Authorities Green-light Hong Kong Airlines’ Consolidation Plan

 - November 4, 2019, 10:48 AM
A Hong Kong Airlines Airbus A350 approaches Hong Kong's Chek Lap Kok Airport. (Photo: Flickr: Creative Commons (BY-SA) by Melv_L - MACASR)

Hong Kong’s airline licensing body on Monday deemed Hong Kong Airlines’ (HKA) flight consolidation plan “reasonable and necessary” following mounting concerns about the carrier’s financial health and inability to stem heavy losses. According to a spokesperson for the Air Transport Licensing Authority (ATLA), officials expect the new strategy to improve the airline’s operational situation, which has come under heavy government scrutiny as protests intensify across the city.

For its part, HKA announced today that it would scale down its long-haul service to North America by closing its route between Hong Kong and Los Angeles, effective February 2020. The carrier added that it would continue to “monitor the market demand closely and may make further adjustments” in the event it needs to suspend the route earlier. Further plans call for an adjustment of frequencies on routes to Vancouver, Osaka, Okinawa, Sapporo, Tokyo, Seoul, Haikou, Hangzhou, Nanjing, and Bangkok “in response to changing market demands,” the airline said.

While city-wide demonstrations have led to a steep decline in passenger numbers for Hong Kong-based airlines, HKA’s parent company, the Chinese conglomerate HNA Group, has come under increasing scrutiny for its failing financials and lack of transparency over its corporate organizational structure. Since 2018, the group has offloaded billions of dollars worth of assets across its international portfolio to reduce its bloated debt load.

Ongoing financial problems and internal strife have also spilled over to HKA, which has experienced its own series of challenges varying from a slew of resignations and ongoing board changes to shareholder battles and lawsuits. In late October, the ATLA warned it would take “appropriate action” if the carrier failed to implement “immediate and concrete steps” to stem losses and return the carrier to profitability. ATLA said on Monday it would continue to closely monitor HKA's flight operations and aviation safety “with a view to ensuring that HKA's operations will continue to comply fully with the requirements of relevant laws and regulations of aviation.”

“The government has also asked HKA to ensure that proper arrangements will be put in place to take care of the interests of passengers and employees,” it added. “We will continue to closely monitor the financial situation of HKA and will consider taking further action in the light of the circumstances.”