Across The BorderIncreased flights between UK and China may pile pressure on Hong Kong airlines

A new deal which could see direct flights between Britain and the Chinese mainland more than double may heap further pressure on Hong Kong’s airlines, according to market watchers.

The two governments agreed on Tuesday to raise their current weekly cap on the number of passenger flights between the two countries from 80 to 200. The deal comes as Britain seeks to boost international tourism and trade links ahead of formal Brexit negotiations which are set to begin in March.

“It is highly possible there will be fewer Chinese mainland and UK passengers taking a connecting flight in Hong Kong when more than double the number of direct airline services are offered,” said Ivan Li Sing-yeung, the head of research at Sinopac Securities. “The expected reduction in passengers will have a negative impact on Hong Kong’s flagship carrier Cathay Pacific Airways, but not that seriously I suppose.”

Zhang Jing, an analyst from Phillip Capital, echoed Li’s views. She said: “Some negative effect will come to Hong Kong carriers with the new deal taking off.

“With more direct flights between the UK and China being provided, it is unnecessary for some passengers to transfer in Hong Kong.”

Cathay Pacific announced on Wednesday evening that it has lowered its second-half profit forecast in the wake of increased overcapacity and competition since an interim report in August. The announcement made no mention of the new Sino-British deal.

It is unclear how many new flights between China and the UK the deal will lead to. At present, Chinese airlines operate 38 flights a week between the two countries, while UK airlines operate 29. This week’s agreement raises the maximum from 40 to 100 for each nation’s carriers.

Li said there is no doubt that mainland Chinese and UK airlines will be the direct beneficiaries of the new arrangement.