UBS found that Hong Kong’s share of the transit market has declined drastically in the last six months, with only 32% of Chinese respondents having flown through Hong Kong, down from 41% in April. By comparison, Korea and Japan’s shares are up to 11% and 6%, from 7% and 5%.
Hong Kong is losing its appeal as a transport hub which threatens to undermine Hong Kong-based Cathay Pacific, says UBS, which has downgraded the stock.
UBS found that Hong Kong’s share of the transit market has declined drastically in the last six months, with only 32% of Chinese respondents having flown through Hong Kong, down from 41% in April. By comparison, Korea and Japan’s shares are up to 11% and 6%, from 7% and 5%.
For Chinese tourists, Hong Kong is losing its appeal to Korea, Japan and Thailand.
And because of Chinese travellers’ preference for non-stop flights, half of Cathay Pacific’s flights may be under strain, said UBS.
Analysts Eric Lin and Tiffany Chen wrote, “Using the airlines’ latest schedule filing, we estimate 34% of Cathay Pacific’s (CX) total capacity could face direct competition from the Chinese airlines’ new routes in the next 12-18 months, while another 12% could face indirect competition as a result of Chinese airlines flying directly to secondary long-haul destinations not served by CX at present.
“We think some of the Chinese airlines’ new routes are placing a structural challenge on CX.”
Source: Barrons Asia