Aircraft operated by Cathay Pacific Airways Ltd. stands on Friday, August 7, 2020 at the intestinal surface at Hong Kong International Airport in Hong Kong, China.
Paul Yeung | Bloomberg | Getty Images
Singapore Airlines and Hong Kong’s Cathay Pacific Airways will “immutably” take a long time to recover from the coronavirus crisis, an aviation consultant told CNBC.
That’s because these carriers are based in markets with no domestic demand for flights, at a time when international travel is still very limited, said Joanna Lu, Asia’s head of consulting at Cirium.
Airlines have suffered massive losses since air travel was virtually halted when most countries closed their borders earlier this year, in an effort to curb the spread of the coronavirus pandemic.
Both carriers saw that profit turned on their loss in their latest earnings report.
Cathay Pacific reported a loss of 9.87 billion Hong Kong dollars ($ 1.27 billion) for the first half of 2020, after recording a profit of 1.35 billion Hong Kong dollars a year ago. For the quarter ended June 30, Singapore Airlines reported a net loss of $ 1.12 billion ($ 817.5 million), down from a net profit of $ 111 million the previous year.
Some countries have since reopened to tourists, with Covid-19 testing and health screening in place at airports, but many are still closed to international visitors as confirmed cases top 20.5 million worldwide.
Lu told CNBC’s Capital Connection ‘on Wednesday that travel within a domestic or regional market is likely to resume faster, compared to long-haul flights to international destinations.
“Those airlines that serve a large scale of domestic market are likely to benefit more, including carriers in China, Japan and perhaps Indonesia,” she said.
However, the opposite is true for Hong Kong and Singapore, where local people do not travel domestically due to the small land area.
Lu also spoke in on reasons why the International Air Transport Association said in June that Asia Pacific is expected to place “the largest absolute losses” in 2020.
She said the disruption of international travel has been the “main cause” of “negative progress” in the Asia-Pacific sector. In addition, she said the region has many countries and markets, while Europe and the US “have worked pretty much as a single, unified domestic market.”
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