Cathay Pacific expects reduced flying for at least two more years

Cathay Pacific does not expect to return to normal levels of flying for at least another two years, underscoring the slow return of travel in parts of Asia and Hong Kong’s fragile status as a global hub.

The airline plans to resume its pre-pandemic capacity in full by the end of 2024 or early 2025, Ronald Lam, chief customer and commercial officer at Cathay Pacific, said in an interview.

“We still have to look at the supply and demand situation, so it will take time to ramp up,” he said.

Cathay has been one of Hong Kong’s biggest corporate casualties from the pandemic border closures which have undermined the city’s status as Asia’s premier financial hub.

Until last month Hong Kong followed China in implementing an incoming traveller quarantine and closing its borders to tourists. The restrictions grounded much of Cathay’s passenger capacity and the airline sent dozens of idle aircraft to the Australian desert to sit out the pandemic.

Lam said Cathay and Hong Kong had “suffered”, but welcomed a “very obvious pick-up in bookings” for the rest of the year that has outpaced expectations since the government announced the end of hotel quarantine.

But he said more people were booking to leave Hong Kong rather than fly in because of lingering restrictions, including PCR tests and bans from restaurants and bars for the first three days after arrival.

“The pent up demand of the Hong Kong people has been unleashed. The demand from visitors has picked up. But it hasn’t shown the full potential yet,” he said.

Virgin Atlantic this month said it would leave Hong Kong, while Willie Walsh, the former head of British Airways who now runs the global airlines lobby group, recently said he believed Hong Kong has lost its status as an aviation hub.

“Hong Kong has lost its position . . . and will struggle to regain it because other hubs have taken advantage of it,” he said.

Lam disagreed, pointing at the expansion of the city’s airport and “very strong backyard” of Chinese commercial hubs, and said Cathay’s future is inextricably linked to Hong Kong’s.

“I’m very confident . . . we’ve been behind in terms of opening up compared to many of our regional competitors. But I don’t think we’ve lost anything structural. Yes, there are some people leaving Hong Kong but I think they will come back,” he said.

The Hong Kong government lead a HK$39bn (US$5bn) bailout in June 2020 to keep Cathay afloat. As part of the this, the government was able to appoint two “observers” on to Cathay’s board, sparking concerns of increasing government influence on the airline which is already part-owned by Air China. Lam said he expected the observers to leave the board once the bailout is repaid.

Cathay, which falls under the colonial-era conglomerate Swire Group, has previously been at the centre of political tensions after some staff participated in 2019’s pro-democracy movement.

The bailout was followed by a restructuring later that year when the airline slashed its workforce and closed its regional Cathay Dragon brand. The company is now attempting to rebuild its workforce after many pilots left owing to rigid quarantine rules during the pandemic.

Lam is tipped by many to be Cathay’s next chief executive, but would not be drawn on his own future. “I cannot comment on that, but there are rumours I have heard,” he said.