Airline CEO berates vendors 'doing well at our expense'

14 September 2009

15 September 2009

The chief executive of Cathay Pacific has laid into suppliers in the aviation sector, angry that "things cost too much".

Speaking at the Asian Aerospace Congress in Hong Kong, CEO Tony Tyler, castigated suppliers for "making good profits even in these dark recessionary days", leaving airlines "stuck in the middle" suffering "chronic financial under-performance".

"We are all in this crisis together but you wouldn't believe that from the way many of the suppliers to the airlines conduct business with us," he said

"I am always astonished when I hear how much what you sell us costs. Big things, small things, seats, engines, parts of all kinds - how can they be so expensive?"

He also conceded he was "almost ashamed to admit what we pay for some of our products and equipment".

According to Tyler, Cathay had been telling suppliers automatic price increases are "simply not possible in the modern airline environment".

"How can suppliers charge more and more for the same thing, while the forces of competition mean that airlines can only collect less and less?"

Some suppliers, he added, had "got the message" working with the airline to improve efficiency and reduce costs. But he said the aim of suppliers should be to provide a year-on-year decrease in price, while maintaining their own profit margin.

"It's time the supply market lifted its game, and we need more risk-sharing and alignment of interests in this business between buyers and sellers."

SMsep2009

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