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Hong Kong Aviation Industry, Cathay Pacific Facing Severe Turbulence
As a result of weakened travel demand due to COVID-19, Hong Kong International Airport is seeing a huge drop of passenger volume as 8.3 million passengers were recorded in the first six months of this year, the airport reported in a press release. It has dropped 78.1% compared to the same period last year.
The vibrant airport has recorded a 99.1 percent drop in passenger volume year over year. Hong Kong resident travel has also dropped by 98 percent year on year. Earlier, the airport resumed transit services. Though as travel restrictions remain in place with the coronavirus pandemic raging through the world, transit traffic has decreased by almost 100 percent.
Cathay Pacific’s Position
Cathay Pacific Group, a Hong Kong-based carrier, has revealed its traffic figures for the month of June. The group’s airlines, which include Cathay Pacific and Cathay Dragon, carried a total of 27,106 passengers in June, a 9,000-passenger increased compared to April. The airline also resumed the services to New York, San Francisco, Amsterdam and Melbourne in June. However, the group’s load factor was only 27.3%.
“Demand continued to be very weak in June with our airlines carrying less than one percent of the passengers we carried in the same month in 2019. We operated about 4 percent of our normal passenger flights capacity in June,” Ronald Lam, Cathay’s chief customers and commercial officer, said.
In the meantime, the airline has issued a profit warning and estimated a net loss of approximately HK$9.9 billion ($1.3 billion) in the first half of 2020, which compares to a net profit of HK$1.3 billion for the same period in 2019. The airline also revealed impairment charges cost HK$2.4 billion related to 16 aircraft that are unlikely to re-enter meaningful economic service before next summer.
According to Lam, some markets will ease the travel restrictions in July as Cathay Pacific will increase its capacity to seven percent, and gradually enhance the services up to 10 percent of the normal schedule in August. Cathay is expected to continue increasing flights and adding destinations.
Earlier, Cathay Pacific has described itself as more “vulnerable” than any other global airlines, given that it has no domestic network and is wholly reliant on “cross-border travel.” According to Patrick Healy, the chairman of Cathay Pacific, the group has been losing HK$2.5 billion ($322.5 million) to HK$3 billion ($387 million) per month since February.
In response to the global pandemic, Hong Kong’s government offered a HK$39 billion ($5 billion) package rescue to the struggling airline. Cathay Pacific’s shareholders have approved the bailout package. According to the Cathay Pacific, the package will maintain its operations and competitiveness while allowing it to continue its commitments to Hong Kong.
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