A new Hong Kong requirement for arriving pilots to quarantine for 14 days has spurred FedEx Express (NYSE: FDX) to relocate pilots to San Francisco and Cathay Pacific to warn of severe capacity cuts for cargo and passenger flights.
FedEx is giving pilots and their families the option to relocate to San Francisco after Hong Kong authorities revealed plans for 14-day hotel quarantines on city-based air crews to contain a wave of new COVID-19 infections, the South China Morning Post reported. The carrier employs 180 pilots in Hong Kong and offered in a memo to pay their hotel accommodations and out-of-pocket expenses so they wouldn’t be subjected to extended periods of isolation.
Reuters confirmed the memo, but noted some pilots could hesitate to move because they have children in school.
“We are developing plans to ensure compliance with the new requirements in a manner that also prioritizes the safety and well-being of our team members and the communities we serve,” FedEx said in a statement. “Depending on the scope of the rule, these steps may include a temporary modification of our Hong Kong base. Regardless of any changes that may be made, we will continue to operate in Hong Kong, providing the critical services and connectivity our customers depend on.”
The government said the move was part of an effort to reach zero infections. However, the South China Morning Post separately pointed out there have been no known imported cases involving crews that have not been detected at the border, nor have they been responsible for any known community transmissions.
Hong Kong-based Cathay Pacific, a top five cargo airline by volume, on Monday warned the quarantine requirement for locally based pilots and cabin crews would reduce current passenger capacity by about 60% and cargo capacity by 25%, while further depleting cash reserves by up to HK$400 million ($51.4 million) per month on top of the average burn rate of about $155 million.
The airline said it hoped smart allocation of manpower would minimize the impact on operations.
Cathay Pacific is entirely dependent on international traffic and feels the impact of cross-border travel restrictions more than other carriers with domestic networks.
In December, passenger occupancy was 98.7% less than in 2019 and the few planes in operation were only 18% full. For the entire year, passenger traffic was down 87%, the company reported. And despite operating a large fleet of widebody freighters, cargo tonnage in December fell 32.3% year-over-year because of the catastrophic grounding of passenger aircraft that have lower-deck space for shipments. Cathay has not risen with the rest of the industry as air cargo has steadily increased since hitting bottom last May.
Whether FedEx would experience any flight and package-delivery delays because of the new restrictions is unclear.
The International Air Transport Association said the Hong Kong quarantine would harm airlines and those who depend on critical transport.
“We recognize the Hong Kong government has to balance the various options in combating COVID-19. However, the measures being considered will reduce flights at a time where aviation connectivity is critical to combat the pandemic as well as support the economy,” IATA said in a statement.
“The Hong Kong aviation sector is already fragile due to the COVID-19 outbreak. This measure will cause further harm to the sector. Additional government support will be important to help the aviation sector and save jobs during this challenging time.
“Aircrew are considered essential workers as they perform an important role of keeping the world connected and enable the global air transport supply chain to function. We hope the government will also prioritize aviation workers for access to vaccination once health care workers, the elderly and vulnerable groups have been vaccinated. Those vaccinated, both passengers and crew, should be exempted from measures and requirements,” it added.
Under current rules, Hong Kong-based crews are screened upon arrival and must stay in a hotel for 24 hours while they wait for their results. Foreign crew members must isolate in hotel rooms throughout their stay and test negative for COVID-19 before departure.
Crews who have been to the United Kingdom, Ireland, Brazil or South Africa, where more contagious COVID strains have emerged, are required to spend three weeks in quarantine.
Last summer, FedEx pilots asked the company to suspend flights to Hong Kong over strict quarantine measures for crews that test positive, citing unsatisfactory hospital conditions. Invasive COVID testing also led United Airlines and American Airlines to temporarily suspend operations in Hong Kong, including cargo-only flights in July. United subsequently moved crew changes to Tokyo and Guam.
UPS denied a request from its pilots’ union for crew members to refuse Hong Kong missions. Pilots can only get out of an assignment if they are able to find someone willing to trade.
UPS (NYSE: UPS) has no pilots domiciled in Hong Kong, so it is not impacted by the pending health measures. It tests pilots prior to overseas departure and takes them off work if they are positive to avoid existing quarantine rules.
FedEx pilots list complaints
Meanwhile, the union representing FedEx pilots raised a series of concerns about the COVID situation and other conditions with management last Friday, according to an outline of talking points posted on its Twitter account.
The FedEx Master Executive Council, part of the Air Line Pilots Association, expressed frustration with the ongoing risk of Hong Kong authorities placing pilots who layover in a quarantine camp. Pilots oppose overnight stays in Hong Kong and expressed concern “that the lack of readiness to medivac” a COVID-positive pilot “is unacceptable as well.”
The union also complained that pilots with rest stays in Guangzhou are not able to sleep properly because of the inability to control the temperature in their rooms, which can exceed 80 degrees Fahrenheit, it said.