Just as Singapore Airlines is offering staff eight months of salary bonuses after record profits, Hong Kong is giving away more than 4,400 free tickets to regional rival Cathay Pacific as the city tries to encourage tourists to return.
Shares in Singapore Airlines surged to their highest level in more than three years after the national carrier made clear the strength of its post-pandemic recovery, posting an annual profit of S$2.16 billion ($1.6 billion) for the year to March.
In stark contrast, shares of Hong Kong-listed Cathay Pacific have fallen nearly 40% from their April 2019 high. In March, the airline posted a HK$6.5 billion ($830 million) loss for 2022, and its shares have been flat since.
Their financial disparity reflects the rise of Singapore, one of the first countries in Asia to reopen its borders after the pandemic, and its rising status as a business hub. Hong Kong, on the other hand, which largely banned travel until late last year, will lose its status as the region’s busiest airport by 2022, while Singapore will lose its status as the region’s busiest airport. Its slow reopening has affected Cathay Pacific, which is also reeling from labor shortages.
“Singapore led everyone in the Asia-Pacific region (reopening) last year,” said Brendan Sobie, an independent aviation analyst based in Singapore. “They benefited a lot from it.
“I don’t think Cathay Pacific’s first fiscal year after reopening will be like Singapore’s,” he added. “The honeymoon period created by the supply-demand imbalance is fading — they’ve largely missed out on these market conditions.”
Hong Kong tourism is still in the early stages of recovery, which is reflected in the number of carriers. Singapore Airlines is operating nearly 80% of pre-pandemic passenger traffic, while Cathay Pacific is still operating at less than 50%.
Singapore Airlines and its wholly-owned budget arm Scoot carried 2.7 million passengers in April, up 85% year-on-year and slightly down from 3.1 million in the same month in 2019. Cathay Pacific carried 1.4 million passengers in April 2023, about 44% of the April 2019 figure.
What you see is a snapshot of the interactive graph. This is most likely because you are offline or JavaScript is disabled in your browser.
At this month’s annual meeting, Cathay Pacific Chief Executive Lynnard said the airline was unlikely to exceed 70% of pre-Covid passenger traffic by the end of the year due to workforce constraints.
The Hong Kong Air Crew Association said an average of 10 to 15 senior pilots were leaving Cathay Pacific each month this year, down from about 30 to 50 a month in the second half of last year.
The airline, which had 3,800 pilots at the end of 2019, has lost more than 1,800 pilots over the past three years and only recruited about 400 new pilots, according to union president Paul Weatherilt. Pilots remain disaffected after pay cuts of up to 40% in 2020, unions say.
Cathay Pacific said that “attrition rates have normalized across all employee groups”, including pilots, adding that base salaries for cabin crew rose by 3.3% from the start of the year.
“Apart from Hong Kong’s later reopening schedule than other aviation hubs, Cathay Pacific’s slower pace of recovery reflects the ongoing challenge of supply constraints across the aviation ecosystem . . . (eg) certified human resources,” JPMorgan analyst Karen Li wrote in a report in March.
Hong Kong Airlines officials have told Cathay Pacific that some of their pilots have been taxiing down the runway at a “pretty slow pace” because wages are now based on flight time, according to an internal Cathay Pacific memo seen by the Financial Times.
What you see is a snapshot of the interactive graph. This is most likely because you are offline or JavaScript is disabled in your browser.
In another sign of crisis, Cathay Pacific fired three crew members after a video went viral accusing them of joking about a Mandarin-speaking customer’s English skills. Mrs Lam said this had caused “significant damage to the image of Hong Kong and Cathay Pacific”. But Cathay’s flight attendants union has hit back, complaining of low morale, increased workload and lower pay.
Singapore Airlines, on the other hand, told local media that by the middle of last year it had recalled most of its more than 3,000 pilots – many of whom had been furloughed. Management said at the time that there were only “very few people” left during the pandemic.
For commercial reasons, Singapore Airlines has historically not provided many details about its employees. The company did not respond to a request for comment.
Since the pandemic, Singapore has gained more transit traffic that traditionally passes through Hong Kong.
“Singapore Airlines did well last year because they were the only realistic transit hub in the whole of Asia,” said an Asian airline executive. Cathay Pacific reported a 68% drop in sales from the Americas to $572 million in 2022 compared with 2019. SIA’s sales from the Americas rose 46% to $1.1 billion in the 12 months to the end of March, compared with the 12 months to March 2020.
The booming market conditions that boosted Singapore Airlines’ profits are not expected to last. Hong Kong is spending billions of dollars to lure back international businesses and tourists, such as a recent Cathay Pacific campaign.
“We are still in a period of dynamism and many of us believe that most of the benefits will be temporary,” said a Singapore Airlines executive. “I’m not sure we’ll see profits like this again. It seems too early to declare a winner.”