brunos

Nothing very original in this interview, but a confirmation that airport labor shortages are a significant factor:
https://www.scmp.com/news/hong-kong/...gtype=homepage

While CX has resumed a significant number of flights to UK, it is still far behind pre-covid to Europe and NA.
An example of demand//supply imbalances.
CX was moving to 2 daily from CDG. AF had 1.5 daily. It is now 1 daily for CX and 3 weekly for AF.
Fares on AF/CX have rocketed, but also on competitors like QR (50 to 100% increase).
Of course, airlines might no be so unhappy of their profit margins on those flights with higher loads and higher fares.

tentseller

The labour issues is not just support staff at HKIA but all over HK.

US HK UK flyer

Especially bad at the airport/airlines though because travel was so closed down compared to other sectors over the pandemic. And there are factors like pilot retraining times slowing recovery.

Notably the government today announced a scheme to import thousands of workers, many of whom would be allocated for airport work.

hkskyline

It's a multitude of factors both attributable to airlines and the airport itself.

The airport and its services companies are short on workers. Many left the industry during COVID and are not necessarily coming back now that there is a recovery. There have been some rumblings that some airlines cannot come back because the service companies at HKG cannot support them.

Cathay lost many pilots and as regional competitors started recovering much earlier than Hong Kong, naturally the experienced folks gravitate to them and won't come back. It doesn't help Cathay has demoted a lot of them and those experienced crew that are on the ranks are disgruntled they can't get back to their pre-pandemic ranks/pay. The airline itself is also experiencing a labour shortage and can't ramp up back to normal levels for a while.

There was an article today on the SCMP where a Qatar Airways official predicted fares will stay high for the coming year but the reason comes from huge demand. I think long-haul prices are indeed still super expensive but for short-haul (other than Japan), prices have pretty much gone back to normal. I recently flew to Shanghai on MU for HKD1320 before tax, which was a steal before the pandemic already, and HK Express has launched a few decent specials to Vietnam and Korea of late.

https://www.scmp.com/news/hong-kong/...ways-executive

brunos

Great minds meet.
This is exactly the article that I linked in my original post above and motivated this thread.

oldchinahand

In some contrast to the SCMP article the CEO of air New Zealand commented last week that airfares were already easing across the board and I believe also that to be the case as Brunos and others comment. After being virtually closed for over 2 years beleaguered airlines such as Cathay have needed to charge as much as the market is prepared to pay and while they can sell 95% of the available seats that pricing will continue.....but not for ever.

Cambo

When QR starts proclaiming fares will stay high for the coming year (suggesting: Book early), I'd only expect the demand is already going down and they try to skim off the market as long as possible with their extreme high J pricing.

Not to forget, the EU is in a recession right now and EU exports are significantly down, across the board. Which is usually an indication of oncoming bad economic weather.

oldchinahand

I was today looking at J to Vancouver for 20 June onward for one of my sons. Almost all flight show full until towards the end of July on the 777 and those that have availability show only 2or3 seats left.
That why the fares remain high.
In contrast some short haul ex HKG are now cheaper than 4 or 5 months ago. Supply and demand almost always governs ticket pricing.

ralphs

Fares and load factors are pretty eyewatering for nonstop travel LAX-HKG. After AmEx cancelled my confirmed booking (another story), I'm looking at either paying $10k-$15k pp for roundtrip J or going to economy. PE is sold out on my travel dates. Oof.

The inventory looks pretty strained LAX-HKG
June 22 W0Y0
June 23 W0Y0 W1Y6 (two flights)
June 24 W0Y1

Return
July 7 W1Y6
July 8 W9Y2 W9Y0
July 9 W8Y9 (why is this flight still so expensive)

Reply1984

HKG-North America routes will be very likely the last market that can normalize...Apart from labor issue in HKG&CX, the Mainland China-North America markets are still paralyzed by political issues.

Russian airspace is very important for these routes especially for the east coast, but it is only closed to US/Canadian carriers while Chinese carriers can still use it. US/Canadian carriers think it is unfair and cry to their government that Chinese carriers should not use Russian airspace at the same time. Obivously Chinese carriers are not likely to take these funny terms so the US/Canadian governnent block new applications for extra frequency from Chinese carriers while Chinese government is blocking them too to retaliate.

The capacity between China-North America is still largely frozen at the pandemic level but the demand is booming and it floods into HKG/ICN/NRT. I will say the fare level will remain elevated between HKG-North America in the foreseeable future as the relations between the West and Russia will not be back to the normal anytime soon.

oldchinahand

There are are not much in the way of labour issues in HK presently as the Hong Kong government has permitted the import of some labour from China for relatively unskilled work and 6500 have been allowed for airport work as cleaners baggage handlers and such.
These workers return home across the border at the end of there shift.-the journey which can take as little as 30 minutes..

royng

I have to go to Tokyo from HKG in mid August...even HKExpress is selling flexible ticket at about HKD4,000 (for flights with timing suitable to me). CX, JL, NH all selling HKD6/7,000 for flexible economy ticket to/from HKG.

My solution? Go to Shenzhen SZX. At about HKD7,000 I can fly on NH SZX-HND-SZX with one segment in business class. It's no brainer at all.

triplefives

This gets no press but most likely the reason why HKG airfares are so high to north america. Anyone who wants to go back to the mainland is basically going to route through HKG due to capacity cuts on the mainland. I've spoken to a few who do not want to transit via ICN/NRT due to the fear of language issues (their words - not mine).

oldchinahand

Whos language issues I am wondering ?
HKG and Cathay airfares are about the same levels as most top Asian airlines and fares to the US are not noticeably higher than to other popular long haul destinations.
The prime reason why airfares are high is demand when that decreases or is spread over more flights prices will weaken. -nothing new here.

brunos

Of course, CX competition is happy to match high CX fares as there is a lack of capacity from HK. While fares have increased everywhere, HK increase is dramatic. Of course, the increase depends on destinations.

Overall HK airport is operating at some 50% of its pre covid/protest flights; it not only CX. Demand is more than 50% of pre covid/protest. I don't think that many Asian airports see such a low supply.
Chinese airline are operating less than 10% of its pre covid flights to the US. Not much better to Europe (you see very few Chinese tourists in Europe). But many pax transit through HK adding to demand. But passports and visas are still a bottleneck for Chinese pax.
https://www.scmp.com/economy/china-e...-calls-support

The price increase is due to supply and demand, but supply plays a major role. When competing airlines can fill their planes at double the fare, they are not anxious to increase frequency. That will remain as long as labor problems at HKIA are not solved (it will take many months) and CX increases capacity extensively. CX is price leader in HK.
One problem is that HKers are quite willing to travel as much as before, but the leisure/business demand to travel to HK is weak.