Author: Chen Shanshan

From yesterday to today, Cathay Pacific was searched for two days because of a recording of a flight attendant.

The spark was a Xiaohongshu netizen complaining that flight attendants discriminated against mainland passengers on Cathay Pacific's Chengdu-Hong Kong flight, and released relevant audio recordings.

Within 24 hours of the recording, Cathay Pacific issued three apology statements in succession, saying that it had completed the investigation into the incident and dismissed the three cabin crew involved in accordance with the company's rules and regulations.

Subsequently, the Secretary for Transport and Logistics of the Hong Kong SAR Government also issued a statement saying that he was deeply saddened by the inappropriate remarks made by some Cathay Pacific flight staff, which seriously violated Hong Kong's excellent hospitality, consistent values and ethical standards. A high level of concern has been expressed to Cathay Pacific and management has been asked to improve its services immediately.

This morning, at the SmartHK "Promoting High-Quality Development - Hong Kong Forum", the Chief Executive of the Hong Kong Special Administrative Region (HKSAR) John Lee Ka-chiu also expressed his views on the above incident. "I am deeply saddened that these disrespectful words and deeds have hurt the feelings of Hong Kong and mainland compatriots and undermined Hong Kong's consistent culture and values of respect and courtesy."

Lee also said that he had proposed to Cathay Pacific CEO Lam Siu-po that the incident damaged Hong Kong's image and hurt the feelings of Hong Kong and mainland compatriots, and was a serious incident, although the three crew members involved had been dismissed, but similar situations could not be repeated. "Cathay Pacific needs to review the quality of training and service, enhance the customer service culture, and reshape the image of respectful hospitality to live up to our expectations of Cathay Pacific."

Under the fermentation of the incident, Cathay Pacific shares closed at HK$7.5 today, down 1.57%.

Founded in 1945, Cathay Pacific is the largest base airline in Hong Kong, China, and in recent years, Cathay Pacific has occupied more than 50% of the seats at Hong Kong airports thanks to the successive acquisitions of Hong Kong Dragonair and Hong Kong Express. According to Cathay Pacific's 2019 half-year report before the pandemic, sales revenue from Hong Kong and Chinese mainland accounted for half of the company's total revenue by region.

Before the pandemic, Cathay Pacific's Chinese mainland routes were only Hong Kong-Beijing and Shanghai, accounting for only about 5% of all Hong Kong-Mainland routes, while its subsidiary Dragonair was responsible for more routes including Beijing, Shanghai, Guangzhou, Chengdu, Hangzhou, Nanjing, Xiamen, etc., while Cathay Pacific itself mainly operated intercontinental routes such as Europe and the United States.

Transit passengers have long been one of the most important sources of growth for Hong Kong airports, with many mainland passengers flying abroad via Hong Kong on Cathay Pacific. In 2018, Mainland passengers transited more than 370.<> million at Hong Kong Airport, making it the largest transit source of passengers at Hong Kong Airport.

Therefore, Cathay Pacific's main source of passengers is also passengers who rely on connecting to Hong Kong for long-haul international routes. However, with the rise of the three major Gulf carriers (Emirates, Etihad Airways and Qatar Airways) in recent years, and the opening of more and more direct flights by Chinese mainland airlines, Cathay's long-distance intercontinental passenger source has also been gradually diverted, which in turn has also put pressure on performance, and after two consecutive years of losses in 2016 and 2017, it was only difficult to turn around in 2018.

However, in 2019, Cathay Pacific Airways had incidents in which flight personnel involved in violent assault and were charged with rioting but did not stop flying activities, and malicious leakage of flight passenger information, in response to which the Civil Aviation Administration of China issued a major aviation safety risk warning to Cathay Pacific Airways in Hong Kong. Since then, the epidemic has begun to affect Cathay Pacific's intercontinental routes.

However, during the epidemic, Cathay Pacific did not stop flying to the mainland, almost every day non-stop flights to the mainland, the share of flights on the mainland and Hong Kong routes reached a maximum of about 80%, and later with the resumption of more airlines, Cathay's share fell back to 3%.

According to the latest data from Flight Manager, in the past month, Cathay Pacific has carried out 1069,16 passenger flights, connecting <> cities in the mainland, of which Hong Kong, China has the top three flights to Shanghai Pudong, Beijing Capital and Guangzhou Baiyun.

Today, revenue from Hong Kong, Taiwan and the Mainland accounts for Cathay Pacific's performance. In the 2022 annual report, 67.51% of Cathay's operating income came from Hong Kong, Taiwan and the Mainland.

It is worth noting that Cathay Pacific currently also cross-holds shares in Air China (601111). In June 2020, Cathay Pacific shareholders such as the Hong Kong SAR government and Air China also increased Cathay's capital by 6 billion.

According to the financial report, after a loss of 2021.50 billion yuan in 80, Cathay Pacific again lost 2022.61 billion yuan in 27, but it was mainly dragged down by the losses of subsidiaries such as Hong Kong Express and Air China.

Which airline mainland passengers choose to take to Hong Kong in the future will also have an important impact on Cathay Pacific's performance.

According to data from Ctrip, since the resumption of customs clearance between the mainland and Hong Kong, Hong Kong has long "dominated" the list of mainland tourists' preferred outbound destinations, and the number of bookings for travel to Hong Kong during the Dragon Boat Festival holiday has increased by more than five times year-on-year. As of 5 May, after the May Day holiday, the number of bookings made by Mainland visitors to Hong Kong increased by more than 5 times year-on-year. (CBN)