Virgin Australia permanently cancels HK routes amid coronavirus outbreak, anti-government protests

07-Feb-2020 Intellasia | South China Morning Post | 6:02 AM Print This Post

Virgin Australia has emerged as the first international airline to completely withdraw all its services between Australia and Hong Kong amid the coronavirus outbreak, citing that the route was no longer commercially viable.

The performance of the route had declined following the anti-government protests that began in June 2019, and is expected to be further impacted by the growing uncertainty caused by the coronavirus crisis, the airline said.

The company said it had undertaken a comprehensive review of the routes, and on Thursday confirmed it would halt service on the Sydney-Hong Kong route on March 2. In November, the airline proposed the suspension of the Melbourne-Hong Kong route due to financial losses, and on Thursday confirmed the last flight would take place on February 11.

“Hong Kong has continued to be a challenging market. With a decline in demand following ongoing civil unrest, and growing concerns over the coronavirus outbreak in the wider region, we have made the decision to withdraw services,” Virgin Australia Group chief commercial officer John MacLeod said.

With a decline in demand following ongoing civil unrest, and growing concerns over the coronavirus outbreak in the wider region, we have made the decision to withdraw services

John MacLeod

“While the decision to withdraw from the Hong Kong market has been a difficult one, it demonstrates our strong focus on driving greater financial discipline through our network.

“Current circumstances demonstrate that Hong Kong is no longer a commercially viable route for Virgin Australia to continue operating, however international tourism remains an important part of our strategy through our other international routes and partner airlines.”

The airline said it would make alternative arrangements for customers already booked on affected flights.

On Tuesday, United Airlines said that it will suspend all flights to and from Hong Kong, meaning no US carriers will be flying passenger flights to Hong Kong after this week. The decision follows a similar announcement by American Airlines, who have suspended all flights to Hong Kong from Los Angeles and Dallas for about two weeks, citing a lack of demand, amid the deadly coronavirus outbreak.

Overall more than 30 global airlines have halted flights to and from mainland China as coronavirus infections continue to soar, and although most flights to Hong Kong have not been affected, some countries and airlines have introduced bans.

Italy suspended all flights from China, including Hong Kong, Macau and Taiwan, until April 28.

The Philippines widened a travel ban previously imposed on visitors from Hubei province, centre of the outbreak, to cover all of China, including Hong Kong and Macau, while prohibiting Filipinos from travelling to those areas.

AirAsia Philippines said it was no longer offering flights to Guangzhou, Shenzhen, Shanghai, Hong Kong and Macau and that the measure would be in place until March 1.

Air India will suspend its New Delhi-Hong Kong service from Saturday after it earlier halted flights to Shanghai.

The World Health Organization has so far said that such limits on trade and travel are not needed to control the spread of the virus.

Less than three years ago, Virgin launched its new Hong Kong routes with some fanfare, arriving with airline brand’s founder, the billionaire Richard Branson, wooing guests and the media with a glittering reception at the luxury five-star Peninsula hotel in Tsim Sha Tsui.

John Borghetti, then CEO of Virgin Australia Group, told the South China Morning Post at the time: “Hong Kong and Greater China is a key pillar of our international strategy.”

On top of the launch, debt-distressed HNA Group took a 20 per cent stake, and the Chinese conglomerate’s Hong Kong Airlines teamed up with Virgin both seeking to compete against chief rivals, Cathay Pacific and Qantas, in their own backyard.

“From the outset Virgin was elbowing its way into a crowded market dominated by Qantas and Cathay Pacific. Virgin found its Hong Kong routes were never heavily patronised, and the Chinese connections through Hong Kong Airlines never took off,” said David Flynn, editor of Australia-based frequent flyer website, Executive Traveller.

“The ongoing unrest in Hong Kong, coupled with China’s coronavirus epidemic and related travel clampdowns and quarantines by the Australian government, proved to be a knockout blow.”

From the outset Virgin was elbowing its way into a crowded market dominated by Qantas and Cathay Pacific. Virgin found its Hong Kong routes were never heavily patronised, and the Chinese connections through Hong Kong Airlines never took off

David Flynn

Faced with its own problems, Virgin Australia announced in August that it was planning to cut 750 jobs as part of a restructuring programme under new CEO Paul Scurrah after racking up a loss of A$315.4 million (US$213 million) for the financial year 2018-2019, the airline’s seventh consecutive annual loss.

As part of the business overhaul, loss-making routes were cut, including suspending the Melbourne-Hong Kong route. Virgin subsequently shifted its attention to new business opportunities in Japan working with All Nippon Airways (ANA).

On Thursday, ANA announced that it was suspending services on some China and Hong Kong routes due to the coronavirus.

Singapore-based Jetstar Asia, which operated a daily service to Hong Kong, said last week it was suspending its flights indefinitely, citing commercial factors. The budget carrier has seen demand weaken amid protests and the spread of the coronavirus.

Cathay Pacific is set to reduce its flights to Australia as part of its own measures to deal with the financial cost of the coronavirus, however, Qantas has said its Hong Kong flights remain unaffected and will fly as normal.

https://sg.news.yahoo.com/virgin-australia-permanently-cancels-hong-022136893.html

 

Category: Hong Kong

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