(Updated Saturday Jan. 2, 1:05 p.m. ET)
Cathay Pacific has suspended all long-haul freighter and cargo-only passenger flights for a week after Hong Kong authorities extended the quarantine period for arriving air cargo crews from three to seven days, the airline confirmed.
The decision is another gut punch to an airline reeling from a massive contraction in passenger business because of strict COVID-19 measures in the semiautonomous city and represents a loss of significant cargo capacity for shippers faced with tight supply approaching the export rush ahead of Chinese New Year in one month.
The extra quarantine period reduces the number of available pilots, making it difficult for Cathay to operate its normal flight schedule.
The South China Morning Post, which broke the news about Cathay’s grounding of the cargo fleet, said health officials tightened the quarantine requirements for air crews after a Cathay pilot tested positive for the coronavirus five days after returning to home base. Under the health protocols, crews must now stay in a designated hotel for seven days.
“In light of additional and more stringent quarantine requirements for Hong Kong-based cargo crew, Cathay Pacific Cargo will pause all long-haul (trans-Pacific, Europe, Southwest Pacific, Riyadh and Dubai) freighter and cargo-only passenger flights with immediate effect for a period of seven days, up to Jan. 6,” Cathay Pacific said in a statement shared with FreightWaves. “We sincerely apologize for the disruption caused. We will be working with customers to mitigate the disruption as much as possible.”
The airline didn’t rule out the possibility that the suspension of cargo operations could be extended, depending on what stance authorities take in the coming days.
In a separate statement issued early Friday morning, Cathay Pacific said five of its aircrew recently tested positive for the omicron variant during their testing and isolation period following their return to Hong Kong and will be penalized for violating company safety rules. Two individuals were subsequently terminated on Saturday.
“Regrettably, our investigation into these cases has indicated a serious breach of protocols by some of those individuals. Failure to comply with medical surveillance regulations will lead to disciplinary procedures,” the statement said. “The actions of these individuals are extremely disappointing, as they undermine the otherwise exemplary dedication and compliance shown by our over 10,000 aircrew. Cathay Pacific is acutely aware of the critical importance of complying with anti-pandemic measures both in Hong Kong and overseas, and apologizes for the inconvenience and disruption caused by these noncompliant cases. Cathay Pacific will continue to work closely with the Transport and Housing Bureau as well as the health authorities to reinforce public health protection.”
All Cathay crew members are fully vaccinated and subjected to multiple tests after every flight. The company said it is also requiring all eligible cockpit and cabin crews to receive a third dose of COVID-19 vaccine.
Hong Kong has effectively prevented significant spread of COVID variants and officials say they are willing to err on the side of public health at the expense of business. Authorities have also barred Cathay Pacific, British Airways and Virgin Atlantic from providing direct flights to and from the U.K., at least through Jan. 8, as well as Cathay’s direct flights to and from Los Angeles and Toronto after cases of omicron were discovered in quarantined passengers.
One of the dominant international passenger and cargo carriers in the Asia-Pacific region, Cathay has been crippled by Hong Kong’s zero-tolerance policy on COVID that has closed borders to travel from certain countries and imposed severe conditions on arriving travelers and aircrews.
COVID’s cargo impact
Cathay Pacific reported a net loss of nearly $1 billion for the first half of the year. In November, it carried a total of 70,047 passengers, a 97.3% decrease compared to the pre-pandemic level in November 2019, with seat capacity down 88%.
Cathay ranked in the top five cargo airlines by volume and distance carried during 2020. In addition to a large widebody passenger fleet, most of which is currently grounded, the airline also operates a fleet of 20 Boeing 747 freighters.
Cargo represents a quarter of Cathay’s revenue, a much higher share than most passenger-centric airlines. Last year it carried 1.4 million tons of cargo, about 34% below 2019 levels because of the loss of belly space in passenger aircraft. Through November this year, it handled about 1.123 million tons. November cargo volumes were down 23.9% versus 2019 and cargo revenue based on metric ton kilometers flown fell 14%. The airline is still operating at a 28.% capacity deficit for cargo because of reduction in passenger flying. The company said cargo demand was strong and undoubtedly performance would have been stronger with greater access to more of the passenger network.
Officials expect to end the year having operated about 8,000 “ghost” freighters — passenger aircraft switched to dedicated cargo business while passenger operations remain diminished, Frosti Lau, general manager of cargo service delivery, said in a news update to customers last week. Six of those repurposed aircraft are Boeing 777-300s that have had some economy seats removed to allow more light cargo to be loaded in the cabin. Last year, the company flew about 5,000 cargo-only flights.
Cathay’s passenger capacity was cut by about 60% and cargo capacity by 25% when Hong Kong imposed a 14-day quarantine on locally based pilots and cabin crews last January. Last month, FedEx Express (NYSE: FDX) closed its Hong Kong pilot base because of what it described as onerous COVID protocols that prevented it from operating efficiently. It previously had relocated most of the pilots to San Francisco.
FedEx pilots early this year requested that the company stop layovers in Hong Kong because of burdensome quarantine conditions they said forced crews to be hospitalized against their will in substandard quarters if they tested positive for COVID upon arrival, with asymptomatic pilots kept in large congregate settings with communal bathrooms.
Many foreign airlines no longer change crews in China and Hong Kong, preferring to make an extra stop in Japan or South Korea to prevent their pilots from being subjected to difficult conditions and any impact to operations.