Hong Kong airlines say HK$2.6 billion in financial aid is not enough, as they ask government for ‘significantly more’ help
- Cathay Pacific points to continued challenges of coronavirus pandemic as it requests more money
- Hong Kong Airlines says carriers are ‘struggling to survive’
Cathay Pacific and Hong Kong Airlines have said the HK$2.6 billion (US$335 million) in financial aid promised by the Hong Kong government and the city’s airport for the ailing aviation industry was not enough.
Hit by months of anti-government protests and now the coronavirus pandemic, Cathay said on Tuesday it needed “significantly more” government help than it was getting, while Hong Kong Airlines said carriers were still “struggling to survive”.
That help included a large portion of the HK$630 million set aside by authorities to reduce airport fees in the five months to June.
“The continued substantial challenges facing the home carriers in Hong Kong, with tightened travel restrictions worldwide, means we are of the view that significantly more much-needed immediate assistance, which is commensurate with the scale of this crisis, still needs to be provided,” a Cathay spokeswoman said.
A Hong Kong Airlines spokeswoman said the airline welcomed the relief measures but believed more help was necessary “to support Hong Kong’s home carriers struggling to survive in this increasingly challenging situation”.
The global airline industry has had a front-row seat to an unfolding crisis as sweeping travel restrictions and fears over the virus have seen demand for flights slump, all but grounding the fleets of major carriers worldwide, putting airlines and industry jobs at risk.
An estimated US$200 billion (HK$1.55 trillion) is needed to bail out the entire aviation industry.
On Monday, Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor further tightened the city’s borders, banning non-residents and travellers from taking connecting flights from Hong Kong International Airport starting midnight on Tuesday, dealing a further blow to battered airlines.
The government offered HK$120 billion last month in help to businesses as part of the city’s 2020 budget, but the aviation industry was excluded at the time.
Hong Kong’s flagship airline said last week its main brand, Cathay Pacific, and regional unit Cathay Dragon recorded an unaudited HK$2 billion loss in February, and it had previously warned of “substantial losses” in the first six months of this year.
The airline has already sold six planes for HK$5.5 billion and leased them back to free up more cash.
To slow the haemorrhaging of funds, Cathay has cut back its flight schedules by 96 per cent and initially secured the cooperation of the bulk of its 32,000 employees in taking three weeks of unpaid leave.
Hong Kong Airlines has been pushed to the brink, operating a handful of flights a day, after cutting 10 per cent of jobs and cutting pay by as much as half. The airline is seeking new investors.
While airlines in Hong Kong are not thought to be seeking direct bailouts, they have pointed to other government measures, including paying employees’ wages in some form to prevent job losses.
Alexandre de Juniac, the director general and CEO of the International Air Transport Association, on Monday welcomed the extra help from Hong Kong, but also concluded that more money was needed.
“Considering the position of Hong Kong, HK$1 billion is a good sign but should probably be a little more if Hong Kong wants to maintain its connectivity with strong and dynamic companies.”
IATA and the Association of Asia-Pacific Airlines have both called for a variety of tax relief measures.
Among them, HK$2.9 billion was collected in the last full financial year for 2018/19 in airport departure tax, a similar sum which could directly help airlines relative to the economic activity generated from air travel.
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