HONG KONG: Hong Kongers can expect lower airfares this year, with the city's flag carrier Cathay Pacific Airways predicting prices will return to normal as supply of flights increase.
The airline made the upbeat forecast about cheaper airfares amid rising calls from lawmakers for the company to reduce ticket prices, after it had posted HK$9.78 billion (45.33 billion baht) net profit last year.
Appearing before the Legislative Council's economic development panel on Friday, Cathay's general manager for planning Erica Peng acknowledged the city's airfares had been elevated due to the unbalanced supply of flights after international travel resumed last year.
Peng added that airfares were likely to "normalise" in the coming year as an increase in the supply of flights would reduce the shortfall, although she did not confirm if the carrier would cut prices.
"Along with the improvement in supply of capacity, Hong Kong's airfares have started to normalise," she said.
"We'll work hard to increase capacity and we expect our ticket prices will be back to normal in the coming year."
Cathay CEO Ronald Lam Siu-por said the carrier would return to 80% of pre-Covid capacity by the end of the second quarter of this year and 100% in the first quarter of 2025, despite a three-month delay to the latter target.
Lam also vowed to introduce more concessionary airfares as a token of appreciation of people's support.
"We've rolled out from time to time some promotional airfares and we'll continue to do so to thank Hong Kong residents," he said.
At Friday's session, several lawmakers complained about Cathay's high airfares and called for the airline to reduce prices.
"In the past few years, your airfares have been too expensive. How will you give back to the community?" asked lawmaker Jeffrey Lam Kin-fung, also a member of the government's key decision-making Executive Council.
New People's Party lawmaker Eunice Yung Hoi-yan asked: "Some have said Cathay's airfares are overpriced. Any chance to cut prices?"
Mayur Patel, head of Asia for aviation analytics firm OAG, said he anticipated that airfares would further normalise with increased capacity.
"As we move forward in 2024, we will see further normalisation of yields as capacity is added to the market," he said.
Patel also highlighted that Cathay operates in a competitive space. Hong Kong-Taipei was ranked as the busiest route while Hong Kong-Bangkok came in at No 8, he said citing information about the top 10 busiest international routes for March 2024 from the firm's database.
Independent aviation analyst Brendan Sobie said while airfares were a function of supply and demand, it was still unpredictable. "Even if you see supply going up, it's hard to predict demand. There are many other factors," he said.
Online searches by the South China Morning Post for Cathay's return economy-class tickets between Hong Kong and London, a popular route with Hongkongers, showed prices of about HK$6,300 to HK$11,000 in April.
A return economy-class ticket to New York the same month were priced between HK$15,000 and HK$32,000.
Cathay charged an average US$452 (HK$3,534) for a one-way economy class ticket excluding taxes and surcharges on the Hong Kong-London route in 2023, 8.8% lower than the average of US$496 in 2022 but still 46.2% higher than US$309 in 2019, according to statistics by aviation firm Cirium Ascend Consultancy.
Using the same parameters, Cathay's air fare on the route was 7.3% higher than British Airways' average of US$419 last year. The British Airway's figure was similar to its average of US$411 in 2022, but higher than US$372 in 2019.
International Air Transport Association, the trade body for airlines, predicted in December that the passenger yield of global commercial carriers in 2024 would contract to 1.8% from an estimate of 6.2% in 2023, reflecting the likelihood of lower airfares.
