforcing that salary was the focus of dispute
(Apple Daily, June 10, 1999). In this respect, the airline had the opinion that it was more
consistent in its key messages than AOA.
The researcher agreed that consistency was important in making the arguments
convincing. It was as equally important in helping an individual or an organization stay
focused in articulating the arguments. Afterall, one cannot convince other people of
one’s arguments if he himself cannot stay focused in and stick to his arguments.
4.2.3 The use of media as communication channel between the company and the
aircrew
The essential role of crisis communications is to affect the public opinion process.
The news media is a prime tool for changing public opinion (Fearn-Banks, 1996). As a
result, the labor dispute was characterized by its heavy use of mass media as a
communication channel between the airline and the Aircrew Officers Association.
Media acted as the middleman for both sides and helped convey messages to one another.
The spokesman had the opinion that it is a common phenomenon in labor disputes and is
inevitable:
“After the announcement (made in the press conference),…
43
AOA stopped to communicate directly with the company. They only communicate through the media.” “In recent labor dispute cases when colleagues are dissatisfied with the company, they’ll shout it out to the media first instead of using internal channels to solve the problem.”
The company claimed that AOA stopped the communication with the company but
brought the case to the media. However, the researcher had the opinion that this was
only an excuse to allow the company’s action look more favorable. The company
seemed to have forgotten that it was in fact the company itself who brought the case to the
media in the first place by holding a press conference to announce the salary concession
issue. It was natural for news reporters to seek the pilots’ comments on the airline’s
announcement as a follow-up. But the company interpreted this action as
“communicating only with the media”.
According to the company, the use of media as a communication channel was,
nevertheless, a necessity for the company because it believed that the aircrew would
heavily rely on information in newspapers:
“Cockpit crew don’t physically station in the office. They receive company information unless they logon the company’s e-mail or receive our communication by post. Newspaper is the next available choice for them to learn the company’s perspective. But very often newspapers have their own stand.” “Media is an important tool to convince aircrew because apart from AOA, media is the only channel they can know the company’s perspective and actions to be taken.”
The researcher found that the above statement revealed the weakness of the company
communication – the aircrew did not trust the company communication. The company
knew that “very often newspapers have their own stand”. But still it had to rely on the
media to disseminate the company’s information to the aircrew. For the aircrew, when
the company communication and newspaper are equally difficult to access, they would
prefer newspapers to company mail. This showed that the company communication
failed to gain popularity among the aircrew.
Because of the important role mass media has, the company needed to win sympathy
from the media first if it wanted to win public sympathy. The researcher thought that it
explained why the spokesman needed to be media-trained as early as 1998. Senior
executives are seasoned in the skills and tactics needed for crisis communication (Johnson,
44
1993). The company wanted to make sure it could gain the support from the media.
As the shaper of public perception, mass media was also the target audience for the
company’s communication plan.
Although the airline tried to gain support from the media, it might not be as
successful as they wished in some occasions. Some newspapers are more difficult to
convince compared to others:
“For key reporters like Jo Pegg of SCMP, we allow her direct access to our spokesman. We hope that the reporter can be on side if we achieve relationship building. It may not be successful, but at least we have presented our facts.”
The spokesman noted that the company was not successful in getting certain
reporters’ sympathy, although it has given these people special treatment (“allow her
direct access to our spokesman”). However, the researcher was of the opinion that it
was inappropriate to play favorites among the media (Johnson, 1993).
4.3 Summary
Cathay Pacific used different crisis-response strategies during the labor dispute.
These strategies were used with the following intentions:
- to shape perception of the media, the public, the aircrew and its employees that
Cathay Pacific is a responsible company
- to convince the public that its action has justification
- to imply that the company is honest and credible
- to suggest that the company has done the best it can, no matter it is about the salary
offer of its aircrew, or the handling of the flight disruption
Cathay Pacific used a mix of different strategies in the labor dispute case in order to
achieve the above objectives and intentions. These strategies included transcendence,
clarification, remediation, repentance, praising others, and distance strategies. In
managing public perception, some strategies worked in this case, and some did not. No
crisis-management model should promise success (Newsom et al., 1992) as the crisis
situation is too complex to factor in and to control for all the variables. In Cathay
Pacific’s case, it was neither successful nor unsuccessful as some of the strategies worked
towards their intention and some failed.
