Struggling Hong Kong Airlines must improve its financial situation by the end of this week or risk losing its licence, with the city’s government expressing “deep concern” about the cash-strapped carrier.

The Air Transport Licensing Authority (ATLA) said today that it met with senior management from the airline on Friday and “heard the representation and explanations made by them about the latest financial position of HKA [Hong Kong Airlines]”.

The ATLA said it found the airline’s situation “extremely worrying” and believes the airline’s financial position has “deteriorated rapidly to such an extent that has severely impacted on HKA’s capability in meeting its obligations as an employer to pay salary and the probability of providing a satisfactory service under its licence in respect of continuity and regularity of operation”.

On Friday, Business Traveller Asia-Pacific reported that Hong Kong Airlines had announced further route cuts, including deciding to end all flights to North America, saying it will focus on “operating priority routes under the challenging business environment caused by the ongoing social unrest in Hong Kong”.

The news came less than 24 hours after Hong Kong newspaper The South China Morning Post reported that the airline could not afford to pay almost half of its staff their salaries for November on time, delaying the payments until the first week of December.

An ultimatum

The ATLA – which can grant, revoke or suspend licences to carry passengers, cargo or mail by air – said it has decided today to attach new conditions to the airline’s licence.

A spokesman for ATLA said: “After careful consideration of the financial position of HKA at present, ATLA must take immediate and resolute action to prevent further deterioration of HKA’s situation in order to protect public interests. In accordance with the two new licence conditions attached by ATLA, HKA must, by a deadline set, ensure cash injection at a level determined by ATLA (or provide an alternative to the satisfaction of ATLA), and raise and maintain its cash and cash equivalent level as stipulated by ATLA.”

If Hong Kong Airlines fails to improve its financial situation as required by ATLA by the deadline, ATLA said it will take further action to revoke or suspend the airline’s licence. ATLA said it will announce its decision by Saturday.

Hong Kong’s Transport and Housing Bureau (THB) said in a statement that it “concurs” with ATLA’s decision and “considers that HKA must face up to its problems seriously and use its best endeavours to meet ATLA’s requirements by the deadline in order to prevent its situation from further deteriorating and to protect public interests.”

The THB added that it met with Hong Kong Airlines on Wednesday and “expressed grave dissatisfaction and deep concern that HKA’s financial situation had not significantly improved and urged the management team to resolve the financial problems pragmatically as a matter of urgency.

“The THB has also reminded HKA to make timely notification to affected passengers of the flight consolidations and to make appropriate arrangements for them in accordance with the terms and conditions of air tickets concerned.”

No in-flight entertainment

On Saturday, Hong Kong Airlines announced on its website that its inflight entertainment (IFE) system will be out of service until further notice.

The airline did not give a reason for cutting its IFE, saying only: “We sincerely apologise for the inconvenience caused to our customers. Hong Kong Airlines will work with our vendor to resume the service as soon as we can.” 

Business Traveller Asia-Pacific has contacted Hong Kong Airlines to ask why the IFE system is suspended and whether the airline is providing any alternative forms of entertainment for passengers.

The announcement will especially come as a blow to passengers booked on the airline’s long-haul services. Hong Kong Airlines’ longest flights are to Vancouver (around 11 hours and 30 minutes) and to Los Angeles (just under 13 hours – though nearly 16 hours on the return leg) and it appears passengers will now have to make do with bringing their own entertainment on board.

This is not the first time a struggling airline has cut its in-flight entertainment system. Now collapsed Indian carrier Jet Airways cut all of its IFE on domestic and international routes at the start of April.

Hong Kong Airlines started life in 2006, when Hainan Airlines bought a large minority stake in Hong Kong carrier CR Airways, according to a FlightGlobal report at the time. The airline was then renamed to Hong Kong Airlines in August 2006 and launched passenger services with a Boeing 737 between Hong Kong and mainland China, according to Hong Kong Airlines’ website.

In 2010, the airline acquired wide-body Airbus A330 aircraft and increased its total fleet size to 10 aircraft. By 2012, it had 20 aircraft and 25 destinations. In 2013, it switched to an all-Airbus fleet. Between that year and 2016, it added more and more new routes around Asia and to Australia and New Zealand.

In 2017, its first Airbus A350 arrived and it introduced its new airport lounge concept “Club Autus”, which Business Traveller Asia-Pacific has reviewed.

Last year, it launched services to San Francisco, the Maldives, Manila and Moscow. It also enhanced its business class dining experience by collaborating with chef Chris Cosentino and chef Gabriel Choy, and unveiled a new business class product on its A350.

I’m booked on a Hong Kong Airlines flight. What should I do? 

Flights between now and Saturday should hopefully be operating as normal and it does not seem that the ATLA will take action on the airline’s operating licence until then, as it has given a deadline to Hong Kong Airlines of December 7.

This is reinforced by a statement from the Transport and Housing Board, which has “reminded HKA that before any further decision of ATLA is made, it must continue to provide services to its passengers in accordance with the terms and conditions of air tickets concerned.”

If your flight is after Saturday, you should pay close attention to the airline’s website here. You can also keep an eye on announcements from the Hong Kong government about the airline here (though note that these are mixed in with announcements from many other government departments).