Hong Kong protests could lead to tighter air cargo rates

“Last week, a Cathay pilot was among over 40 people charged with rioting for allegedly taking part in violent clashes with the police near Beijing’s main representative office in the city,” the Reuter’s report reads. “On Friday night, the Civil Aviation Administration of China said that Cathay crew who have engaged in the protests pose a threat to aviation safety in mainland China.”

To enforce this rule, the government will require Cathay Pacific to provide identification information for all staff members onboard flights headed for mainland China. These crew members must be approved to gain entry to the airspace.

Cathay Pacific is the number five carrier globally for scheduled cargo capacity. In addition to a significant passenger presence across the Pacific, it has a significant freighter fleet that connects Hong Kong and China with North America, Europe and elsewhere. It is a major player in the Asia-U.S. air trade, and particularly the China-U.S. air trade. If these staff restrictions lead to fewer flights, the impact may be felt across the supply chain.

“While air cargo is slower this year and load factors are down, the prospect of higher U.S. tariffs on September 1 on the remaining $300 billion of Chinese imports could see a demand surge on North American flights in the second half of August,” FreightWaves Air Cargo Market Expert Jesse Cohen said. “Cathay Pacific would be a major player and its flight cutbacks (presumably with less available staff) would benefit U.S., Chinese and other Asian carriers, tightening up the rate picture even more, at least temporarily.”

Cathay Pacific issued a statement to Reuters emphasizing its commitment to safety and professionalism after the news broke.

“We have received the directive and are studying it very carefully. We are treating it seriously and are following up accordingly,” the airline’s statement reads. “The safety of our passengers is always the top priority of Cathay Pacific. There is zero tolerance for any inappropriate and unprofessional behavior that may affect aviation safety. We deal with these incidents very seriously.”

The airline reported struggling earnings earlier this week, citing political disruption in Hong Kong for current and future weakness in the passenger segment.