Cathay Pacific is responding to depressed demand by cutting or reducing a number of longhaul routes.
August was a horrible month for Cathay Pacific, its worst since the 2003 SARS outbreak. Overall passenger traffic declined 11.3% versus the previous August, with a lopsided 38% reduction in the number of inbound passengers to Hong Kong. Premium cabin demand was hit particularly hard.
As the winter season of lower demand approaches, Cathay Pacific has announced a number of cutbacks or service reductions from Hong Kong:
- Dublin – suspendeded effective November 07 – will only operate during summer in 2020
- Medan (Indonesia) – suspended
- Frankfurt – daytime flight suspended
- Paris – daytime flight suspended
- Vancouver – 16 to 13 weekly flights effective October 29
- Washington IAD – 5 to 4 weekly flights effective October 29
- New York JFK – 21 to 18 weekly flights effective October 29
Cathay’s Fifth Freedom route between New York and Vancouver will also be cut on March 29, 2020.
Look for upcoming cuts–perhaps severe–to Mainland routes.
With an ongoing tiff between protestors in Hong Kong and Mainland China hurting demand, capacity to the Mainland fell 9.3% in August but demand fell by 28.1% versus one year ago. Tourism groups from the Mainland to Hong Kong dropped 63% in August compared to a year ago and Mainland tour groups are already down 90% this month versus September 2018.
Augustus Tang, the new Cathay Pacific CEO, blamed the drop in demand on protestors in Hong Kong and the ongoing U.S. – China trade war. In a memo to staff obtained by Danny Lee of the South China Morning Post, Tang announced new austerity measures, including:
- Hiring freeze on non-flying staff
- Delay in non-crtical spending
- Critical evaluation of existing spending, including on personnel
- Push for more productivity
With no end in sight to the protests, Cathay Pacific is bracing itself for a winter of despair. While the cuts are arguably modest, these are only the first round. Look for deep cuts to Mainland China service in the weeks ahead.