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JUNE 2019

Week 24


Hong Kong hub faces uncertainty

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June 14th 2019

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Violent protest and extradition bill could scare off tourism and business. Read More »

The structural changes in Hong Kong that have propelled Cathay Pacific’s turnaround could be quickly undone by a violent protest in the city on June 12. Users on Twitter were mostly taken back by what they saw as excessive police force against protesters. Users remarked they would not want to visit Hong Kong. Hong Kong airport is shifting towards an O&D hub, and away from transit traffic.

Flights on June 12 were largely not disrupted, but delays were common at Cathay.

Cathay said its turnaround was benefitting from a rebound in Hong Kong tourism. Tourism slumped during a nearly three-month protest in 2014, but that tourism downturn coincided with other factors including a weakening yen and austerity measures in mainland China.

Business traffic also now faces uncertainty. The protest was against a proposed extradition bill. Various groups warned the bill, if passed, would diminish Hong Kong’s attractiveness as a business destination. A more extreme scenario came from US Speaker of the House Nancy Pelosi, who said Hong Kong’s special relationship with the US would need to be re-evaluated.

Prior to the protest, Cathay was already facing a downturn. “Overall yield for April still saw a year-on-year decline and such yield pressure is expected to continue in the coming months,” Director Commercial and Cargo Ronald Lam said of the airline’s passenger performance in April, the most recent month disclosed. Lam said cargo had a worse outlook owing to a “decline in both volume and yield. Both are expected to remain difficult for the foreseeable future.”

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