HK Airlines to halt mainland routes

PUBLISHED : Thursday, 23 October, 2008, 12:00am
UPDATED : Thursday, 23 October, 2008, 12:00am

Hong Kong Airlines will suspend three mainland routes as early as Sunday to stem losses amid weakening travel demand, according to a source.

The carrier would halt flights to Xian, Chengdu and Chongqing when the winter schedule began because bookings for those routes were lukewarm, sources said, adding the Xian route would return next summer.

Travel agents said quotes for the three routes were available until October 31 but the airline had yet to update prices for next month.

'We can't book tickets for our clients on those routes from November due to the lack of new information,' said a travel agent.

Although Xian, Chengdu and Chongqing were popular destinations, travellers from the United States and Europe usually fly there via Beijing and Shanghai instead of Hong Kong as more airlines were using mainland cities as gateways, an industry veteran said.

Foreign carriers such as Lufthansa, Continental Airlines and Northwest Airlines have increased their presence in Beijing and Shanghai in recent months. Connections at the two mainland cities were also more convenient because of their more frequent schedules to other domestic cities, he said.

Hong Kong Airlines and Hong Kong Express Airways, both partly owned by the mainland's HNA Group, had ended passenger flights to Xiamen and Nanchang because of insufficient demand.

After the reshuffle, the two airlines would operate 13 mainland routes, including Shanghai, Haikou, Guilin and Hangzhou, although all but Haikou were loss-making, a source said.

The two airlines had no plans to merge because some of their aviation rights would be forfeited if they combined, the source added.

The source said they were struggling to obtain credit as banks no longer considered receivables from travel agencies as eligible collateral.

As such, the airlines were relying on shareholders' loans to fund operating expenses such as fuel costs and wages but the amount was capped at HK$2 million, he added.