Due to “restrictions and quarantine requirements in Hong Kong and many of our key markets,” Hong Kong-based Cathay Pacific airline, a carrier with no domestic market, is unable to predict when its financial troubles will end and must wait for other countries, especially China, to reopen their borders to travelers, board chair Patrick Healy said in comments quoted by the Financial Times. (See “Long-Haul Air Travel Recovery Still Not Lifting Off,” Trends Journal, 22 June, 2021.)
The carrier reported losing HK$7.6 billion in the first six months of this year, after losing HK$9.9 billion during the same period in 2019, although a strong cargo business helped moderate the loss.
“Unlike many of our global peers, who have seen encouraging signs of recovery in some domestic markets, Cathay Pacific remains wholly dependent on cross-border air travel,” Healy said.
The airline hopes to be flying at 30 percent of capacity in this year’s final quarter, but that depends “on operational and passenger travel restrictions being lifted,” he added.
In the first half of this year, Cathay Pacific flew 47 percent of its cargo capacity, the company reported, but only 5 percent of passenger capacity, with passenger revenues down more than 92 percent compared to the first half of 2019.
Hong Kong’s vaccination campaign faced strong hesitancy early on and authorities left business and travel restrictions in place longer than many other locales did.
Also, Hong Kong must persuade mainland China’s government to reopen its borders to travel, an unpredictable proposition.
Singapore Airlines, also lacking a domestic market but facing less stringent government restrictions, reported flying 28 percent of its passenger capacity by the end of June, the FT said.
TREND FORECAST: The increasing emphasis on vaccine passports and negative COVID tests—plus the Delta variant fear spreading among the masses—will continue to weigh on airlines’ sales, delaying the sector’s return to positive cash flow even longer.