More than strikes, CAAC warning could deal direct blow to Cathay Pacific Cargo

HONG KONG – The Civil Aviation Administration of China (CAAC) has just issued what it called a “severe safety warning” to Hong Kong-based Cathay Pacific in response to what it perceived as “safety risks recently exposed” by the airline. If enforced, the warning could impact not only flights connecting mainland China, but potentially Cathay flights passing through Chinese airspace as well.

According to the CAAC, as part of its zero-tolerance policy on safety and security, Cathay would have to comply with three requirements. From Aug. 10, all staff who took part in or supported “illegal protests, violence and other radical activities” are banned from operating flights to and from mainland China, and carrying out other activities related to air transportation in mainland China.

From Aug. 11, the warning also requests Cathay to submit the identity information of all crews operating flights to, from or through mainland China for approval. Flights without approval, the warning states, would not be certified to fly in Chinese airspace. Cathay must also submit to the CAAC by Aug. 15 the measures it will take to strengthen internal management and control, and improve flight safety and security.

Given the warning was released after business hours on Friday evening, it is not yet clear how broadly participation in an illegal activity is defined. Cathay, for its part, has not yet disclosed what steps it will take to respond, but said it was studying the directive. One CX pilot was charged with rioting last week, and reports claim that up to 1,200 other Cathay employees may have been involved in a strike that happened this Monday.

Up until now, widespread protests and other disruptions across Hong Kong have had a relatively benign impact on air cargo. Even as the action encroached on Hong Kong International Airport (HKG) on Aug. 5, when a sit-in was staged at the airport, the impact on cargo was minimal. Although a few Cathay Pacific freighter flights experienced delays on Monday, every scheduled flight ultimately departed. At least six other carriers canceled freighter flights, including SpiceJet, Nippon Cargo Airlines (NCA), Emirates, Polar Air Cargo, UPS and Etihad Airways – but as cancellations are common for an airport with more than 1,100 flights each day, it’s not clear all the cancellations were linked to the strikes.

Cathay Pacific currently operates a fleet of more than 200 aircraft, including those aircraft operating with subsidiaries Cathay Dragon and Air Hong Kong. Apart from 747Fs flying to and from Chongqing (CKG), Chengdu (CTU), Zhengzhou (CGO) and Shanghai (PVG) in mainland China, Cathay’s 747F flights to and from Southeast Asia, India, Dubai (DWC), as well as Amsterdam (AMS), Frankfurt (FRA), London (LHR) and Milan (MXP) all traverse Chinese airspace. In addition, Cathay’s passenger network in mainland China consists of more than twenty destinations, and a large number of Cathay’s passenger flights to and from Southeast Asia, India, the Middle East, Europe and the U.S. all fly through Chinese airspace.

As for HKG, last year, total cargo throughput exceeded the 5 million-tonne threshold for the first time, registering volumes of 5.06 million tonnes. It’s unlikely volumes will be as high this year as air cargo responds to headwinds not only from the domestic situation, but also as it is caught in the middle between the U.S.-China trade war. In May, volumes dropped 7.3% year-over-year, to 405,000 tonnes.

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