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Cathay Pacific Further Reduces Passenger Capacity to 40% Following the “Most Challenging” Chinese New Year Period Ever

Cathay Pacific Further Reduces Passenger Capacity to 40% Following the “Most Challenging” Chinese New Year Period Ever

Cathay Pacific announced it has slashed overall passenger capacity by a further 10 per cent for the months of February and March after facing a “substantial” drop in demand because of the COVID-19 novel Coronavirus outbreak. As the airline released its traffic figures for January, chief commercial officer Ronald Lam revealed a “sharp reduction” in capacity of 40 per cent across the airline group’s global network.

“Passenger capacity reduction is also likely for April as we continue to monitor and match market demand,” Lam warned, describing the month of January as “the most challenging Chinese New Year period we have experienced”.

Cathay Pacific Starts Flights to Tel Aviv, Israel
Photo Credit: Cathay Pacific

After battling a slump in travel demand following months of pro-democracy protests in Hong Kong through the second half of 2019, the airline had seen a slight improvement in bookings for the Chinese New Year – a period in which millions of Chinese traditionally travel to be with their families.

“As the novel coronavirus outbreak in mainland China intensified towards the end of the holiday period, travel demand dropped substantially,” Lam said, revealing total passenger numbers for January had dropped 3.8 per cent compared to January 2019.

The total number of passenger carried came in at just over three million, while load factor dropped by 1.3 per cent. Cargo and mail continued to suffer in January, decreasing by over 8 per cent compared to the same month in 2019.

“Inbound passenger traffic to Hong Kong was down 40% year-on-year, a slight improvement over the 46% declines seen in November and December,” Lam said, attributing the early gains to the timing of this year’s Chinese New Year.

“… Our performance deteriorated rapidly in the last week of January as the novel Coronavirus situation became more severe, and it continues to weaken significantly. We saw significant cancellation of bookings within a short period of time.”

Long-haul routes had seen improved load factors and yields, although Cathay remains “heavily reliant” on lower yield transit traffic through its Hong Kong hub.

Late last week, mainland China’s largest airlines released equally grim passenger traffic figures for the month of January. Air China recorded a 2.9 per cent drop, while China Southern saw passenger numbers fall by 4.6 per cent in comparison to January 2019.

China Eastern recorded the worst drop with passenger numbers slumping by as much as 5.4 per cent.

Cathay Pacific has asked its employees to take three weeks of unpaid leave to help it cut costs, and foreign pilots at mainland airlines have already been forced to take sabbaticals.

The International Civil Aviation Organisation (ICAO) estimates that the Coronavirus outbreak will cost international airlines around $4 – $5 billion in the first three months of 2020 alone.

However, these figures do not include the impact on international air traffic to and from Hong Kong, Macau and Taiwan, or domestic Chinese services in these figures. The real impact could be far worse.

This article has been corrected from an original version which claimed Cathay Pacific staff had been offered four weeks unpaid leave. The special leave scheme is actually for a period of three weeks.

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