A jump in transit customers boosted Cathay Pacific Airways’ travel volumes in July, contributing to a 59 per cent monthly increase in passengers, the airline said on Friday.
The performance offered a slightly positive start to the second half of the financial year for the airline, which is receiving a government bailout to cope with the slump amid the coronavirus pandemic.
On Wednesday, it reported a record first-half loss of HK$9.87 billion (US$1.27 billion).
Get the latest insights and analysis from our Global Impact newsletter on the big stories originating in China.
The rise in Cathay’s passenger numbers last month underscored the benefits from Hong Kong as a major airport transit hub, with air travel hammered by the global fight against Covid-19.
Hong Kong has allowed flight transfers since June 1, and the airport will further open to transit flights from mainland China from Saturday for two months. Previously, all transit services had been suspended from March 25.
“Passenger volume showed signs of slight improvement in the beginning of July, fuelled by a boost in the number of transit passengers via Hong Kong,” said Ronald Lam Siu-por, the airline’s chief customer and commercial officer.
But the resurgence of Covid-19 in different parts of the world saw demand fall towards the end of July, Lam added.
The 59 per cent rise marked the largest increase in passengers that Cathay Pacific and Cathay Dragon have carried since March, after which the airline scaled back flights to a skeleton schedule.
July’s volume, 42,984 passengers, was almost the size of May and June’s passengers combined. In the same month last year, Cathay carried 4.43 million passengers.
Transit customers pre-coronavirus made up 50 per cent of the airline’s passenger mix. During the pandemic, it has been closer to one-third.
Fresh from a HK$39 billion recapitalisation, with the government making a significant investment, the company reiterated it was a long way from normal times.
“In addition to the Covid-19 pandemic, we have to contend with a looming global recession and geopolitical tensions, which are expected to have a negative impact on both air travel and cargo demand,” Lam said. “It is obvious that there will be no return to normal demand conditions any time soon.”
The airline anticipates a 92 per cent capacity reduction in August and September compared to the same period last year, still the highest rate since April. Currently operating at 8 per cent passenger capacity, Cathay said it might manage to boost that figure into double-digits by October.
The airline is currently flying to just 21 destinations out of the more than 90 it would ordinarily serve.
Cathay noted the transit plan for flights from the mainland would offer a little extra help.
“This will help enhance our passenger volume via the Hong Kong hub, and offer essential connections from the Chinese mainland to different parts of the world,” Lam said.
Health officials and experts have said the health risks posed by transit passengers would be low, as the mainland was considered a low-risk zone.
Meanwhile, Cathay carried almost 40 per cent less cargo in July because of a wider grounding of passenger flights. But it still generated more revenue from its cargo business than carrying passengers in the six months to June.
Did you know that China supplies 40% of the world’s active pharmaceutical ingredients (API) for drug manufacturing? Learn what other ways local healthcare players are expanding their global footprint from the China Healthcare Report, brought to you by SCMP Research, and get a comprehensive industry review and insights on Covid-19 induced market shifts. Purchase now and get a 30% discount before 30 September 2020. You will also receive access to 6 closed-door webinars led by China healthcare’s most influential C-suite executives.
This article Hong Kong transit passengers give Cathay Pacific a lift to start second half of the year first appeared on South China Morning Post