, Hong Kong

HK, China aviation 'fly into another year of loss': Jefferies

International travel recovery will be delayed up to 2023.

In an equity research report, financial services company, Jefferies, said Hong Kong and Chinese airlines have suffered their third year of loss, with international travel delayed to the end-2022 and domestic ticket prices only marginally higher on slower economic growth.

Domestic passengers will be the main revenue driver with domestic passenger flight capacity quickly rebounding close to pre-pandemic levels once the local COVID infection outbreaks subside. However, Jefferies expects pre-fuel surcharge domestic ticket prices to increase to only 2%, given price-conscious travellers on slower economic growth.

The JEF Global strategy team noted China's 5.5% GDP growth target seems 'ambitious'. It is estimated 2022 and 2023 to return to 94% and 100% of pre-pandemic levels.

Jefferies also expected international travel to be delayed until the latter part of this year, at the earliest, and more likely 2023, as China is unlikely to relax its zero-tolerance COVID policy especially given the current local COVID-19 infection outlook. The international passenger capacity has been predicted at only 20% of pre-pandemic levels in 2022 and 60% in 2023. Meanwhile, cargo remains a tailwind with global air cargo sector imbalance driven by the lack of belly space from passenger planes.

Lastly, Jefferies forecasted the key driver for customers will be the relaxation of the current HK-crew strict quarantine policy, imposed since December 2021 and the reason for the year-to-date losses. The key date could be 21 April, when the first phase of HK social distancing measures are relaxed. Similar to the return to the second half of 2021 profit, cargo will be the driver.

Follow the link for more news on

Join Hong Kong Business community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!