Cathay Pacific experiences extremely challenging month of August

Combined Cathay Pacific and Cathay Dragon traffic figures for August 2019 show declines across both cargo and passengers compared to the same month in 2018, as the carrier struggles with not only the ongoing trade war, but paralyzing street and airport protests.

The two airlines carried 161,394 tonnes of cargo and mail last month, a drop of 14 percent compared to the same month last year. The cargo and mail load factor fell by 7.5 percentage points to 60.9 percent.

Capacity, measured in available freight tonne kilometres (AFTKs), was down by 0.6 percent while cargo and mail revenue freight tonne kilometres (RFTKs) dropped by 11.6 percent.

In the first eight months of 2019, the tonnage fell by 7.1 percent against a 0.8 percent increase in capacity and a 7.2 percent decrease in RFTKs, as compared to the same period for 2018.

August tourism decreased by half

Cathay Pacific Group chief customer and commercial officer Ronald Lam says: “August was an incredibly challenging month, both for Cathay Pacific and for Hong Kong.” Lam adds that overall tourist arrivals into the city were nearly half of what they usually are in what is normally a strong summer holiday month, due largely to the weeks of increasingly violent protests in Hong Kong, and this “has significantly affected the performance of our airlines.”

The protests have also claimed two top Cathay executives – Cathay CEO Rupert Hogg and Cathay chairman John Slosar who both resigned in August and early September, respectively – which many see as the long arm of the Chinese government meting out retribution for what it sees as tacit support by the airline for staff who protested in their off-duty hours in early August.

“On the cargo side, our business continued to face headwinds,” Lam continues. “Tonnage further deteriorated month-on-month across all regions, driven in particular by slow demand over the holiday season in different parts of the world, the effects of tropical storms and disruptions at Hong Kong International Airport.

Slight optimism about the future

“Ongoing geopolitical tensions continued to affect overall market sentiment. Nevertheless, our outlook for September is slightly more positive and we expect to see demand progressively improve, driven by project shipments and the restocking of inventory as we enter the traditionally high-demand season,” Lam says.

The two airlines carried a total of 2.9 million passengers last month – a drop of 11.3 per compared to August 2018. Passenger load factor decreased by 7.2 percentage points to 79.9 percent, while capacity, measured in available seat kilometres (ASKs), rose by 5.1 percent.

Particularly hard hit was inbound traffic demand to Hong Kong from regional markets, particularly mainland China and North East Asia.

“Given the current significant decline in forward bookings for the remainder of the year, we will make some short-term tactical measures such as capacity realignments. Specifically, we are reducing our capacity growth such that it will be slightly down year-on-year for the 2019 winter season (from end October 2019 to end March 2020) versus our original growth plan of more than 6.0 percent for the period,” Lam adds.