The use of a mixture of various strategies also differed from what Coombs predicted
in terms of the strategy selection. Coombs predicted in the decision flowchart that a
45
single strategy – mortification – should be used. Part of the reason for such difference
has been suggested by Coombs that the guidelines treat pre-crisis planning and descriptive
strategies (providing basic information about the crisis) as givens.
There should be no right or wrong in selecting a single strategy or a mixture of
strategies. What matters most would be the outcome of the selection – whether such
strategies could contribute to increasing the positive value of an organization’s image by
successfully shaping public perception.
46
CHAPTER FIVE - CONCLUSION
In this research, the crisis-response strategies used by Cathay Pacific during the labor
dispute in May 1999 were examined through a case study research method. It was found
out that Cathay Pacific used a mix of different strategies in the labor dispute case in order
to achieve the above objectives and intentions. These strategies include transcendence,
clarification, remediation, repentance, praising others, and distance strategies.
The use of a mixture of various strategies also differs from what Coombs predicted in
terms of the strategy selection. Coombs predicted in the decision flowchart that a single
strategy – mortification – should be used.
5.1 Limitations
The research aimed at understanding the crisis-response strategies adopted by Cathay
Pacific in handling the labor dispute. Different types of data were necessary in getting a
fuller picture of how and why the airline chose a particular strategy. However, there
were some limitations in terms of the data solicitation.
In this research, the findings have been based on the information given by Cathay
Pacific’s Corporate Communication Department and the Aircrew Officers Association.
Unfortunately some information was not made available from the airline. Archival data
like the internal memos and crisis communication plan were labeled as confidential and
have not been disclosed. The findings collected were those that have been published,
either to the press or to its employees. If a larger amount of inside information was
available, a more accurate and detailed account could have been achieved. The
company’s selection process as well as the decision rationale could also be better
understood.
The verification of data also had similar issue. Due to the job nature of the cockpit
crew, it was also difficult to locate an appropriate spokesman from AOA who could
comment on the strategies used by the airline. The next available source, the press
materials of AOA, was thus consulted. The disadvantage of this source was that it
lacked dynamics and interaction.
5.2 Implications
The strength of a qualitative research approach, the uniqueness in the data generated,
has the shortfall in generalization. Nevertheless, the study of the one of the most
well-known labor dispute cases in recent years in Hong Kong did offer certain areas for
further academic research, and points of interest for communication professionals to
47
consider in developing a communication plan for their organizations.
5.2.1 Academic Implication
By proving the use of a mix of strategies by the organization, this research did not
support the prediction of Coombs in the strategy selection. Further study on different
crisis cases or by different research methods could be conducted in order to obtain a
clearer understanding of the applicability of Coombs’ prediction.
This research raised an argument that the preferred strategy – mortification – which
was predicted by Coombs, did not suggest a high level of effectiveness in Cathay Pacific’s
case. In this case, mortification was a must for the company in order to show its
acceptance of responsibility and gain public understanding. But it was not successful in
shaping public perception as the damage was so bad and the duration of the crisis was so
long. Researchers interested in pursuing Coombs’ strategies and selection guidelines
could further explore the relationship between the effectiveness of the strategy and level
of damage as well as duration of crisis.
An area that researchers could also focus on in future studies is the role of mass
media in labor negotiation, given the unique example Cathay Pacific provided. In this
case, both sides relied heavily on the media to converse with one another, which should
not be the intended function of mass media. Studies on the appropriate use of mass
media in labor negotiation could be insightful.
5.2.2 Professional Implication
The findings suggested that a package of different crisis-response strategies should
be used, instead of a single strategy. In real life situations, each crisis is unique in itself
and could have developed to an extent which is beyond the organization’s expectation by
getting more and more complicated. It is thus not appropriate and realistic to stick to
one single strategy. Due to the uniqueness and complexity of different crisis cases,
strategies should be evaluated and implemented as they fit in the development of the crisis.
Afterall, as indicated by Coombs, the guidelines are designed only to increase the
likelihood of success, not to guarantee it.
Another aspect that communication professionals should examine was the usage of
mass media as a communication channel. In Cathay Pacific’s case, media became the
battlefield for the company and the aircrew where both parties rebuked the other side for
its arguments in a high profile manner. This is indeed detrimental to the image of the
company given the effect of mass media in the society. In crisis communication, a more
careful and well-planned use of mass media should thus be taken into consideration.
48
The consequence of every message spoken should be carefully assessed first before
articulating the message.
