Protests still weigh on Cathay Pacific’s business

“Commercial challenges” forces 1.4 percent cut in seat capacity after airline earlier planned a 3.1 percent increase.

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(PHOTO: Matt Driskill)

Protests still weigh on Cathay Pacific’s business

Cathay Pacific’s woes from this past year of anti-government protests look set to continue into the coming year. The airline announced this past week it was cutting capacity and media reports from Hong Kong say the airline is losing at least three senior managers. The airline earlier this year saw the departure of its CEO, chairman and other top leaders after it ran afoul of Mainland Chinese authorities because Beijing felt the airline was taking a too soft approach to employees who supported the pro-democracy protests.

The airline announced that its November passenger and cargo numbers continued to decline. Cathay Pacific and affiliate Cathay Dragon carried a total of 2.6 million passengers, a drop of 9 percent compared to November 2018. The two airlines carried 177,964 tonnes of cargo and mail in November, a drop of 3.9 percent compared to the same month last year. The cargo and mail load factor fell by 1.5 percentage points to 68.6 percent. Capacity, measured in available freight tonne kilometres (AFTKs), was down by 3.8 percent while cargo and mail revenue freight tonne kilometres (RFTKs) dropped by 5.8 percent.

Cathay Pacific Group Chief Customer and Commercial Officer Ronald Lam said: “As with the past few months, November continued to be very challenging for both Cathay Pacific and Hong Kong, with sentiment for travel still weak. In November, our inbound Hong Kong traffic dropped 46 percent compared to the same period in 2018 – a further slowdown from the 35 percent drop seen in October. Outbound Hong Kong traffic, meanwhile, was down 8 percent against the same time last year – a slight improvement over previous months.” Lam added that regional traffic remained weak, especially from China and northeast Asia and its premium-class travel around the Thanksgiving holiday was also weak.

Cathay Pacific Group Chief Customer and Commercial Officer Ronald Lam. (PHOTO: Cathay Pacific)

“Looking forward, we continue to see a significant shortfall in inbound Hong Kong advance bookings, particularly from Mainland China and other regional markets, as compared to the same snapshot last year,” Lam said. He said the “immediate commercial challenges we are facing” means the airline will reduce seat capacity in 2020 by 1.4 percent year-on-year after earlier saying the airline would add 3.1 percent. Lam said Cathay was “cautiously optimistic” about its 2020 cargo business, but said he expected it to remain soft during the first half of the year. To help spur the cargo business, the airline announced earlier that it was cutting its “Terminal Charge concession” for export shipments from Hong Kong, which will take effect from 1 April 2020. “Overall, our expectation is that the rest of 2019 will remain incredibly challenging and we continue to expect our second-half financial results to be significantly below those of our first half,” he added.

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Matt Driskill
Matthew Driskill is the Editor of Asian Aviation and is based in Singapore. He has been an Asia-based journalist and content producer since 1990 for outlets including Reuters and the International Herald Tribune/New York Times and is a former president of the Foreign Correspondents Club of Hong Kong. He frequently appears on international broadcast outlets like CNN, Al Jazeera and the BBC and has taught journalism at Hong Kong University and the American University of Paris. Driskill has received awards from the Associated Press for Investigative Reporting and Business Writing and in 1989 was named the John J. McCloy Fellow by the Graduate School of Journalism at Columbia University in New York where he earned his Master's Degree.

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