Barricades on September 1 at the airport, a popular target for protesters. Photo: Dickson Lee
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https://scmp.com/news/hong-kong/hong-kong-economy/article/3032706/demand-hong-kong-flights-smaller-decline-expected Hong Kong economy
Demand for Hong Kong flights in smaller decline than expected during protests, American Airlines says
- AA eyes up Hong Kong to expand frequent-flier scheme in rare vote of confidence by a carrier in city, as others slash flights
- Senior figure at one of world’s biggest airlines says routes ‘doing better than we expected’ in pledge to continue investing in Hong Kong
Leading carrier American Airlines reports only been a small dent in customer demand for Hong Kong, although the company remains tight-lipped about the exact figure. Photo: Reuters
American Airlines (AA) has said demand for travel to and from Hong Kong had fallen less than expected despite a broad slump across the aviation industry caused by prolonged unrest in the city.
Boosted by robust demand for business travel despite global headwinds, the Texan carrier – considered the world’s largest airline in terms of the number of planes operated – plans to use Hong Kong as the first Asian city to expand its corporate frequent-flier programme, underscoring the carrier’s confidence despite the turbulence.
Hong Kong has been rocked by often violent protests for more than four months, sparked by the now-withdrawn extradition bill, which would have allowed for the transfer of fugitives to jurisdictions with which the city has no such agreement, including mainland China. The campaign has since morphed into a wider anti-government movement.
Some foreign airlines cut routes or flights to Hong Kong or downgraded to smaller aircraft as travellers have generally avoided the city. Domestic carriers Cathay Pacific Airways and Hong Kong Airlines followed suit, but AA has kept to business as usual.
“We’re in Asia-Pacific [for the] long term,” said Shane Hodges, AA’s managing director for Asia-Pacific sales. “[We will] continue to invest in certain parts of the world where things aren’t necessarily going as well as we would like.
“We know about the current situation in Hong Kong, but that doesn’t mean we’re going to stop.”
The Fort Worth-based carrier said its corporate frequent-flier scheme, Business Extra, was eyeing the city up and expected to sign thousands of local small and medium-sized businesses to complement its corporate contracts. It believed there were opportunities to win a greater market share while other foreign airlines downsize their Hong Kong operations.
Hodges said: “For a long time we’ve been able to have contracts with large corporate companies but the market I am happy we can serve now is the smaller and medium-sized businesses that might not have the huge amount of spend larger companies do and we want to reward them.”
The US carrier flies to Hong Kong from Dallas Fort Worth and Los Angeles daily. AA also sells tickets as code-shares on 50 flights a day beyond Hong Kong across Asia with the Cathay Pacific Group.
Describing the performance of AA’s routes, Hodges painted an optimistic picture.
“While it’s far off where we would like it to be, it’s doing better than we had expected,” he said.
Hodges pointed to a larger volume of connecting passenger traffic from Hong Kong to the rest of Asia and from Dallas and Fort Worth to other domestic US and Latin America destinations respectively.
He said he would not be drawn on the route’s performance, when asked whether the carrier had experienced a low single-digit drop in passengers.
“Because of the business model, because of the strength of other markets coming onto our flights, we are not beholden to a Hong Kong-demand led market. We are actually doing pretty well and our forwards [bookings] are looking pretty good,” he said.
Hodges acknowledged the pricing power on airfares had become weaker as airlines slashed prices in a bid to stimulate demand. Some travellers managed to book return flights in economy class to Miami via Los Angeles from Hong Kong on American this month for HK$3,168 (US$403).
Hong Kong International Airport is poised to unveil its September traffic performance soon. HKIA suffered a 12.4 per cent drop in passenger numbers in August, marking the biggest single monthly drop since June 2009.
Cathay Pacific, which controls half of all take-off and landing slots at HKIA, saw passenger numbers fall 11.3 per cent in August including a 38 per cent drop in arrival travellers. The company has also faced a boycott from mainland-owned business in Hong Kong and elsewhere in China.
American’s rival United Airlines will gradually cut its capacity in the Hong Kong market by 25 per cent, including suspending its routes from Chicago and Guam and downgrading flights to smaller planes.
A Cathay flight takes off from Hong Kong International Airport, one of several carriers that have been forced to reduce services in the city on the back of ongoing protests. Photo: Handout
Travel intelligence firm ForwardKeys said in a report that the number of mainland Chinese visitors arriving to Hong Kong by air had dropped 53.3 per cent from July 1 until September 23, and advanced bookings from September 24 until the end of the year were 58.2 per cent down on the same point last year.
Jameson Wong, Asia-Pacific business development director at ForwardKeys, said: “When one considers that mainland China is Hong Kong’s most important source market and the tourism industry is responsible for 300,000 jobs … these numbers reveal that the demonstrations are delivering a devastating blow to the economy.”
While American Airlines also has a financial interest in neighbouring rival China Southern Airlines, holding a 2.76 per cent stake in China’s largest carrier, it said it had no plan to expand to Guangzhou.