The third point of interest that this research offered for communication personnel is
the level of information disclosure. In Cathay Pacific’s case, the airline gave away a lot
of information in order to clarify the arguments made by the other party. Such
information even included the full list of salaries for the pilots. The approach of
clarification is on the right direction, but the outcome is harmful to its relationship with
the aircrew as this should be information limited to internal use and is not appropriate for
public disclosure. In planning its communication plan, an organization should evaluate
carefully what kind of information is suitable for disclosure and the possible outcome of
such disclosure, before it actually releases such information.
Problems can turn into crises and crises, if not handled effectively, can become
catastrophes. Crisis communication, if implemented appropriately, can stop a crisis from
deteriorating into a catastrophe. The use of crisis-response strategies, which is a
symbolic aspect of crisis communication, is thus critical in achieving this objective.
49
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Publications
Website of Cathay Pacific Airways: www.cathaypacific.com
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APPENDIX I
Organization Chart of Cathay Pacific Airways highlighting major players in the
labor dispute
David Turnbull Deputy Chairman & Chief Executive
Philip Chen Director & Chief Operating Officer
Ken Barley Quince Chong Tony Tyler Director Manager Corp Director Corp Flight Communication Development
Operations William Chau Augustus Tang GM Personnel GM Corp
Planning
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APPENDIX II
Decision flowcharts for crisis-response strategies selection
Faux Pas Decision Flowchart Crisis Evidence Damage Victim Performance Crisis Response Type Status History Strategy Positive Ingratiation Victim Negative Mortification True Positive Distance, Ingratiation Non-victim Faux Negative Mortification Pas Positive Nonexistence, Ingratiation Ambiguous Negative Clarification Positive Nonexistence False Negative Clarification
Accident Decision Flowchart Crisis Evidence Damage Victim Performance Crisis Response Type Status History Strategy Positive Mortification, Ingratiation Victim Major Negative Mortification True Positive Excuse, Ingratiation Non-victim Negative Mortification Positive Distance, Ingratiation Victim Accident Minor Negative Distance Positive Distance, Ingratiation Non-victim Negative Distance
Positive Non-existence False Negative Clarification
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Transgression Decision Flowchart Crisis Evidence Damage Victim Performance Crisis Response Type Status History Strategy Positive Mortification, Ingratiation Victim Major Negative Mortification True Positive Mortification, Ingratiation Non-victim Negative Mortification Positive Mortification, Ingratiation Victim and Justification Transgression Minor Negative Mortification Positive Justification, Ingratiation Non-victim Negative Justification
Positive Non-existence False Negative Clarification Terrorism Decision Flowchart Crisis Evidence Damage Victim Performance Crisis Response Type Status History Strategy Positive Suffering, Mortification, Victim and Ingratiation Major Negative Suffering, Mortification True Positive Suffering, Mortification, Non-victim and Ingratiation Negative Suffering, Mortification Positive Suffering, Distance Victim and Ingratiation Terrorism Minor Negative Suffering, Distance Positive Suffering, Distance, Non-victim and Ingratiation Negative Suffering, Distance
Positive Non-existence False Negative Clarification
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APPENDIX III
Interview questions
1. What are the communication objectives for the labor dispute? Who are your
audiences (primary and secondary)?
2. What are the communication strategies and what is the significance of such strategies?
3. What are the considerations in developing the communication plan?
4. How did the strategies change as the incident developed?
5. How do you evaluate the effectiveness of the strategies? How do you define the term
“effectiveness” from a company perspective? What worked and what didn’t?
6. To what extent were the communication objectives achieved?
7. How far do you think the shaping of public perception was important in developing the
communication plan? What mechanisms were useful in shaping public perception?
8. How will the communication plan be changed if the incident was positioned as a crisis
at its outbreak?
9. Do you think the company image was affected after the incident? How important was
the rebuilding of a favorable company image? Have you done anything? What were
they?
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APPENDIX IV
Interview with Ms Katherine Wang, Corporate Communication Manager (Public
Relations), Cathay Pacific Airways, conducted on April 28, 2000
(The interview was conducted in Chinese. This transcript is a translated version.)
Why did Cathay Pacific initiate a salary cut for its aircrew last year?
Let me give you some background about this salary repackaging of the pilots first. In
1998, we laid off 700 something ground staff. In late 1998, we requested our ground
staff to raise their productivity by working 2 hours a week longer for a pay rise. After
that we further requested cabin crew to increase the working hours for 4 hours each month,
from 72 to 76. But in return we gave them productivity increment. We finally resolved
it with the Flight Attendants Union in early 1999. After that we discussed with the
cockpit crew on the salary repackaging. It was not a salary concession as we offered
them stock options. In the future they can profit from the stock market to compensate.
