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HONG KONG: Hong Kong airline Cathay Pacific has been "hit hard" by the global financial crisis with a significant drop in the number of first and business class travellers, senior managers said.
Cathay's chief executive Tony Tyler said that concern had shifted from the sky-high price of oil earlier in the year to weak passenger numbers.
"In the first half of the year, the problem was very much a cost crisis caused by runaway fuel prices, but now – in the midst of a global financial meltdown – we are also being hit hard on the demand side," he wrote in the company's internal newsletter, released on Wednesday.
"The fact that revenue growth is stalling in our biggest market, Hong Kong, is a serious worry.
"We are very exposed to the financial industry here and when banks, our biggest corporate customers, cut or even just curtail their travel plans we know we can expect to be in for a rough ride.
"I wish I had something more optimistic to say but the truth is that Cathay Pacific – and the airline industry as a whole – has entered another very troublesome period," he added.
The company has experienced a fall-off in passengers travelling in the most lucrative seats in both August and September, said James Tong, Cathay's general manager of sales for Hong Kong and China.
"A lot of companies are now trading down – from first to business class, or from business to economy – and a number are cutting travel altogether," Tong said in the same company newsletter.
"The worst hit is front-end travel for long-haul flights, with a significant drop compared to last year when there was a lot of IPO activity from mainland China companies."
Tong said he expected business could even drop off further: "This is just the beginning."
"We usually see a surge in business travel in September after the summer peak, but this year we experienced a weak August followed by a static September," he said.
In August, Cathay announced losses of 663 million Hong Kong dollars (85 million US) in the first half of 2008 due to soaring fuel prices. It has since cut the number of flights to North America.
- AFP/so
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