Cathay Pacific carried fewer passengers year on year in September, reveals report signalling Hong Kong’s flagship airline could slump to a full-year loss

South China Morning Post 發布於 2019年10月18日10:10 • Danny Lee Danny.lee@scmp.com
  • Airline group saw passenger numbers fall 7.1 per cent year on year in September, with planes only about three-quarters full
  • Hong Kong airport will unveil its September performance later in the week, which could show a year-on-year loss of around 700,000 passengers
The Cathay Pacific Group has warned of a “significant shortfall” in advance bookings for the rest of 2019. Photo: Reuters

Hong Kong's biggest airline recorded its second straight month of falling passenger numbers in September, as a report signalled it could slump into a full-year loss amid violent anti-government protests in the city and severe scrutiny from mainland Chinese authorities.

The Cathay Pacific Group also warned of a "significant shortfall" in advance bookings for the rest of the year, reflecting the extent of the impact from the civil unrest.

Its passenger numbers stood at 2.42 million in September, down 7.1 per cent year on year, and its planes were only approximately three-quarters full " or down 7.2 percentage points to 73.6 per cent.

The National Day holiday period, which typically means big business for Cathay Pacific, turned into a nightmare as travellers from mainland China avoided the airline and the city amid the violence.

Number of tourists coming to Hong Kong drops as protests deter visitors

Fewer passengers opted to fly to Hong Kong, and the airline saw inbound passenger traffic fall 38 per cent, the same figure as in August. Outbound traffic dropped 9 per cent, compared with 12 per cent last month.

Ronald Lam Siu-por, Cathay Pacific's chief customer and commercial officer, said September was "another challenging month" for its passenger business, with revenue adversely affected by weakened market sentiment, particularly for travel to Hong Kong.

Giving some clues about the financial impact, he said: "Our expectation is that the rest of 2019 will remain incredibly challenging for the airline and our second-half financial results are expected to be below those of our first half."

Of the outlook, Lam added: "We continue to see a significant shortfall in inbound bookings for the remainder of 2019 as compared to the same period last year."

The Chinese National Day holiday period, which means big business for Cathay Pacific, turned into a nightmare this year as travellers from mainland China avoided the airline and the city amid ongoing violence. Photo: AFP

The ongoing slump in air travel out of Hong Kong continued through the first week of October. Ahead of the "golden week" around the National Day holiday, immigration data indicated fewer people entering and exiting the city via Hong Kong International Airport.

Excluding transit passengers, 170,000 fewer people travelled in and out of the airport between October 1 and 7, official figures showed.

Mainland China has become Cathay Pacific's worst-performing market, with demand for flights in and out of the mainland down 23.2 per cent in September.

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

Our expectation is that the rest of 2019 will remain incredibly challenging for the airlineRonald Lam, chief customer and commercial officer, Cathay Pacific

The intervention by the Civil Aviation Administration of China prompted mainland passengers and businesses to boycott Hong Kong's premium airline.

The carrier has also faced a slump in travel in North and Southeast Asia. Meanwhile, demand for flights to and from Europe, India, Australia and New Zealand performed well for the group.

Amid the recent drop in demand, airlines have slashed fares, offering discounts like the hotel sector has.

Hong Kong protests leave 'golden week' tourist boom in tatters

For the month of August, the city's airport suffered its biggest monthly drop in passengers in a decade, with a decline of 12.4 per cent " or at least 850,000 fewer travellers. The airport will unveil its September performance later in the week and could show a double-digit decline or a loss of around 700,000 passengers from the same month last year.

Hong Kong has been rocked by violent protests for more than four months, initially sparked by a now-withdrawn bill that would have allowed extradition of criminal suspects to jurisdictions including mainland China. Though the bill has been withdrawn, the protests have morphed into a wider anti-government movement.

The percentage decline in passengers for Cathay Pacific and Cathay Dragon in September follows August when the airline saw monthly passenger traffic fall 11.3 per cent " excluding its low-cost airline HK Express " and the number of travellers flying to the city fall 38 per cent.

The Hong Kong International Airport suffered its biggest monthly drop in passengers in a decade in the month of August. Photo: May Tse

Bocom International transport analyst Luya You said: "As seen in August and September, Cathay's short-term strategy is to focus on boosting transit flows as inbound traffic predictably suffered."

"Overall mainland China revenue is not that big, but if their costs have been growing at a flat or accelerated pace, a small loss is possible," You added.

The airline made a profit of HK$2.34 billion in 2018 after two consecutive years of losses. This year it made a first-half profit of HK$1.35 billion.

In response to the downturn in the airline business, Cathay has reduced the number of flights on some routes and reined in its costs to limit the financial fallout triggered by the protests.

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