The company understood they suffer. So we offered them stock options. It was the
first time the company offered stock options to its staff. Even directors don’t get stock
options. They get bonus only. The price was fixed at $7.47. We started the negotiation
long ago.
CX has three trade unions and we discussed with them every time we conducted salary
review. From the union’s point of view, no matter how much the increment would be,
it’s not enough. So discussion is important and there’s always give and take. Apart
from salary, we also discussed the benefits and service delivery with the trade unions.
We held focus groups when the company introduced certain benefits, or introduced
certain operation procedures to seek for service improvement. The salary discussion
went on for a long time. We explained to them the company’s difficulties. The cockpit
crew’s headcount represents 10% of the whole employee population, but they have a high
percentage on our human resources cost. We have already laid off some staff in other
departments. And many people suffer in order to let the company stay competitive.
Perception of other ground staff towards the cockpit crew is that this group of people is
well treated and enjoys a privileged position. When other colleagues suffered but not
cockpit crew who represents a higher salary expenditure, it’s difficult to explain and
difficult to make real savings in our cost structure. Other low-income staff cut 10%.
But if cockpit crew cut 10%, the savings would be more significant. Thus we raised the
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salary repackaging proposal. In real cash term there was a cut, but in the long run they
could benefit from the stock market. It also represented their commitment to the future
of the company – they’re holding the company’s stocks. If the company has a promising
future, they will be benefited.
You proposed the salary repackaging in mid March. AOA didn’t accept it, and then you
made a revised proposal in mid May. Have you included their suggestions?
My feeling is that the company is honest. It is the Flight Operations Department that is
responsible for the salary repackaging. When there’s a cost cutting exercise, the
company will set a target. Say, if we need to be competitive with Singapore Airline
which has a cost per km of $2, how are we going to achieve this target? For instance we
need to be more productive, conduct outsourcing to reduce cost, or find other ways.
They had to calculate how much salary cut for the cockpit crew was needed in order to
achieve the target. At the same time, we also needed to benchmark their salary packages
with other airlines, e.g. BA, Quantas. Our pilots come mostly from UK, Australia, and
Canada. We needed to take into account if they work for other airlines, what package
they will get if they are at the same rank. It’s quite a bottom-line proposal after a series
of calculation.
Did that consider the pilots comment?
Yes, we discussed with AOA for a long time and they actually didn’t reverted. They
suggested a lot of other proposals. They suggested the company not to cut salary, only
freeze salary. There were many counter offers. But they didn’t confirm what they
wanted. The time was critical as the company announced the first ever loss in 35 years
since it listed. To be responsible for other colleagues and shareholders, we needed to
take actions quickly. We opted for giving a written offer to each pilot. Although AOA
represents the pilots, according to labor law, if there is any change to the employment
agreement, we need to get individual’s signature. We need to get individual’s signature
anyway. AOA sent representative in the discussion, but we didn’t know if AOA would
clearly convey what has been discussed or explain company’s difficulties to their
members. We had a responsibility to inform them. Cockpit crew already knew that
support staff have frozen their salaries, and ground staff as well as cabin crew increased
the working hours, although they got a one-off productivity increment. Not all cabin
crew accept our proposal of increasing 4 hours. Some didn’t signed. Cockpit crew
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knew that they are the next targets. The company knew it was a tough discussion as they
have the highest bargaining power. We can fly with less cabin crew as long as we meet
the minimum safety compliment ratio, although the service level is lowered. But we
cannot fly without 2 cockpit crews. Most cockpit crew knew the company would ask
them to sacrifice. Flight Operation Department learned from a number of cockpit crew
that they have confusion – they knew company would take certain actions, but they didn’t
know what the proposal and negotiation status was. The management thought they have
the responsibility to explain and let them know what the proposal was, so we chose to
send letter directly. After we negotiated with AOA on the revised offer, we set a
deadline for them to reply, although we expected they wouldn’t reply before deadline.
We thought they would procrastinate. They didn’t reply and we sent out the letters.
Hong Kong-based cockpit crew received it faster. For those overseas-based, we sent the
letter by courier. We gave them a deadline. Afterwards many reported sick.
It was reported that management terminated the discussion. Was that correct?
