Peak season provides some relief to Cathay’s cargo decline

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The Cathay Pacific Group reports another month of cargo declines, down 4.9 per cent in October year-on-year, but is seeing some pick up in volumes although yields continue to lag.

Cathay Pacific and Cathay Dragon carried 183,119 tonnes of cargo and mail last month, a drop of 4.9 per cent compared to the same month last year. The cargo and mail load factor fell by 2.4 percentage points to 68 per cent.

Capacity, measured in available freight tonne kilometres (AFTKs), was down by 2.5 per cent while cargo and mail revenue freight tonne kilometres (RFTKs) dropped by 5.9 per cent. In the first 10 months of 2019, the tonnage fell by 6.6 per cent against a 0.4 per cent increase in capacity and a 6.9 per cent decrease in RFTKs, as compared to the same period for 2018.

Cathay Pacific Group chief customer and commercial officer Ronald Lam says: “Cargo volume continued to improve as the market entered into its peak season of the year, with demand picking up after the National Day holidays in October. This began with an uptick in raw materials and machinery parts into mainland China, followed by encouraging exports from mainland China and Hong Kong, especially into trans-Pacific and European markets.

Ronald Lam Cathay
Ronald Lam

“Month-on-month tonnage growth was recorded across all sales territories. We anticipate this positive momentum continuing through mid-December. However, overall cargo yield remained significantly below that of the same time last year.

“Overall we foresee a challenging remainder of 2019 for our airlines. We expect our second-half financial results will be significantly below those of our first-half. The short-term outlook remains challenging and uncertain.

The passenger side of the business is struggling as the turmoil in Hong Kong continues to escalate. Lam says: “It continues to be a challenging time for both the Cathay Pacific Group and for Hong Kong.”

The carrier saw a nearly unprecedented drop in passenger numbers in October, dropping 7.1 per cent year-on-year. In response to weakened travel sentiment to and from Hong Kong, the carrier has reduced its passenger flight capacity against its original schedule by 2-4 per cent between August and October, and 6-7 per cent for November and December.

“In October, demand for travel into Hong Kong remained weak with our inbound passenger traffic seeing a year-on-year decline of 35 per cent, consistent with the trend seen in both August and September. The drop in outbound Hong Kong traffic was 13 per cent in October, again similar to the trend over the past two months,” Lam says.

Transit traffic via Hong Kong remained relatively less affected. Passenger load factors dropped by 4.0 percentage points to 77.6 per cent compared to the same time last year. Apart from reduced traffic volume and load factor, overall passenger yield also continued to be under significant pressure, the carrier says.

“Mainland China routes in particular felt significant pressure with weak travel sentiment to Hong Kong by mainland tourists. Demand for premium class travel was also sluggish with passenger volume seeing a double-digit dip in October, traditionally a peak month for business travel.

“Japan routes were the star in our network – the Rugby World Cup generated good demand, especially from England and South Africa when both teams advanced to the final.

“Looking ahead, our advanced bookings continue to show weakness in both inbound and outbound Hong Kong traffic for the rest of 2019, partly offset by moderately increased transit passengers via Hong Kong.”

“Despite these short-term challenges, our strong commitment to the long-term development of Hong Kong and our airlines remains the same,” Lam adds. The carrier along with the Association of Asia Pacific Airlines (AAPA), recently took the unprecedented move of cancelling the association’s annual meeting of airline chief executives, scheduled for 21-22 November, as the situation in Hong Kong continues to spiral.

 

 

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