Hong Kong Airlines

More woe for Hong Kong Airlines as major insurance firm pulls coverage for passengers in event carrier folds

  • Blue Cross (Asia-Pacific) Insurance Limited advises business partners of move, which takes effect on Monday
PUBLISHED : Thursday, 03 January, 2019, 9:28pm
UPDATED : Thursday, 17 January, 2019, 2:11pm

Passengers flying with Hong Kong Airlines run the risk of losing out in the event the city’s third-largest carrier folds, after an international travel insurance company said it would partially suspend coverage for customers from Monday.

Blue Cross (Asia-Pacific) Insurance Limited notified its business partners on Thursday that next week, customers travelling with the airline would not be able to enjoy the special allowance the insurer offers if the airline winds up “in view of the news of the airline published by media recently”, according to a notice seen by the Post.

In response, Hong Kong Airlines said it did not have a business relationship with Blue Cross.

“We are operating as normal and remain committed to offering our best service to customers,” a spokesman said.

A travel agent with Morning Star approached by the Post confirmed the news, and said his company had received the notice from Blue Cross. But, he said it should not have a significant impact on their travel tours as the airline was not their major partner.

The troubled airline has endured a torrid time of late, and recently suffered an exodus of senior executives and rumours about a poor financial status.

According to Blue Cross’ website, clients would normally be compensated up to HK$2,000 in the event an airline folds.

Insurance sector lawmaker Chan Kin-por said it was rare for an insurer to remove airlines from such coverage. Yet, he said it was common for insurance companies to review the conditions of their coverage by adding or removing terms after evaluating any potential risk.

“The coverage itself is rare. Only a small number of insurance companies offer coverage if airlines wind up,” Chan said, adding that the Bank of China also offered these terms.

A spokeswoman from the Bank of China (Hong Kong) told the Post it had not received any notice from Bank of China Group Insurance Company to change the terms of its coverage.

Dr Law Cheung-kwok, director of policy at the Aviation Policy and Research Centre at Chinese University, said: “This news will definitely affect confidence in consumers and travellers booking with the airline.”

Call for Hong Kong Airlines to explain its finances, despite ‘here to stay’ vow

But despite the financial problems, Minh Tran, who works in the education sector and has enjoyed flying with the airline before, said he “wouldn’t think twice” about booking with the firm. However, he said he would pay with his credit card to ensure he could recoup his airfare if the carrier closed suddenly.

Although Blue Cross collaborates with a significant number of travel agencies across the city, Chan said the effect on customers would not be large because the compensation involved was relatively small, and the company had notified people in advance.

However, the move may have a bigger impact on the airline, whose parent company is debt-laden mainland aviation conglomerate HNA Group.

The conglomerate has sued a firm owned by a former director of Hong Kong Airlines, for about HK$854 million in unpaid debt, just two weeks after news surfaced of the exodus of top executives.

Local media also reported that the airline must repay HK$4.5 billion (US$575 million) in bonds by January 20, a task believed to be challenging for the carrier.

But senior management at the carrier have vowed it is “here to stay” and that it remains committed to long-term growth.

A spokeswoman for Blue Cross on Friday afternoon confirmed the new arrangement and said it was “solely made based on our commercial considerations”.

“We have already notified our authorised agents and insurance brokers who will communicate with their customers in regard to this new arrangement,” she said.

The company would post an announcement on its website and provide guidance to customers, she added.