We didn’t terminate the discussion. The question was…we couldn’t even reach a
common ground. We were open to discussion. CX has a tradition of having
discussions with trade unions. We are among the few companies admitting the presence
of trade unions. In a public arena, different parties needed to gain PR support. The
pilots knew they were well paid. A large number of local people earn around $10,000,
but pilots have a package of over 1 million, plus other fringe benefits. In that economic
environment, it was difficult to seek support for this group of well-paid people who said
they were dissatisfied with the wage cut. One of the tactics was to blame the other
party – a PR tactic blaming us too rigid and not willing to discuss. In fact we discussed
with them for a long time and have included their suggestions in the revised offer. We
also knew what their concerns were. For some colleagues who are based in overseas
like UK, Australia, their package include salary and other benefits. For those who are
based in Hong Kong, if they send their child back to their home to study, they’ll receive
education allowance. Overseas-based staff suffers more salary cut, because when we
compared their package with, say UK pilots, their package is much higher than that of BA.
But we offered them a flexibility not to be based in overseas. They can base in Hong
Kong. Of course this is subject to their family’s preference. We want them to be
informed as early as possible because this is an important issue for them to discuss with
their family, not something they can decide within a few days. They needed to discuss
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with the whole family to decide what is best for them. Most crew knew salary
repackaging was going to happen, but from the union’s standpoint, they would strive hard
for the best deal, maybe not to cut salary.
You arranged a press conference on May 25. Did you inform AOA?
At that time we were “enemies”, so to speak, and we had to predict what actions other
parties would take. CX has a policy of letting the employees to be the first to know, no
matter they are salary cut, company marketing programs, or corporate news. We don’t
want the staff to learn the company’s news from newspapers, as newspaper report may not
be the most accurate and news reports may not be able to explain company’s position.
Staff has the right to know company’s perspective. Then they can make their own
decision of whether that action is right, or they like it or not. We arranged the press
conference as we expect AOA to disclose the offer and position the issue as an action of
suppression by the company. At that stage, each party got into a PR battle to gain public
sympathy or create media pressure. Rather than letting AOA position the issue as
suppression by the company, we preferred explaining the proposal to the public - which is
a complicated one. At the early stage we didn’t disclose the pilot’s salary. We only did
it in the later stage. The objective of the press conference was to inform the media of the
proposal, why the company needed to do it – we needed to be competitive in the long run.
The key message of the company was clear cut – from lay-off to this time – as a
commercial organization, we need to stay competitive, maintain our cost structure at a
low level, and use the savings to reinvest in our network or product in order to increase
competitiveness. This message coped with the overall Hong Kong economy at that time.
We took the proactive steps to announce. CX is quite a high profile company, and the
media learned the news quickly. It’s partly because many cockpit crews know the
reporters as some of them live in Discovery Bay. Many SCMP reporters got inside
stories about the incident, but some stories only represent cockpit crew’s view. Some
were distorted from our perspective. We can’t hide from the reporters.
Was it part of your strategy to be proactive?
We knew that a press conference was needed as soon as the Hong Kong-based crew
received the letter. We did the same in the incident of cabin crew. It was partly due to
the media environment in Hong Kong. Otherwise we won’t have the chance to position
the campaign in a way we saw it. It’s more difficult when others initiated it and we took
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a counter-arguing position. For some companies, when they have a salary cut, the
employees will take it to the media in a hope to pressurize the company to back down.
Did the negotiation continue after the press conference?
After the announcement, official communication stopped. From the company’s
viewpoint, we’ve done our part to propose the offer, and it would be your turn to let me
know what you think. But AOA did not communicate directly with the company. They
only communicated through the media, which was not an official channel. Since we
made the proposal, we could do nothing but to wait for your reply. Having said that, our
Flight Operations Department did have informal channels to discuss with the crew on how
they feel about the proposal. There are 3 groups of people – fence sitters (who don’t
want to lose the job and just support the side which is likely to win), radicals (who’d
never retreat) and supporters of the company (who like their job in CX and are grateful to
how the company is treating them). The third group of people cannot show their support
in a prominent way as AOA is a close community and if they do, they’ll face a huge
peer-group pressure. A majority was the fence sitters.
The media thought that we did not prepare for a strike given the high possibility of strike.
When we prepared for the proposal, we came up with different strategies for different
scenarios. We informally discussed with the cockpit crew and identified the percentage of
these 3 groups of people. We have prepared a scenario that if we needed to maintain the
minimum service delivery during a flight, how many cockpit crews do we need, and
whom can we rely on. Those who support the company, who are willing to operate
flights even if there’s a strike, was about 25-30% of the whole aircrew population. We
had different scenarios, one of them being chartered flights. The industry is transparent,
if we contacted other airlines for chartered flights, the aircrew would know it immediately.
