A wrong-way oil-price-hedging bet by the parent company of Cathay Pacific and Dragonair has rebounded on passengers, who will have to pay a fuel surcharge of HKD 109 (AUD 18.40) on each trip they take after Thursday next week, 15 September 2016.
Cathay Pacific said the surcharge would apply only to inbound passengers, Hong Kong’s South China Morning Post reported. That will add an impost for Australians flying Cathay to Hong Kong.
The airline’s website says the surcharge will apply to flights to Hong Kong from the Southwest Pacific, including Australia and New Zealand. It will also apply from North America, Europe, Africa, the Middle East, and South Asia, starting from Thursday next week.
“The decision to reintroduce the fuel surcharge overseas follows the practice currently adopted by other airlines in many of these markets,” the company said. “All itineraries originating from the city will not be affected.”
The drastic measure came after the company reported a worse than expected 82% slump in first-half net profit.
Cathay Pacific has stopped hiring staff, apart from those critically needed, since fierce competition from rivals and economic weakness in China conspired to severely undermine its profits in the first half of this year.
Hong Kong’s biggest airline posted an interim net profit of HKD 353 million (AUD 59.7 million) an 82% plunge from the same period a year earlier.
“The operating environment in the first half of 2016 was affected by economic fragility and intense competition,” the airline said. See: Cathay Pacific first-half profit plunges by 82%
“There was sustained pressure on revenues, reflecting suspension of fuel surcharges, weak currencies in some markets, weak premium class demand, particularly on long-haul routes, and a higher proportion of passengers transiting through Hong Kong. All these factors impacted the Group’s operating performance. The contribution from subsidiary and associated companies increased.”
Written by Peter Needham