Crisis Management: Cathay Pacific Labor Dispute Analysis

Essay by billychangUniversity, Master'sA+, March 2004

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Table of Contents

Executive Summary4

Introduction & Background4

Industry Overview5

History of Labor Relations6

Causes of the Industrial Action8


Attribution to Roster Practice8

Attribution to Remuneration Package10

Perceived Self-efficacy11

Perceived Self-efficacy with Regard to Job Nature of Pilots11

Perceived Self-efficacy with Regard to the Power of AOA13

Analysis and Comment on the Strategies by the Pilots and the Management14

Strategies of the Pilots14

Management's Strategies15



Existing Scenario (Lose-Lose Scenario)18

Ideal Scenario18

Secondary but Practical Scenario18

Understand the Super-ordinate Goals18


Seeking Third-party Intervention19

Reduce Stress for the Pilots19


Executive Summary

A brief review of the history and background of the airline industry reveals that there are two key industrial factors that bear on this case of a labor action: government involvement and cost containment motivations. Due to its importance as a mechanism for global trade and economic development, the airline industry has a strong historic connection to government.

Additionally, the majority of the technological developments in the industry grew from military applications. Finally, the underlying economics of the industry imply that successful airlines will keep their cost structure in line with industry leaders. Carriers that fail to compete on the basis of cost fail to compete in the industry.

Cathay Pacific had a long history of effectively avoiding strikes by offering relatively higher compensation packages than other carriers in the region, but the recent hard times have fallen on the airlines have forced management to delay pay increases and limit benefit extensions. These matters are of great concern to the pilots who are now convinced that they are grossly underpaid. Last year an angry group of pilots decided to take industrial actions against the Company.

The first organizational behavior theory that can be used to explain the pilot strike at Cathay Pacific is the attribution theory.