We did not want to do anything that is provocative to angry them. It’d better if they
have gone on strike as by doing so, we could have officially suspend their duties and
knew how many people could still be used. The problem with reporting sick was that we
didn’t know how many people will report sick. We didn’t know how many fence sitters
would become radicals. The number of reporting sick increased every day and
fluctuated. We needed to evaluate the situation before deciding what actions to take. We
had planning and we knew what we could do. We were also aware of the fact that as a
public utility company, we couldn’t let the situation develop to a point that need the
government’s intervention. We play a significant role in Hong Kong’s aviation industry.
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We’re conscious that we need to maintain the skeleton delivery and chartered flight is
needed when necessary. To introduce the chartered flight was also a gesture. In fact at
the later stage, the number of passengers to be carried has dropped drastically. It was
normal for customers to shift their flight from CX to other airlines if you know CX was
undergoing a service disruption. From the company’s point of view, we still needed to
achieve an optimal service level. The main objective was to tell the aircrew that we
would not back down in any circumstances. We rather suffered from the additional cost
incurred due to chartered flight, instead of give in, because it is something we have to do.
This gave a strong message. It gave the fence sitters a message that with the increase of
service level each day by using chartered service, the company has a determination to
continue its action. The fence sitters lost confidence.
What was the role of Labor Department?
We didn’t approach Labor Department. Labor Dept approached us. The pressure from
the media pressure was high. We have been updating the government through Aviation
Dept and Labor Department. The government’s attitude was that it’s a commercial issue
and should be resolved by the organization itself. But the media pressure was too high
and questioned why the government didn’t intervene and force them to go back to
negotiation table. So Labor Department approached us. They mainly acted as a
reconciliation role to seek for common ground for both parties on the proposal. We have
3 representatives in the negotiation– Augustus Tang, General Manager for Business
Development, Ken Barley, Director of Flight Operations, and William Chow, General
Manager Personnel.
We are a public listed company. We have management meetings where our management
updated our shareholders of the incident. The management needed to seek for
agreement from shareholders on the proposal, including the issuance of stock options.
We also need to clear it with the Stock Exchange.
Why did aircrew accept the offer?
After 3 rounds of negotiations, there was a consensus from the AOA that they will accept
the offer, and will give their direction to their members. We are quite surprised, they
made minor adjustments only, for instance improved wordings in terms of contract.
They accepted probably because they realize the service level has been improving and it
would be harmful to both sides if the incident drags on. Labor Dept’s main role was to
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act as a mediator to force both sides to negotiate more constructively and realistically.
Labor Department is experienced in dealing with labor disputes and they know what both
sides are doing – including what the labor union’s tactics are and what the company
wants.
According to Quince Chong, Manager Corporate Communications, there were 3 stages
for the incident. In the preparation stage, it was mainly an internal issue, like collecting
data on the pilots’ salaries, and organizing media training sessions for the spokesmen.
Can you elaborate on this?
We did some data collection regarding the pilots’ salaries. From a PR point of view, an
important reason is to convince ourselves first before we could explain it to the press.
We compiled salary comparison to show the status of our aircrew.
Why did you use it at a later stage?
A lot of reporters asked for the salary comparison. We thought it was a critical tactic to
release this. We took the public comment into consideration. When we first announced
the proposal, the press was neutral and didn’t take side. After they reported sick, the
media shifted and questioned why CX didn’t do anything. The trade union said CX
didn’t want to talk and release misleading data. It was AOA who released the salary
first, which we thought was misleading, so we needed to respond by giving out our data.
What preparations did you do for the spokesmen?
We drilled them with key messages. We trained them up and let them get to know the
issue in detail. The media skills included, for example, inform them on television
there’s no second chance and you have to speak precisely and to the point. Also, how
you package your messages. We had the same key message throughout the incident –
competitiveness. This term captured the situation of Hong Kong at that time. It was
not inclined to either side. Companies needed to be competitive, and employees needed
to be competitive also.
How did you rank your audience?
Our main audience was cockpit crew, not AOA but individual cockpit crew. Media was
an important tool to convince aircrew because apart from AOA, media was the only
channel they can know the company’s perspective and actions to be taken.
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You don’t have other communication channels other than the media. Do you?
