Staff at Hong Kong Airlines are the latest to bear the brunt of their airline’s financial difficulties. As much as it wants to remain stable, the air carrier this month is unable to pay nearly half of its wages. Hong Kong Airlines has indicted civil unrest in the country for its financial troubles.
Loyal staff left out of salary redress
According to the South China Morning Post, Hong Kong Airlines (HKA) will fail to pay 45% of its staff at the end of this month. Instead, the 1,600 employees that will go without a salary for the month of November will be paid on 6th December.
The airline has been selective about the 55% of staff that it will pay. Cabin crew and overseas staff will receive wages on time leaving other loyal and local staff empty-handed. The airline is unable to support those staff at the forefront of the impact of the unrest. And that’s the bitter reality of the Hong Kong protests.
It’s the reason HKA has cited for its troubles. In its latest press statement, it said:
“Hong Kong Airlines has been reviewing its network strategy and will continue to focus on operating priority routes under the challenging business environment caused by the ongoing social unrest in Hong Kong…Hong Kong Airlines will continue to monitor the situation closely and adjust its business plan accordingly to ensure that it remains commercially viable and sustain its long-term growth.”
But of course, whilst HKA’s inability to reward its staff is a severe enough topic for discussion, its just one symptom that advertizes HKA’s future. That’s what’s really at stake; HKA’s commercial viability.
The strategy for commercial viability
Already over the course of this year, HKA has been faced with a plethora of difficult decisions. It has cut staff, pulled back aircraft and more recently culled popular destinations. Today, HKA announced it will cease operations on three international services. There will be no services to Vancouver, Taijin, or Ho Chi Minh City with the airline from February 2020 onwards.
Both the Air Licensing Transport Authority in Hong Kong and the Transport and Housing Bureau (THB) have been outspoken about HKA’s financial reputation. In the latest statement from the THB, it said it would continue to closely monitor HKA’s financial situation but urged it to take care of its passengers and employees. However, the THB injected some confidence in the situation and saw a promising light at the end of HKA’s fiscal tunnel. A spokesperson said:
“We noted that HKA has made an announcement on their flight consolidation…we are of the view that [this] plan is reasonable and necessary, and expect this will help improve the operational situation of HKA.”
But, what more can HKA do to secure its future? Well, unfortunately, that might be out of its control. The airline will engage in heated talks with the Air Licensing Transport Authority today to discuss how realistic a Hong Kong Airlines revival would be. According to the South China Morning Post, the licensing body is “extremely concerned” about HKA’s operations at this time with the inability to pay its staff stoking the burning woodpile with fresh timber.
However, speaking to the South China Morning Post a representative from HKA said that its delayed staff payment was an isolated case. That suggests that HKA believes a remedy for its woes is promptly on the way.
Tourism ruptured by the political climate
Nonetheless, we can’t get too comfortable just yet. Recent U.S. involvement in Hong Kong is thought to bring a fresh wave of protest as tensions in the region build. That would see more damage to airlines like HKA and Cathay Pacific. And the political climate is something that these airlines are largely unable to defend themselves against.
Once the second busiest airport in the world, Hong Kong International Airport has lost 2.3 million travelers this year as a result of the unrest in comparison to this time last year. There is an animosity towards traveling to and from Hong Kong in light of the political situation. And that’s something HKA would need to heavily invest in if it wants to regain its financial footing.
However, in January this year, there were already claims that HKA was in a fiscal compromise with parent company Hainan Airlines. And that was before the unrest even began…
Do you think Hong Kong Airlines took the right approach by not paying staff? Do you think it will be able to regain a positive financial outlook? Let us know in the comments!