Cathay warns of downturn and IATA wants Hong Kong to help protect aviation jobs

Cathay will continue to see a “significant shortfall in in-bound bookings for the remainder of 2019”, the company said.

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Hong Kong flag carrier Cathay Pacific recently released traffic figures for the company’s Cathay Pacific and Cathay Dragon and the numbers were not good. The dire report coincided with an appeal by the International Air Transport Association (IATA) to Hong Kong’s beleaguered government to consider some sort of financial aid package to the city’s aviation sector. All of this comes as the anti-government protests that have been roiling Hong Kong since June look set to continue, possibly threatening plans by Cathay to host the upcoming Assembly of Presidents of the Association of Asia-Pacific Airlines set for 21-22 November.

Cathay for its part release September traffic figures that showed a decline of 7.1 percent for September 2019 compared to the same month a year ago. Total passengers carrier were 2.42 million. Passenger load factors decreased by 7.2 percentage points, the company said, while capacity, measured in available seat kilometres (ASKs), rose by 9.8 percent. In the first nine months of 2019, the number of passengers carried grew by 1.3 percent and capacity increased by 6.9 percent, as compared to the same period for 2018.

The two airlines carried 172,637 tonnes of cargo and mail in September, a drop of 4.4 percent compared to the same month last year. The cargo and mail load factor fell by 3.7 percentage points to 65.5 percent. Capacity, measured in available freight tonne kilometres (AFTKs), was up by 0.1 percent while cargo and mail revenue freight tonne kilometres (RFTKs) dropped by 5.3 percent. In the first nine months of 2019, the tonnage fell by 6.8 percent against a 0.7 percent increase in capacity and a 7 percent decrease in RFTKs, as compared to the same period for 2018.

Cathay Pacific Group’s chief customer and commercial officer, Ronald Lam, said: “September was another challenging month for our passenger business, with revenue adversely affected by weakened market sentiment, particularly for travel into Hong Kong. Passenger load factor was down 7.2 percentage points and inbound passenger traffic dropped by 38 percent – both unchanged from August. Outbound traffic was down 9 percent year-on-year, a slight improvement over the 12 percent drop seen last month.”

Lam added that the “mainland China market has been hit especially hard and we observed very weak demand for travel over the National Day holiday – traditionally a very strong period. Our India routes were the main bright spot, buoyed by strong demand between India and North America. Intense competition together with an increasing reliance on transit passengers over the short term has continued to apply additional pressure on yield.”

Cathay will continue to see a “significant shortfall in in-bound bookings for the remainder of 2019 as compared to the same snapshot last year. This has been felt most strongly with bookings from mainland China and our other Asian markets. As previously announced, we are taking a number of short-term tactical measures to respond to this shortfall, most notably realigning capacity for the winter season (from end October 2019 to end March 2020)”.

A graphic from the International Air Transport Association from its report calling on Hong Kong’s government to consider financial relief for the industry.

Meanwhile, IATA, which represents the global aviation industry, said “maintaining aviation connectivity is critical to Hong Kong” and called on Hong Kong’s government “consider financial relief measures to support the 330,000 jobs and 10.2 percent of GDP dependent on the aviation and tourism sector”.

IATA said anti-government protests, which shut down Hong Kong International Airport on two consecutive days in August shows “the protests have had a significant impact on air passenger traffic flows in one of the region’s main airline hubs”.

Anti-government protests in Hong Kong took to the streets – again – in October to demonstrate against the Hong Kong government’s ban on wearing masks during demonstrations. (PHOTO BY MATT DRISKILL)

“There are two elements to this decline,” IATA said. “While passenger numbers were impacted directly by the temporary closures of the airport, more broadly, demand for travel to Hong Kong – as a final (tourism and business) destination and as a connection point – has softened. While this may lead to more enduring impacts, our previous research suggests that the industry recovers quickly following episodes of disruption. In terms of passenger departures, Hong Kong traffic decreased by 15.4 percent vs August 2018, a steep decline that is almost unprecedented for major markets.”

“Airlines cannot immediately change their scheduled services,” IATA went on to say. “Rather, the immediate impact is a combination of ad-hoc cancellations as well as a decline in the passenger load factor. Airlines have reduced the number of scheduled seats in the market, although the size of the reduction so far suggests that the downturn is expected to be of a temporary nature. However, any further prolongation of the disturbances may induce airlines to more drastically change the amount of services, either in terms of seats and/or frequencies. Maintaining aviation connectivity is critical to Hong Kong. The government should consider financial relief measures…”

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