Cockpit crew doesn’t physically station in office. They receive company information
unless they logon the company’s e-mail or receive our communication by post.
Newspaper is the next available choice for them to learn the company’s perspective,
although very often it has its own stand. Communication with the government
communication has been ongoing. Their concern was not to force them to intervene.
Economic Services Bureau knew our situation. Our aim is to maintain a neutral and
balance media coverage so that government would not be forced to intervene. Labor
Department’s intervention was a better way because it’s their area of business.
How did you weigh the public interest?
The public is those frequent travelers and non-frequent travelers. We conducted a
perception study at a later stage and they have different views. From an employee’s
view, they thought we were not right. When we explained our situation (like other
employees have also sacrificed), some still thought we’re not right, some understood our
situation. For us, it’s how to use the media battle. Public was one of our audiences, but
they were not the target of influence. Media was the one to influence because it could
influence public perception and pressure on government. Our key influence was the
cockpit crew.
Can you elaborate the development of your PR strategy?
At the preparation stage, we prepared background information but they were only drafts
because we didn’t know what messages AOA will put out. We fine-tuned our messages
as the incident developed. At the early stage, we developed briefing paper to explain to
the media in simple and systematic way the proposal. We had consistent and clear image,
and we needed to explain in detail to the media what we wanted to do and what we’re
doing. We sent out these briefing papers to chief editors and major columnists, opinion
leaders at the early stage, and then to all reporters at a later stage. The presentation was
to give a question and then supply with a lot of bullet points. “Myth” is the response
expected from AOA, and then we present the arguments as “facts”. Our communication
principle was to be as proactive and transparent as possible. What have we done to
maintain the service level, we need to let the public know. Our argument was what we
thought as the best we could establish, and we stuck to that argument. Our key messages
63
and argument was consistent throughout the incident. It only differed in the way we
reinforced it. At first, we present the key message. Then we support it with data after
AOA disclose their data. At a stage when AOA blamed us for not negotiating, we
presented a time chart to give a chronology of events. The time chart was revised
regularly in order to give the media the latest update. When the service level was being
disrupted, we activated our crisis communication mechanism – we held a briefing
everyday at 6pm and at 11am Quince will report the number of flights cancelled and
passengers affected, passengers to carry. These were done with an aim of letting the
press know we were available.
Why Quince said that looking back, the company should have activated the crisis
communication mechanism?
The whole team were not allowed to take leave and all advertising and marketing
programs were put on hold. Every time there is a crisis, a crisis management center will
be set up comprising of representatives from each department to give the latest update of
the situation. At the post-mortem evaluation, we thought that we should have set up the
crisis management center as soon as the aircrew reported sick instead of wait until the sick
out ratio impact the operation.
You didn’t position the event as a crisis. Did you?
If we defined the event as a crisis, we should have set up the crisis management center at
a earlier stage so that department heads could exchange information as soon as possible.
What actually happened in this incident was that we only relied on the head of airport
operations to update the management. So the situation could not be disseminated to all
dept heads in a timely manner, and thus we were not able to respond quickly. For us,
there are 2 types of crises – emergency and accident, and commercial. An example of
commercial crisis is the suspension of all aircraft due to a problem from the engine. In
this incident, it was also a crisis. But if we have defined it as a crisis, the pull in of
resources could have been more efficient.
How did you evaluate the effectiveness of the PR strategies?
For the communication to cockpit crew – we thought we have done it at our best. At that
time it was quite sensitive. If we issued a letter to cockpit crew after sending offer letter,
it would be perceived as provocative. We issued an employee communication which
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was supposed to be read by the whole employee population. This newsletter explained
why the company did this and why we needed to be determined. To evaluate the
effectiveness, the passenger side was not enough. We should have published apology
advertisements and advertisements to inform passengers of our service recovery. We
should have used different medium to inform the public about what we have done, instead
of relying only on PR. Our service recovery is slow. Asiamiles giveaway was slow.
It should have been quicker. If we have had better service recovery, it could rebuild the
company’s image more effectively. During the campaign, we have pulled in all
resources and done the best we can. We have done a lot in earlier stages but not in
post-events – like it just stopped there. We should have done more efficiently for
post-event activities.
How do you define effectiveness?
Whether we can win the media battle and achieve a balanced report. Our management
value role of PR. They understand that it is impossible to see all coverage saying CX is
the best. But in critical issues, if we have achieved a balanced of report, the purpose can
be achieved. In this incident, we have successfully put forward our argument and
reporters understand. For us we thought that it was quiet effective. We thought it was a
tough battle because no matter what the reason is, to cut employees’ salary is wrong.
