Hong Kong's Cathay Pacific should improve service, tap Belt and Road potential: Paul Chan

The Hong Kong government is required to implement policies to maintain the city's status as a global and regional aviation hub, in accordance with Article 128 of the Basic Law, the city's mini-constitution.

We hope Cathay Pacific Airways will continue to improve its service quality and support and enhance Hong Kong's status as an international aviation hub, Chan wrote in his weekly blog.

In the future, local airlines should actively expand their route networks in response to the needs of economic development, trade relations and public transportation and facilitate the country's aerial Silk Road strategy.

The Aerial Silk Road is the air connectivity component of Chinese President Xi Jinping's Belt and Road Initiative, a China-centric trade network spanning more than 100 countries.

Chan said the air corridor would boost bilateral trade with these countries.

In response to Chan's latest comments, Cathay said it was committed to improving the customer experience and highlighted its continued contribution to the city's development as an international aviation hub.

The airline also pledged to continue expanding its routes connecting the city to Belt and Road countries and the rest of the world, particularly with the full operation of the third runway system planned by the end of this year at Hong Kong Airport.

We are making good progress in rebuilding connectivity, a Cathay spokeswoman added.

She said Cathay remained on track to return to 100% passenger flight capacity by the first quarter of 2025.

Xia urged the authority that manages the international airport to leverage its unique advantages under the governance principle of one country, two systems and continue to contribute to national development.

The finance secretary said he also expected more trade and closer ties between Hong Kong and the Middle East after Cathay relaunched a direct flight to the Saudi capital, Riyadh, in October.

The relaunch comes months after other cities on the continent established their own air links to the Middle East. Shenzhen launched its first direct flight to the kingdom on June 3 via China Southern Airlines, while Guangzhou also offers direct flights to Kuwait and Riyadh.

More convenient transportation between the two places will definitely enhance closer trade between the two markets, gather more new funds and create more new opportunities for Hong Kong's financial market, Chan said.

Lau Siu-kai, a consultant at the Chinese Association of Hong Kong and Macao Studies think tank, said Cathay had a responsibility to play a leading role in Hong Kong's support for the Silk Road as it was the city's national airline.

With more flights to Belt and Road cities, Hong Kong can provide strong support to Beijing's early geopolitical strategy of building [the initiative] “We will create an integrated economic region that will support China's economic development,” he said.

He also said the city's support would help it gain more development opportunities as an aviation hub under the Belt and Road plan and become a bigger player in the region.

He said he believed the CFO's comments were aimed at urging Cathay to adapt to changing circumstances and opportunities.

The government's development strategy is to integrate into China's overall development and support its geopolitical and economic strategy.

I think both Beijing and the Hong Kong government are looking to Cathay for support.

Cathay was the only airline in the city to receive financial aid from the government during the pandemic.

The airline said on Friday it would repurchase the remaining half of the government-issued preferred shares, worth about HK$9.75 billion, and pay the remaining dividends of HK$2.44 billion through July 31.

The actions were part of a government-led rescue plan in 2020 that included a HK$39 billion recapitalisation plan for Cathay as the airline struggled financially due to the collapse of the global travel market.

The first half was bought last December.

Chan said Cathays' ability to fully resume operations marked the gradual return of Hong Kong's aviation industry to full normality.

The finance chief added that in 2020, the government had taken into account the broader interests of Hong Kong society, particularly the need to maintain the city's status as an international aviation hub, before investing HK$27.3 billion, including HK$19.5 billion in preferred shares and HK$7.8 billion in bridge loans, in Cathay.

This special investment agreement concluded in such an extraordinary period has achieved win-win results, he said.

On the one hand, Cathay gained financial liquidity, was able to survive its difficulties and restore its capacities relatively quickly.

At the same time, this investment brought in nearly 4 billion Hong Kong dollars to our coffers.

Cathay reported in March a net profit of HK$9.78 billion last year, its first since 2019, after a net loss of HK$6.62 billion in 2022.