Cathay Pacific swings axe in response to sharp drop in passenger numbers, with flights to Dublin, New York and Paris all hit, and a freeze on spending

13-Sep-2019 Intellasia | South China Morning Post | 6:02 AM Print This Post

Hong Kong activists will combine anti-government protests with lantern celebrations marking the Mid-Autumn Festival this weekend after a brief lull in sometimes violent demonstrations which have rocked the Chinese-ruled city since June.

The protests include another in a series of “stress tests” of the airport, which in recent weeks have seen approach roads blocked, street fires started and the trashing of a nearby MTR subway station.

Protesters also jammed the airport arrivals hall last month, leading to cancelled or delayed flights and clashes with police.

The Mid-Autumn Festival is a harvest celebration throughout the Chinese-speaking world and in East and Southeast Asia. It is celebrated with mooncakes, gazing at the full moon and colourful lantern displays and falls on Friday this year.

Protesters plan a series of lantern-carrying human chains and sit-ins at MTR shopping malls and on the city’s scenic Victoria Peak, popular with mainland tour groups, and on Lion Rock, separating the New Territories from the Kowloon peninsula.

There were brief scuffles, pushing and hair pulling, between pro-Beijing and anti-Hong Kong government supporters in the mall of the IFC, a prominent skyscraper on the newly reclaimed Central waterfront. Some top-brand stores were closed.

Police denied the Civil Human Rights Front (CHRF) permission for a mass downtown march on Sunday.

“In previous marches applied for by CHRF, participants, reporters and police suffered serious injuries,” police said in their refusal letter to the group.

“Some protesters acted violently and blocked the main road and even used petrol bombs, bricks and iron bars to damage public facilities and social peace.”

The group has appealed.

Police have responded to violence with tear gas, pepper spray, rubber bullets, water cannon and baton charges, prompting complaints of excessive force.

Protesters also plan to gather outside the British consulate on Sunday to make sure China honours the Sino-British Joint Declaration which was signed in 1984, laying out the former British colony’s future.

China says Hong Kong is now its internal affair. Britain says it has a legal responsibility to ensure China abides by its obligations under the Joint Declaration.

Hong Kong returned to China in 1997 under a “one country, two systems” formula that guarantees freedoms not enjoyed on the mainland, including an independent legal system.

The current unrest was originally prompted by anger over planned legislation to allow extraditions to China, but has broadened into calls for democracy and for Communist rulers in Beijing to leave the city alone.

China denies meddling and has accused the United States, Britain and others of fomenting the unrest.

The airline is in the final year of a three-year restructuring to save HK$4 billion, following two years of back-to-back losses in 2016 and 2017. The company said earlier this year that it would not meet its cost saving targets by year end.

Cathay said its capacity would be down “slightly” during the winter flying season, which runs from the end of October until March next year, as opposed to a planned expansion of 6 per cent, signalling a significant cut in flying activities.

According to airline scheduling tracker service Airline Route, which analysed the Hong Kong carrier’s ticketing system, Cathay’s four weekly non-stop flights to Dublin could no longer be booked while Cathay Dragon’s daily service to Tokyo Haneda Airport similarly became unavailable, although Cathay Pacific flights to Haneda were not impacted.

The late-night Cathay Dragon flight to Beijing from Hong Kong also appeared at risk. But nighttime flights to Paris and Frankfurt, better timed for business travellers, were also unaffected.

Flights to Vancouver are being reduced from 17 to 14 a week from October 29 onwards, similarly Washington would lose one of its five weekly flights, and New York JFK is expected to fall from 21 to 18 services a week.

Flights in and out of mainland China, which has become the worst performing market for Cathay Pacific, are likely to face cutbacks next. In its August report, Cathay trimmed the number of flights and seats into the market by 9.3 per cent, but demand fell more than three times that, at 28.1 per cent.

It’s possible that when demand rebounds Cathay may be under equipped

Transport analysts Luya You

“We can expect significant reductions in capacity on most distressed routes, for example, mainland China,” said Luya You, a transport analyst at Bocom International.

“Cathay are struggling to find a balance between long-term growth and short-term profitability. It makes sense then that they are resorting to significant reductions in capacity for the winter season.

“Although this could impact their full year 2020 growth plans and profitability if demand rebounds quickly and Cathay find themselves unable to match that growth.”

You was more concerned that Cathay would be too aggressive with flight cuts, and said based on historic trends, passenger demand typically rebounded very quickly.

“2019 has been terrible for nearly all airlines,” she said. “Unless we actually fall into some major global recession next year, it’s possible that when demand rebounds Cathay may be under equipped because of how much they’ve been hammered this year.”

Some planned investment is expected to continue, including new first and business class upgrades, to help the airline maintain its competitive edge, while rolling out a new dining offering for economy travellers.

Under pressure from Beijing to rein in staff taking part in illegal protests, Cathay has been rocked by resignations and reshuffles among its senior management. The airline has warned that those who “support or participate in illegal protests” will be disciplined or sacked.

Meanwhile, Hong Kong’s pro-democracy protests, triggered by a controversial extradition bill, entered their 14th week and show no signs of easing.

Hong Kong saw tourism arrivals fall 40 per cent in August, the largest downturn since the 2003 Sars outbreak, after a 5 per cent drop in July.

On top of that, the number of mainland tour groups visiting Hong Kong fell 90 per cent in the first 10 days of September, according to the Travel Industry Council. That followed a 63 per cent decline in August compared to a year ago.


Category: Hong Kong

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