Which mechanism was more effective?
It’s important whether the media view PR as a convincing and reliable source of
information, and consistent. If PR is convincing, it’s more helpful. All along CX has
been viewed by the media as a transparent company. Analysts expect our action. We
have close relationship with reporters. AOA put out different messages in different
times. In comparison we were more convincing because we were consistent. From our
situation, we have given a fair offer. We gave them stock options in return for cutting
their salary. Reporters can see that we are not the most harsh compared with other
companies. Cable TV cut employees’ salaries just because the company’s profit was
reduced. We are lucky – we are a transparent company. Everything we did was
convincing. Our PR track record can help.
Did you pay more attention to those media that you thought was on your side?
Chinese papers were more understanding. Their readers are general public who may not
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sympathize with the aircrew who enjoy an annual income of over 3 million and now have
to cut salary. English papers were less sympathetic. One even published some very
harsh and provocative comments from the aircrew. They have closer informal contacts
with the cockpit crews. Reporters from English papers were hard to convince. They
don’t accept that employees need to suffer as a result of the company’s failure. They
sympathized with cockpit crew. But Chinese people accept the saying that people should
encounter difficulties together.
Did you have different treatments with different papers?
For key reporters like Jo Pegg of SCMP, we allowed her direct access with our spokesman.
We hoped that the reporter could be on side if we conducted relationship building. It
may not be successful, but at least we have presented our facts.
We feel that Chinese papers were more balanced, and English papers more on side with
cockpit crew.
What were the lessons learned?
We tried to rebuild our image through service recovery, but it was slow. Many questions
could not be solved by PR only. We showed to the public that we are not cutting cost
only but did have actions to reinvest, for instance reinvest in products, new uniform, and
first class. All these have been done to increase competitiveness. We did some
corporate advertising to reinforce the relationship of CX with Hong Kong. PR could not
solve all problems. We did some community works too. Some events have been
planned to implement even without the crisis. Still, it could help rebuild the company
image.
We need to improve internal communications. In recent cases when colleagues were
dissatisfied with the company, they’ll shout it out to the media first instead of using
internal channels to solve the problem. Thus we have revamped our staff magazine to
improve its readability.
How did you respond to the blame that both sides treat passengers as hostage? Do you
think it has affected your image?
What we could do is to apologize. We could not control the situation, as they were not
officially on strike. Reporters also challenged AOA for the reason for sick. We just
faced the same situation. In all labor disputes, unfortunately customers will be affected.
66
We hope that we can show our improvement progress to prove that what we have done is
necessary for the survival of company in order to serve passengers better.
What was the implication that both sides used the media to communicate?
It was something necessary in labor disputes. Our GM Personnel was once the head of
one of our trade unions. He understands what actions the union will take. The union
will not talk with company direct, because there was no common ground. It’s the only
way to pressurize the company to back down if the matter is brought to media’s attention
and show how the company is treating its employees.
Have you ever thought of opening other channels, even labor union only focused on using
media as the main communication channel?
I think what we can do is very limited. Interaction is important. If we make phone
calls or send letters to cockpit crew, what will these actions be perceived? They may
view it as threats. Thus there are some situations where not taking any actions is better
than taking actions. The management has a concern also that the cockpit crew should be
given more time and room to make their decision. But when AOA has made some
statements, we needed to clarify and give our view to public and cockpit crew. Labor
dispute is sensitive. At the negotiation table, there’s a gentleman agreement that unless
the proposal is in black and white, all other discussions should not be disclosed to the
public.
We communicate with the pilots through flight operations mainly. We focus on main
stream communication.
What was the value of PR in this incident?
Proactive and transparent PR is important. The value of PR is evident - we
communicate to the public why we should do this, what we have done to recover service,
and what we have done to increase competitiveness. We also think we have laid an
example for other companies in negotiation. If we are not proactive and transparent,
reporters will think we have a lot of hidden agenda, especially with English papers’
reporters. Don’t shy away from reporters. Present your viewpoint as clear as possible.
PR cannot affect company decision. In some occasions we asked the department head to
convince us in some decisions. We’ll challenge them if the reason is not convincing.
In some circumstances they have solid reason, but they don’t know how to articulate. As
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PR we’ll help them articulate. If we still are not convinced, we’ll ask them if they can
drop the decision. We may influence the company’s action, although this may not be in
major issues.