Cathay Pacific is fighting to emerge from the long shadow of Covid

Few major airlines in the world have been hit as hard by the Covid pandemic as Cathay Pacific, Hong Kong’s flagship airline, or have worked as hard to recover from it. The company was decimated by some of the most extensive no-fly zones and quarantine requirements in the industry. And the pandemic wasn’t the start of Cathay’s troubles.

In 2019, as Hong Kong was agitated by pro-democracy protests, Cathay Pacific was caught in the crossfire with Beijing. Flights were canceled or delayed by airport sit-ins involving thousands of protesters, including employees of the Cathay Pacific airline. Chinese officials threatened to ban crew members who joined the protests or even expressed their support from flying to China.

Unrest grew within Cathay Pacific. The airline’s CEO and chairman both resigned, and new leaders began cracking down on anything employees said or posted on social media that might anger China.

In 2020, as the pandemic grounded its business, Cathay closed its regional division, Cathay Dragon. It parked 70 unused aircraft in the desert in Australia’s Alice Springs and dismissed 5,300 employees based in Hong Kong. When the city extended mandatory quarantines, some of the aircrew had to stay indoors for three to four weeks.closed circleworking shifts, endured weeks away from home that were devastating to employee morale.

Today, Cathay Pacific is still struggling to hire enough pilots, flight crew and other personnel to compete with other airlines. Its rivals “have gotten slimmer, fitter and eager to take customers away from us,” the company’s CEO, Ronald Lam, said in a video message to employees in January, trying to unite them around a plan “to survive and thrive”. Cathay Pacific only climbed back to 50 percent of its prepandemic flight capacity in March.

The problems persist. Last week, in an internal memo, Mr Lam informed Cathay Pacific staff that three employees had been fired after an audio recording of cabin crew members ridiculing a passenger’s English went viral. Mr Lam said the employees had caused “significant damage to the image of Hong Kong and Cathay”.

The episode was a reminder of the delicate task Cathay Pacific faces in navigating its relationship with China. China is a vital market for the airline, but the economy is still recovering after nearly three years of lockdown from Hong Kong and the rest of the world. Before the pandemic, Cathay flew from Hong Kong to 119 places in 35 countries, including 26 destinations in China. Convenient flight times from cities across China allowed passengers to transfer overnight in Hong Kong and arrive in the United States or Europe in the morning or early afternoon.

At the height of the Omicron outbreak in January 2022, when the Hong Kong government banned inbound flights from countries such as the United States, Australia and the United Kingdom, the airline was flying at just 2 percent of its passenger flight capacity.

In a statement, the airline said it aims to return to 70 percent flight capacity and 80 destinations by the end of 2023, with 160 flights a week to 16 airports in mainland China.

Even after Hong Kong scrapped its Covid-related rules and quarantine requirements, Beijing’s determined influence over the former British colony still threatens the reputation it has enjoyed for decades as an attractive, free-for-business destination.

Just as Hong Kong was the world’s gateway to China, Cathay Pacific was at the forefront of connecting emerging economies in Asia with New York, London and Paris. Founded in 1946, it was one of the city’s premier brands, renowned for its punctuality and top-notch service. From the airport third runway opened last year to accommodate Beijing’s plans to integrate Hong Kong with Macau and nine cities in Guangdong province into a technology hub known as the Greater Bay Area.

Cathay Pacific said it doesn’t expect a full recovery until next year. The most immediate challenges are restoring the number of pilots and cabin crew and increasing flight capacity.

To cut costs, Cathay slashed pilot salaries by about 40 percent, angering many members of its aircrew. In response to the airline deploying fewer flight attendants per flight and reducing recovery time between long flights, the Cathay Pacific Flight Attendants Union launched a ‘work to rule’ campaign in January: discouraging flight attendants from performing duties that are outside the scope of the company. guidelines. Hong Kong airport authority officials said in May they had observed a trend of slower taxi speeds among Cathay pilots after the airline’s new pay structure effectively discouraged them from completing flights ahead of schedule.

“They told us to save money, but there’s little point in saving money if you don’t have an airline at the end,” said Paul Weatherilt, president of the Hong Kong Aircrew Officers Association, a pilot union. and a Cathay Pacific pilot for nearly three decades. And that’s about the position they’re in right now. They own half of the airline.”

Prior to 2019, the airline had 3,840 pilots. Since then, 1,900 have resigned, according to the Aircrew Officers Association. The number of captains, the most experienced pilots, has been halved. And while Cathay Pacific rehired dozens of pilots from the closed Cathay Dragon division in 2021 and 2022, many had to accept pay cuts and demotions when accepting their offers. The lack of flights during the pandemic delayed the development of the training first and second officers need to become a captain. Senior pilot trainers and flight simulator instructors quit.

Despite the difficulties, some industry analysts are optimistic that Cathay Pacific will recover. The company reported a full-year profit last year, its first since 2019. Flights are about 90 percent full, which is better than before the pandemic, and high ticket prices have helped revenue. During the pandemic, cargo flight business kept the airline afloat.

But no market is now as important to Cathay Pacific, or as potentially fraught, as China.

The most recent issues stemmed from a complaint from a passenger who flew to Hong Kong from the southwestern Chinese city of Chengdu on May 21 and intake of flight attendants was heard laughing in the galley at a passenger who had apparently requested a “carpet” instead of a blanket. “If you can’t say ‘blanket’ in English, you can’t have it,” one flight attendant said in the recording.

The recording dominated discussions on Chinese social media, with people posting about what they saw as a history of snubs by the airline’s flight attendants at mainland passengers. Xinhua, a state media agency, criticized the airline for “arrogance”, “poor service” and a lack of sincerity. “If it doesn’t correct its old habits, Cathay Pacific won’t fly far,” read the headline of an editorial.

Hong Kong’s Supreme Head of Government, John Lee, joined the rebukes. “The flight attendants’ words and actions hurt the feelings of compatriots in Hong Kong and the mainland and destroy Hong Kong’s traditional culture and values ​​of respect and courtesy,” he said in a Facebook post.

Cathay Pacific issued an apology on Weibo on Tuesday, saying the airline would open an investigation. By Wednesday, three flight attendants had already been fired.

“We had to react and act quickly, which was necessary to protect the interests of the company and therefore our people in general,” wrote Mr. Lam Thursday in the internal memo to employees.

He added that the comments were a blow to the airline’s reputation. “While the incident has caused a setback to our rebuilding journey, let’s embrace it as a valuable lesson,” he wrote.