Hong Kong Airlines is cutting capacity throughout the remainder of 2019 due to falling passenger numbers. The South China Morning Post is reporting that Hong Kong Airlines will cut flights by 7% and the number of tickets for sale by 9%. It comes as protests continue in Hong Kong and the number of passengers flying into the city plunges.
Hong Kong Airlines currently provides more than 100 flights a day, including some 50 a day out of Hong Kong Airport. Now, those numbers are set to shrink.
A spokesperson for Hong Kong Airlines said;
“Travel demand has declined sharply due to recurring issues in Hong Kong. In response to the current market conditions, we have temporarily reduced our capacity.”
Protests are having a big impact on visitor numbers
The last 15 weekends have seen Hong Kong grappling with protests and the response by security services, causing potential travelers to the city to cancel in their thousands. The impact on Hong Kong-based airlines such as Cathay Pacific and Hong Kong Airlines has been acute. Hong Kong Airlines has reported a decrease of 13% in year on year travel in August.
The Hong Kong Government says 40% fewer people visited Hong Kong in August 2019 compared to one year ago. Hong Kong Airport reported a year on year passenger volume decline of 12.4% in August 2019.
A report in CH-Aviation suggests the move by Hong Kong Airlines is an attempt to minimize financial losses. The airline, a subsidiary of the HNA Group, has had recent boardroom turmoil and ongoing debt and liquidity problems. CH-Aviation also notes that the airline has suggested employees may be asked to take unpaid financial leave or to cut their working hours.
Current Hong Kong Airlines cancellations are reportedly occurring on an ad hoc basis. This week’s decision by the airline may be an attempt to formalize future cancellations, providing some certainty to passengers and easing the logistical strain on employees.
A pattern of route cancellations
This week’s decision by Hong Kong Airlines is a continuation of ongoing route consolidation following a period of rapid expansion. Last year it pulled out of the Gold Coast and Cairns routes. Earlier this year it axed flights to Auckland. The airline has also reduced frequencies to the North American destinations of Vancouver, Los Angeles, and San Francisco.
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At the time, Hong Kong Airlines called it an “adjustment to our business strategy,” switching from loss-making long haul routes to the more lucrative short and medium-haul Asian routes. As one aviation analyst said at the time, for many smaller Asian airlines, having long haul routes is more about face than profitability.
Earlier this year, The South China Morning Post quoted Hong Kong Airlines’ Chairman, Hou Wei, saying;
“As one of the fastest-growing carriers in the world, we are confident of our future and are committed to sustaining our long-term growth.”
Having trimmed their long haul routes, it appears Hong Kong Airlines’ Asian destinations are in line to feel the effects of new cancellations. Ch-Aviation notes flights to Sapporo, Male, Seoul, and Hanoi have seen cancellations recently.
Pain in Hong Kong
While the slowdown in visitor numbers is having an impact on all airlines that fly into Hong Kong, the effects are being felt most keenly by the Hong Kong-based airlines. In addition to Hong Kong Airlines, local behemoth Cathay Pacific is halting short term growth plans. In addition to airlines, the impact is being felt at the airport, hotels, the businesses and their employees that rely on the normally strong visitor numbers to Hong Kong.
One thing is for sure, there seems to be no immediate prospect of a resolution to the problems in Hong Kong, meaning the financial pain for many, including Hong Kong Airlines, is set to continue for the foreseeable future.