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Written by: Chen Jingqi
2019-12-05 10:26
Last updated: 2019-12-05 10:26Hong Kong Airlines is struggling with financial difficulties, and the Air Transport Licensing Authority asked Hong Kong Airlines to improve its financial situation on the 2nd of this month, otherwise it will issue a license; Hong Kong Airlines unilaterally stated that it has sufficient funds to respond to the government's request, and so far the government has not received a response from Hong Kong Airlines. Luo Xianguo, a senior policy consultant at the Aviation Policy Research Center of the Chinese University of China, analyzed today (5th) when interviewed by Metro Radio. The market size of Hong Kong is similar to that of Southeast Asian countries. Due to the market size, most of them can only support a local traditional international airline. Even with the establishment of a new airline company for many years, the operation of long-haul routes has not been successful.
He believes that Hong Kong Airlines has expanded its long-haul routes on a large scale since 2017, which has hit financial conditions. If it can continue to operate in the future, it will need to reduce its size to regional airlines in order to maintain its business.
The Air Transport Licensing Authority stated on December 2 that if Hong Kong Airlines fails to improve its financial status as required by the deadline, the authorities will take further actions, including "pinning", etc., which will be announced before December 7. (Photo by Yu Junliang)
For Hong Kong Airlines recently being urged by the Air Transport Licensing Authority to improve its financial situation, it is required to inject capital and improve its cash flow. Hou Wei, chairman of Hong Kong Airlines, sent a letter to employees yesterday (4th) stating that the regulatory requirements were initially met for capital injection, and employees' salaries would be paid today.
Luo Xiangguo said that since 2006, Hong Kong Airlines has been reorganized. As a regional airline, it has been quite successful in operating short- and medium-haul flights. However, in line with the National 13th Five-Year Plan, Hong Kong Airlines decided to expand its long-haul routes on a large scale in 2017. The financial situation is a blow; coupled with the failure of the parent company Hainan Airlines to provide immediate management and financial support to Hong Kong Airlines, the current situation has resulted.
At the same time, the outbreak of the Anti-Amendment Movement has continued the cold winter of the aviation industry since June. Passengers and passenger transport in October exceeded 10% and 5% respectively, which also hit the industry.
Hong Kong Airlines was in financial difficulties. It had previously announced that it would reduce its existing flights by about 6%. It will suspend flights in Los Angeles, Tianjin, and Vancouver in February next year. It also announced that it would stop providing in-flight entertainment system services in December. (Profile picture)
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Luo Xiangguo continued to point out that the current Cathay Pacific Group ’s market share has accounted for more than half of the entire Hong Kong aviation industry, while Hong Kong Airlines previously had a market share of about 10%. However, Hong Kong Airlines announced earlier that it would cut existing flights by about 6% in February next year. Dominance is very obvious. With reference to other Asian countries, including Thailand, Malaysia, and Australia, they can only support a local international traditional airline. Even if other companies try to enter the market, it is also unsuccessful. Therefore, if Hong Kong Airlines' license is not revoked, it is believed that it will be reduced to a regional level. Airlines can still sustain business.
As for the third runway to be opened in 2022, Luo Xiangguo pointed out that many airlines in the Mainland have vigorously developed new routes in recent years. It is believed that when the three runs are completed, they will also face strong competition from other Pearl River Delta regions.
Legislative Councillor Tan Wenhao stated in the commercial Taiwanese program "Departure on a Sunny Day" that the most valuable airlines are not airplanes or manpower but air traffic rights. At present, Hong Kong Airlines still has quite a lot of air traffic rights: "So as long as In this case, the company will not be in debt until it is out of the sun, and some people will eventually inject capital. So I ’m confident that the channel will be unswerving and change hands at most. Of course, if the operating capacity of Hong Kong Airlines is insufficient, the route will be reduced. Insurable. If the transition to low-cost airlines, Tan Wenhao believes that the current competition from Hong Kong Express is fierce and the results are difficult to guarantee.
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