Is Cathay ready for recovery?

Not long ago some feared for Cathay Pacific’s future. The Hong Kong airline has been hamstrung for longer than many international rivals by the territory’s unyielding Covid-19 restrictions – almost as tough as mainland China’s – and there was a suspicion some in the Beijing leadership were unconcerned about the venerable airline’s fate, seeing it as a vestige of the British colonial era.

Now there is a warning that, as rules relax, Cathay is as unprepared for the rebound in demand as some other big-name carriers have been. A pilot union has urged the airline to make more effort to retain pilots and re-enlist those who have left. It claims “unprecedented” staff shortages and training backlogs could take years to address, and lead to flight shortages and fare hikes.

The Hong Kong Aircrew Officers Association maintains that Cathay has just 2,500 pilots on its books, well below the 4,000 it employed before a massive restructuring in October 2020. In response, the airline insists it is recruiting 700 flight-crew, including local cadet graduates who will join as second officers, ahead of a recovery it expects in 2023.

One competitor Cathay will not face is Virgin Atlantic. The UK airline began serving Hong Kong from London in 1994, but operational complexities including Russian airspace closures and the territory’s strict travel restrictions have spurred its decision to drop the city from its schedules. While Virgin’s desertion might help Cathay, it does not do much for Hong Kong’s teetering status as a global hub.

With long-haul travel continuing its slow climb, one question is how demand for the most expensive seats will change. Several airlines have reconfigured cabins by introducing premium-economy seats at the expense of business class. The thinking is that squeezed corporate travel budgets will mean firms are less prepared to pay top whack for executives to enjoy lie-flat comfort and champagne.

One such is Austrian Airlines, which is removing six business class seats from its Boeing 777-200ERs and adding 16 premium economy seats to the 24 it had previously. It will also fit 14 more economy seats. Austrian’s bet – and that of many other carriers – is that enough economy travelers will be happy to trade up, and business passengers to trade down.

Embraer has struggled somewhat to find customers for its E2 family of late, so decisions by Royal Jordanian and SalamAir to opt for the regional jet will be very welcome in Sao Jose dos Campos. Royal Jordanian has signed a memorandum of understanding to introduce 10 E2 jets in “coming years” while the Omani low-cost airline has placed a firm order for six E195-E2s with six options.

Croatia Airlines, however, has chosen another small narrowbody for its long-speculated fleet renewal, in its case the Airbus A220, formerly the Bombardier CSeries. The Star Alliance carrier plans to operate an all-A220 fleet from 2026, replacing Airbus A319s and A320s, and De Havilland Canada Dash 8 turboprops.

A much smaller contender in the regional airline segment is the Tecnam P2012. The Italian firm’s piston-twin is the first new nine-seat type in decades and the USA’s Cape Air is a customer. Tecnam is now working on a short take-off and landing variant, which it hopes will open up new markets in territories where there are remote airfields with limited runways. It is slating certification next year.