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Why may Cathay Pacific, Singapore Airlines take longer to recover



Aircraft operated by Cathay Pacific Airways Ltd. operator was standing on the runway at Hong Kong International Airport in Hong Kong, China, on Friday, August 7, 2020.

Paul Yeung | Bloomberg | beautiful images

Singapore Airlines and Hong Kong’s Cathay Pacific Airways “certainly”

; will take longer to recover from the coronavirus crisis, an aviation consultant told CNBC.

That’s because these airlines are based in markets with no domestic flight demand, at a time when international travel is still very limited, says Joanna Lu, head of Asia consulting. Cirium says.

Airlines have suffered huge losses since air travel was almost halted when most countries closed their borders earlier this year, in an attempt to prevent the spread of the pandemic. coronavirus.

Both carriers see profits shift to losses in their latest earnings reports.

Cathay Pacific reported a loss of HK $ 9.87 billion ($ 1.27 billion) in the first half of 2020, after recording a profit of HK $ 1.35 billion a year ago. In the quarter ended June 30, Singapore Airlines reported a net loss of S $ 1.12 billion ($ 817.5 million), down from a net profit of S $ 111 million the previous year.

Several countries have since reopened to tourists, with Covid-19 testing and health checks at airports, but many remain closed to international visitors as cases are the case. Acknowledgment is 20.5 million globally.

Lu told CNBC’s “Capital Connection” on Wednesday that travel within the domestic or regional market is likely to continue faster, compared with long-haul flights to international destinations.

“Airlines serving a large scale of the domestic market are likely to gain more benefits, including airlines in China, Japan and possibly Indonesia,” she said.

However, the opposite is true for Hong Kong and Singapore, where locals don’t travel domestically by air due to the small land area.

Lu also weighed in on why the International Air Transport Association in June said Asia Pacific is expected to record “the greatest absolute loss” by 2020.

She said disruptions to international travel were the “main cause” of “negative progress” in the industry in Asia Pacific. In addition, she said the region has many countries and markets, while Europe and the US “are operating as a single, unified domestic market.”


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