Cathay Pacific will be cutting down its passenger flight capacity by 1.4% next year rather than its original plan to increase it by 3.1%. Revealed on Friday, the information was obtained by Reuters through an internal memo. The decrease is a result of a change in outlook - solely due to anti-government protests that have consumed the city in recent months.
This capacity reduction comes after Cathay Pacific's reduction of its second-half profit guidance earlier this month. The anti-government protests started in June and have steadily continued ever since. Tourism and business have been hampered by these protests as numerous airlines also reduce their flight capacity to the East Asian financial hub.
In the Reuters-obtained memo, this is what CEO Augustus Tang had to say:
“Given the immediate commercial challenges and the fact that our position has deteriorated in recent weeks, we must take swift action to adjust our budget operating plan for 2020 downwards again. Put another way, rather than growing our airlines in 2020, for the first time in a long time, our airlines will reduce in size.”
The memo also adds that revenue performance continues to be disappointing. Furthermore, advance bookings through to 2020 remain much lower than expected. Weak traffic from mainland China has particularly affected the airline's revenue.
Other airlines suffering
The protests have not just affected Cathay Pacific. In fact, Hong Kong Airlines recently announced the closure of its last long haul service: Hong Kong to Vancouver. The flight will no longer operate after February 2020 while bookings will be closed from early December.
Prior to this, the airline had also removed a number of long haul routes from its schedule. San Francisco was discontinued in October, and the Auckland route was closed earlier in the year. It also announced it would be suspending Los Angeles, its last US route, from February 6th, 2020.
As for mainland Chinese carriers, cuts have been made virtually across the board. Shanghai Airlines, operating flights from Shanghai Hongqiao, is using much smaller aircraft on its flights to Hong Kong. China Eastern’s flights from Shanghai Pu Dong operated by its A330/350 and 777-300ER fleet have also been replaced by much smaller Airbus A319/320/321 aircraft.
Other airlines, such as Xiamen Airlines, have suspended some routes altogether. This includes flights to Hong Kong from Fuzhou, Hangzhou, Quanzhou, and Xiamen. China Southern is canceling its services from Shenyang and Yiwu. Many of these suspensions have been filed through to the end of this year – December 31st – with some going even longer.
Conclusion
Many interviews with protestors indicate that there is no end in sight for these protests. There is zero indication and no expectation that the Chinese government will make any concessions or even negotiate with the protestors. This unrest could continue far into the future.
Do you think Cathay Pacific can weather this storm? What do you think it will have to do to survive this unrest? Let us know by leaving a comment.
We contacted Cathay Pacific for a request for comment. However, no response was received at the time of publishing this article.
