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Cathay Pacific layoffs | Reorganization leads to route integration, fear of loss of ups and downs, good time for early flights and late flights?

2020-10-21T09:31:08.513Z

The global aviation industry has been hit by the new crown pneumonia epidemic, many airlines have laid off staff, and the local leader Cathay Pacific also needs to reorganize. It is Hong Kong’s leading airline. One of Cathay Pacific’s major advantages is that it has a "sweet time" for flights, which is more convenient for local passengers and transit passengers. The advantage of Cathay Pacific's flight schedule is related to the internationally recognized "World Slot Guidelines", which stipulates that flight slots are allocated according to historical precedence, and airlines have priority to inherit the time slots obtained in the previous quarter. However, due to the limited capacity of the airport, the guidelines stipulate that airlines must use 80% of the time within their allocated time, otherwise the time will be lost and must be returned immediately, that is, "use-it-or-lose-it" )in principle.



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Written by: Wong Wai Lun McKay

2020-10-21 17:24

Last update date: 2020-10-21 17:24

The global aviation industry has been hit by the new crown pneumonia epidemic, many airlines have laid off staff, and the local leader Cathay Pacific also needs to reorganize.

It is Hong Kong’s leading airline. One of Cathay Pacific’s major advantages is that it has a "sweet time" for flights, which is more convenient for local passengers and transit passengers.

The advantage of Cathay Pacific's flight schedule is related to the internationally recognized "World Slot Guidelines", which stipulates that flight slots are allocated according to historical precedence, and airlines have priority to inherit the time slots obtained in the previous quarter.

However, due to the limited capacity of the airport, the guidelines stipulate that airlines must use 80% of the time within their allocated time, otherwise the time will be lost and must be returned immediately, that is, "use-it-or-lose-it" )in principle.

After the reorganization of Cathay Pacific, whether it can maintain the current moment has become a big question.

Some aviation policy scholars have analyzed that Cathay Pacific has an excellent time of flight, which is an important asset, especially long-distance lines.

Under the epidemic situation, the principle of “no need and throw away” is temporarily not implemented internationally, and under the Great Depression of the aviation industry, it is difficult for other airlines to “handle” the moment when Cathay Pacific has a chance to give up, so I believe it can still maintain its flight departure and return. The advantage of time.

According to the annual report of the Civil Aviation Department, Hong Kong Airport's flight slots are allocated by the Hong Kong Airport Flight Coordination Office (HKSCO) in accordance with the "World Slot Guidelines" issued by the International Air Transport Association (IATA) to ensure the best use of the existing airport infrastructure.

In 2018/19, airlines and other aircraft operators operating at the airport were allocated a total of 431,940 flight slots.

According to IATA guidelines, airports will be classified according to their busyness. Hong Kong Airport belongs to the third busiest level. The demand for airport facilities far exceeds the airport's capacity. Flights must obtain the time allocated by HKSCO before they can take off.

As a matter of fact, time of flight can be regarded as an asset in the shipping industry and can be traded in some countries. For example, at the beginning of March this year, Air New Zealand sold the time of London Heathrow Airport for US$27 million (approximately HK$210 million).

As for Hong Kong, airlines are currently not allowed to trade flight schedules. However, in 2016, there was a suspicion of using loopholes in the Civil Aviation Department's online system to speculate on the flight schedules of private jets.

The preciousness of the lifting time is not only due to the limited capacity of the airport, but also related to the distribution method.

According to the "World Flight Schedule Guidelines", aviation timetables are published twice a year, and one of the major distribution principles is historical precedence, that is, airlines can give priority to inheriting the time slots obtained in the previous quarter.

However, the guidelines also point out that due to the limited capacity of the airport, in order to avoid wasting precious flight time, if airlines want to inherit the time they originally own, the utilization rate of the relevant time in the quarter must reach at least 80%, otherwise the inheritance rights will be lost.

The guidelines emphasize that if the airline does not intend to use it, it needs to return the relevant flight time immediately, that is, the "use-it-or-lose-it" principle.

However, due to the impact of the new crown pneumonia epidemic, IATA has called for the relaxation of air time regulations in various places. HKSCO has previously stated that it will suspend the implementation of the "no need and discard" principle until March next year, that is, Cathay Pacific does not need to meet the 80% time usage requirement for the time being .

However, under the influence of the epidemic, when Cathay Pacific announced its results in August, the passenger volume in the first half of the year fell by 76%, with a loss of nearly 10 billion yuan. This quarter, it proposed a restructuring plan.

In order to save money, in addition to layoffs, Cathay Pacific has at least one-third of the passenger aircraft that has been sent to park in the desert of Australia. It is expected to be parked for 3 years. The cost of parking will be reduced. This means that the relevant passenger aircraft will not be put into operation in the short term, which will affect the carrying capacity of Cathay Pacific. .

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Luo Xiangguo, senior consultant of the Aviation Policy Research Center of CUHK, said that the flight time is an important asset of airlines, and the superior time is a major advantage of Cathay Pacific, especially for some long-distance routes. Cathay Pacific can operate 5 to 6 flights the day before the epidemic. For flights to and from London, and the departure time is ideal, "take a nap when you get on the plane, and you can go back to work when you get off."

He estimated that British Airways also hopes to operate more of the same flights, but due to time constraints, there are only about 2 direct flights.

After Cathay Pacific's reorganization, will it affect its rising and falling moments and lose its advantage?

Luo Xiangguo said that due to the "no need and throw away" principle, even if Cathay Pacific cannot maintain all routes, but in the absence of the aviation industry's recovery, I believe that no airline will apply for the relevant time. Because the utilization rate must reach 80%, it is difficult to occupy it.

He continued that in the long run, the third runway of the airport will be opened in a few years, and there will be more pick-up and drop-off times at that time. I believe Cathay Pacific will not lose its advantage.

Huang Jinda, chairman of the Hong Kong Travel Industry Council, also said that Cathay Pacific has a wide range of time, route options and high passenger capacity. It is convenient for travel agencies to arrange itineraries more flexibly and has its advantages, especially some "point-to-point" direct flights.

However, he also pointed out that the aviation industry is highly competitive, and it will be more convenient if the relevant itinerary changes to different places or foreign airlines.

He expressed his hope that the tourism industry and the aviation industry can continue to work closely together after the epidemic returns.

01News

Cathay Pacific Hong Kong Airlines

Source: hk1

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