Cathay Pacific Airways on Friday said it would operate just 4 per cent of its scheduled services in April and May as its budget unit HK Express declared the suspension of flights for at least five weeks until the end of April.
Both airlines cited a significant drop in travel demand and sweeping restrictions in movement amid the coronavirus pandemic for taking the drastic steps.
Outlining a “skeleton” service for flights as it decimated its passenger capacity by 96 per cent, Cathay Pacific said it would operate three flights a week to 12 destinations in the region and further afield, including London Heathrow, Vancouver, and Taipei. Cathay Dragon will operate three weekly services to Beijing, Shanghai Pudong, and Kuala Lumpur. Dedicated freighter flights will continue as scheduled.
Hong Kong’s flagship airline said it was important to keep a minimum number of key passenger and cargo links open to and from the city, likening them to “vital arteries”.
Cathay Pacific said, however, said in a staff memo that HK Express operations “will be suspended temporarily until the situation improves”, indicating a complete grounding beyond five weeks.
Ronald Lam Siu-por, Cathay’s chief customer and commercial officer, said: “We need to take difficult but decisive measures as the scale of the challenge facing the global aviation industry is unprecedented.
“We have no choice but to significantly reduce our passenger capacity as restrictions worldwide are making it increasingly difficult for our customers to travel, while demand has also dropped drastically.”
The airline had told its staff it would reduce its capacity to just 5 per cent, before announcing publicly it would be closer to 4 per cent.
“These cuts are both extraordinary and necessary given the continued drop in customer demand,” the company told staff.
Cathay Pacific, making some of the steepest cut to flights in its history, has seen the number of passengers flying collapse from 90,000 daily to as little as 11,000 on some days. About 150 of 236 planes have been grounded, but that figure is likely to rise close to 200 with the latest flight reductions.
Cathay on Monday said its full-service airlines made an unaudited loss of HK$2 billion in February alone – the first full month of the coronavirus crisis.
HK Express, which will stop all its flights from March 23, is the first airline in Hong Kong to do so amid the public health crisis, but joins more than 45 carriers worldwide to halt services on a temporary basis.
HK Express CEO Mandy Ng said: “It is now essential to ensure we see ourselves through this extremely difficult period. Given all the challenges we have been facing, preserving our cash position is key to make sure we stay together as a team.”
The low-cost airline has cancelled about 2,000 flight sectors, covering 23 out of 25 routes across Asia since the pandemic started. The airline serves 13 Japanese airports.
Operating 34 flights a day from Hong Kong International Airport in good times, it fell to a low of five flights last week after sweeping travel restrictions were imposed by Japan.
The International Air Transport Association said up to US$200 billion in state aid and bailout ailing carriers was needed to save the industry.
Transport and Housing Secretary Frank Chan Fan said he accepted HK Express’s decision to stop flights temporarily and on the understanding the airline would take care of its staff and passengers.
Chan said it was continuing discussions with the Airport Authority for a financial package beyond already rolled out relief measures worth HK$1.6 billion. The absence of a reduction in the costly aeronautical charges in the package had upset airlines.
Elsewhere, Lufthansa Group said on Thursday it would shrink its flight schedules to levels not seen since 1955. The German company will also ground 700 of 763 aircraft.
Across the industry, scores of staff are being laid off temporarily, thousands of planes are being taken out of service, and services are being cut to bare bones to rein in costs and preserve cash.
Almost one year ago, Cathay Pacific acquired HK Express in a HK$4.93 billion deal (US$628 million) taking it off the hands of the cash-strapped HNA Group. Last year, the budget airline lost HK$246 million.
The full list of destinations to be operated by Cathay in April and May are London Heathrow, Los Angeles, Vancouver, Tokyo Narita, Taipei, New Delhi, Bangkok, Jakarta, Manila, Ho Chi Minh City, Singapore, and Sydney.
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