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Cathay Pacific Cuts Seven Routes to North America, Europe, Maldives
On Tuesday, the South China Morning Post (SCMP) reported that Cathay Pacific was cutting seven key routes from its network, including flights to North America, Europe and the Maldives. The news was revealed in an internal memo seen by SCMP, which explained that all of the routes were losing money and would be permanently canceled until the industry recovers to a pre-COVID era. Unfortunately, that may not be until 2024 at the earliest.
The seven routes cut by Cathay Pacific are flights to Washington, D.C.’s Dulles International Airport, Newark Liberty International Airport and Seattle-Tacoma International Airport in the U.S.; London’s Gatwick Airport, Dublin Airport and Brussels Airport in Europe and Male Airport in the Maldives.
However, the airline will continue to fly to London Heathrow and New York’s John F. Kennedy International Airport. While many of these routes had already been suspended by the carrier at the beginning of the pandemic, the permanent axing of the routes indicates that Cathay Pacific is struggling to remain afloat, and industry analysts worry other major airlines will follow suit.
A Cathay Pacific spokesperson told Executive Traveler, “As we have previously announced, we expect to operate well under 25% of 2019 passenger capacity in the first half of 2021 and below 50% for the entire year. Flight services to and from these destinations have been suspended for many months already due to shrinking passenger demands. We remain in a very dynamic situation and we will continue to review our flight network.”
The scrapping of these seven specific routes is not a total surprise. Brussels, Washington Dulles and Dublin only launched in 2018, and Seattle in 2019. Seattle had not yet gotten the momentum it needed to remain viable during the pandemic, and Washington Dulles’s high fares, late-night departure and lack of daily flights made it less favorable, not to mention the expense to accommodate crew between flights.
Furthermore, service to Dublin had already been suspended once in late-2019 due to anti-government protests in Hong Kong. However, the nonstop flight was set to begin again in March 2020, but due to protests in Hong Kong coupled with the pandemic, the route never fully took off.
As far as New York and London, it appears the airline is canceling unnecessary redundancies, and the demand for Chinese leisure travel to the Maldives is likely low. Overall, these routes had loss-making flaws that needed to be scrapped as part of the airline’s survival plan.
Going forward, it is doubtful that these routes would be re-launched before COVID-19 is under control, especially considering that most of them were created under former Cathay Pacific CEO Rupert Hogg. Hogg, who resigned in 2019, catapulted the airline onto the world stage by focusing on rapid-expansion. However, new management does not appear to have the same mantra — especially during the pandemic — so it is likely these routes will not return for quite some time — if they ever do.
Struggles During the Pandemic
Before the global spread of COVID-19, Cathay Pacific and its subsidiaries flew to 93 destinations worldwide, including 50 served by regional carrier Cathay Dragon. However, the pandemic hit the Cathay Pacific Group hard, and what was once a thriving commercial and cargo airline is now shattered, and management is struggling to put the pieces back together. Not only has the company been forced to cut dozens of its long-haul routes, but it also experienced a 9.9 billion Hong Kong dollar ($1.27 billion) loss and a 76% plunge in passenger traffic in the first half of 2020.
Fortunately, Hong Kong threw the company 27.3 billion Hong Kong dollars in a bailout, which kept it and Cathay Dragon afloat through October. However, it wasn’t enough. In September, CEO Augustus Tang-Kin announced the company would be restructuring its route network, leading to the loss of 5,900 jobs, the closure of Cathay Dragon and the delay in the delivery of 21 of its Boeing 777-900 jets, which were slated to begin delivery in 2021. The carrier said the deliveries would be postponed “beyond 2025” and that it “was in discussions with Boeing about a deferral of the 777-9 program, but not a cancellation of it.”
The biggest shock of the company restructuring was the closure of its subsidiary Cathay Dragon, which cost 2,500 flight attendants and pilot jobs and led to the abrupt cancelation of many regional routes. Cathay Dragon employees were stunned, as many had only expected job cuts, much less an entire shutdown.
Flight attendant Lisa Mok was among the thousands of flight crew members to suddenly lose their job. She told the South China Morning Post that she had been asked to take unpaid leave at the beginning of the pandemic and then saw her salary cut in half soon after. She explained that the reality that she and her colleagues will need to find a new career path is frightening, and she worries about those employees who have children. Union leaders say they are disappointed with Cathay Pacific, explaining the company failed to be transparent with its employees.
While Cathay Pacific Group Chairman Patrick Healy says the decision to close Cathay Dragon was “heart-wrenching,” he explained that management needs to focus on the parent company. According to Healy, a majority of Cathay Dragon’s routes, which included most of the group’s flights to mainland China, will be split between Cathay Pacific and HK Express, which is another Cathay Pacific subsidiary. It was not clear what the plans are for the two Airbus A321neo jets that were to be delivered to Cathay Dragon in the coming weeks. According to Executive Traveler, the subsidiary had 16 of the jets on order, and they were to debut the company’s new regional business class.
Although the future of Cathay Pacific is uncertain, the company continues to be hard-focused on developing a profitable fleet and network plan that can weather the pandemic and “adapt to the new travel reality.”
Furthermore, Financial Secretary Paul Chan Mo-po explained that the survival of Cathay Pacific is imperative to the expansion of Hong Kong’s aviation industry. He said if the pandemic is not properly managed, “the situation would harm Hong Kong’s international aviation hub status and development in the region, and adversely impact other local economic activities to the detriment of the overall interests of Hong Kong.”
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