Passengers pay for Cathay’s mistake
Hong Kong’s pride in the sky has again suffered a huge loss thanks to making wrong-way bets on fuel prices. And loyal customers are being hit with a fuel surcharge as a result
Someone help me understand this new fuel surcharge from Cathay Pacific and its sister airline Dragonair. I want to be as fair as possible because it is a big newspaper advertiser and I hate to bite one of the hands that feeds me. My dogs and my family also fly quite a bit on Cathay, seeing how it’s a whole lot friendlier to pets than Air Canada, which incidentally banned carrying dogs for the whole summer until this month.
The surcharge of HK$109 will kick in from September 15 for inbound passengers, though those flying out of Hong Kong will be spared because of a government regulation.
It will apply to flights to Hong Kong from the Southwest Pacific, including Australia and New Zealand, North America, Europe, Africa, the Middle East, and South Asia, starting from next Thursday.
Other flights including those between New York and Vancouver will be subject to a surcharge of HK$24 per journey.
But didn’t they used to charge extra for fuels because oil prices were sky-high at about US$100 a barrel? Now they are charging because prices are low? OK, they aren’t as low as they were in January when they were south of US$30, but at about US$46 a barrel, that’s more than half of what prices were back in 2014.
Well, there is the latest disappointing first-half profit report, partly hurt by a whopping HK$4.49 billion loss stemming from hedging fuel prices the wrong way. According to Bloomberg, Cathay’s hedges were way north of US$80 per barrel. Ouch! Didn’t Cathay already suffer a HK$3.74 billion loss from fuel hedges in the previous year? Cathay is not alone. Many leading airlines in the world also made wrong-way bets on fuel prices.
So I guess they are making the rest of us – and my dogs - pay for their financial genius.
“The decision to reintroduce the fuel surcharge overseas follows the practice currently adopted by other airlines in many of these markets,” Cathay said in a statement.
That’s right; our pride in the sky is just doing what everyone else is doing.
Hmm, doesn’t it sell itself as one of the city’s best managed companies? Manage by following doesn’t have the same ring to it.
Here’s an idea: How about cutting management’s pay instead of going after the wallets of loyal customers? It’s only fair.