Cathay Pacific Airways is moving rapidly to reclaim its position among the top cargo carriers after being shackled for three years by ultra-restrictive COVID health policies in Hong Kong and China.
Rebuilding the passenger network after China dropped efforts to stamp out the coronavirus at all costs will significantly increase the cargo division’s ability to transport shipments around the world. Equally beneficial is the reopening of the border between China and Hong Kong and lifting of restrictions on cross-border trucking, enabling more cargo to flow from manufacturing centers in southern China to Hong Kong International Airport.
In February, Cathay Pacific carried 59.6% more cargo by weight than a year earlier, when cargo capacity was significantly reduced because of stricter crew quarantine measures. The length of transit for shipments increased 2.5 times, allowing the company to generate more revenue. During the first two months of 2023, tonnage increased 43%, while capacity tripled, according to a monthly report issued Thursday
The tonnage figure also grew 9% from January — a sign that demand picked up following a lengthy factory break for the Lunar New Year holiday. Cathay’s experience dovetails with industrywide data showing cargo volumes out of China to the U.S. and Europe jumped in the past two weeks after a lackluster start to the year.
“With our freighters fully operational and our passenger belly capacity steadily returning, we are quite optimistic about the tonnage we can carry. Overall demand is still reduced relative to the same time last year due to the fragile global economy, but recent positive data from the Chinese Mainland means we remain optimistic that we will be able to fill our planes,” said Frank Yau, the head of cargo sales for Hong Kong and southern China. Executives say e-commerce demand is picking up faster than general cargo.
The cargo division, newly rebranded as Cathay Cargo, operates 20 Boeing 747 cargo jets, including 14 late-model 747-8s, in addition to managing cargo throughput on passenger aircraft. It was the ninth-largest cargo airline in the world by volume in 2021, sliding from the fifth position in 2019, according to the latest data from the International Air Transport Association.
Few carriers were punished worse than Cathay Pacific by the pandemic. Passenger service was virtually eviscerated because the carrier had no domestic market to fall back on when borders were closed. Stringent travel and airline restrictions after the emergence of the omicron variant in early 2022 decimated business again. A seven-day quarantine period for locally domiciled crews constrained Cathay’s ability to operate passenger and cargo flights. It suspended long-haul cargo operations for three months. The situation was so bad that on March 12 last year the airline carried only 58 passengers.
Cathay Pacific resumed a full freighter schedule in August.
By the end of March, the Cathay Group will be operating about 50% of its pre-pandemic passenger flight capacity. Officials said they expect to be at 70% of pre-crisis capacity by the end of the year and have the full fleet back by the end of 2024. The airline will substantially boost the number of flights to London and Japan beginning in April and operate more than 110 round-trip flights per week to 15 cities in China by the end of March.
Cathay Pacific announced this month that it achieved its first operating profit ($450 million) in three years during 2022, aided by Hong Kong’s lifting of quarantine rules last fall.
Cargo revenue in 2022 decreased 16.6% to $3.4 million year over year because of lower demand, partly offset by an 18.5% increase in cargo yield. Cargo traffic measured in distance fell nearly 30%, while tonnage declined 13.4% to 1.3 million tons.
The earnings report noted that the airline has reinstalled seats in four of six Boeing 777-300 Extended Range aircraft that had been reconfigured during the pandemic, when cargo demand skyrocketed, to carry boxes of goods in the main cabin.
Cathay said 41 passenger aircraft remain in long-term parking outside Hong Kong, but it continues to bring back more as demand increases. It also anticipates receiving 11 new aircraft this year.
Cargo highlights last year included the launch of a new priority service for time-sensitive shipments and new products to ship seasonal fruit and vegetables from Australia and Northeast Asia directly to customers’ doors in Hong Kong.
Cathay Cargo recently added more digital capabilities to its priority, pharma and mail products to meet customer demand for shipment visibility, reliability and speed.