Hong Kong airfares skyrocket as hotel quarantine ends

TRAVELLERS looking to leave Hong Kong after two-and-a-half years of Covid isolation face the prospect of paying sky-high airfares after the government said it will scrap hotel quarantine on Sep 26.

Weeks after Cathay Pacific Airways, bruised by the city’s strict pandemic strategy, pleaded publicly for a roadmap to exit Covid, the Asian financial hub’s about-turn on hotel quarantine is set to leave airlines rushing to fill a yawning gap in reduced flight schedules.

Hong Kong chief executive John Lee announced an end to hotel quarantine at a press conference on Friday (Sep 23) afternoon, a decision Bloomberg News reported earlier. The government will also ditch a requirement that travellers get a negative PCR test before boarding a plane to Hong Kong. 

Cathay, which supplies about 45 per cent of plane seats in and out of Hong Kong, has previously warned it could only increase flights to one-third of pre-Covid levels by the end of the year, hobbled by a lack of aircraft and the need to train new pilots and staff. Foreign carriers have gutted schedules or stopped flying to the city altogether. 

In the first eight months of this year, Hong Kong International Airport handled just 3.4 per cent of passengers that it did before Covid, and 30 per cent of flights.

Travellers face paying significantly higher prices for available tickets. They’ll need to stump up HK$102,000 (S$18,511) for a return business-class flight to Los Angeles early next month, more than double the usual fare. A return economy-class seat to London departing Oct 3 will cost HK$25,600, as much as triple regular prices.

“Demand and supply face a huge imbalance, but once we know there is a clear timeline and a roadmap, airlines will assess their own decisions and commercial judgments,” said Yolanda Yu, vice-chair of the Board of Airline Representatives of Hong Kong, which represents more than 70 carriers flying in and out of the city.

“Whether Hong Kong is viable to increase capacity is yet to be seen,” Yu said. Typically it takes airlines 6 to 9 months to organise flight schedules, she said.

Cathay welcomed the news, saying it would boost sentiment for travel. The airline plans to add more than 200 pairs of regional and long-haul passenger flights in October, with daily flights to Tokyo’s Haneda Airport resuming in November. 

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“We are fully committed to rebuilding the connectivity of the Hong Kong aviation hub,” the airline said in a statement. “While we will continue to add back more flights as quickly as is feasible, it will take time to rebuild our capacity gradually.”

Bloomberg Intelligence analysts Tim Bacchus and Eric Zhu wrote in a Sept 20 note that Cathay had some room to revise passenger capacity to 40 per cent. “Demand rebound will likely be led by departures of travel-starved residents.” 

Cathay’s shares closed up 1 per cent on Friday, taking their rally this year to 40 per cent, by far the best performance on a Bloomberg gauge of world airline stocks.

Foreign airlines face the challenge of airport restrictions and a shortage of aircraft and staff in restarting Hong Kong flights. Carriers could be reluctant to restart services when other parts of the world are more profitable. And operationally, airlines particularly flying between Europe and Asia face longer routing with Russian airspace closed to most carriers.

British Airways plans to resume flights to Hong Kong in December, but Australia’s Qantas Airways recently pushed back the restart of Hong Kong flights until late January 2023. Virgin Atlantic Airways won’t return until March next year. 

United Airlines Holdings, the only US carrier with Hong Kong flights, is yet to decide on resuming services. ANA Holdings said earlier this week it would restart services to the city from Tokyo Haneda airport from the end of October, flying four times a week.

Corporate travel manager CWT said the amount companies are set to pay for flights out of Hong Kong will continue to rise. From pre-pandemic levels to next year, airfares will have climbed 53 per cent. BLOOMBERG