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Dragonair business still down, starting to recover slowly

Hong Kong Dragon Airlines Ltd, the smaller of the city's two carriers, is carrying about three-fifths fewer passengers than before the SARS outbreak, Chief Executive Officer Stanley Hui (許漢忠) said.

Dragonair is carrying about 4,000 passengers a day this week, compared with its usual 10,000 to 12,000 passengers a day, Hui said. At the height of the SARS outbreak in May, the airline's daily passenger numbers fell to about 500.

Dragonair forecast a full-year loss after SARS forced it to cut two-thirds of flights in May. Asian carriers, including Cathay Pacific Airways Ltd and Singapore Airlines Ltd, canceled more than 1,150 weekly flights in May; many airlines are resuming some of those services as the disease abates.

"While we're saying that the market is coming back, there's still a way to go," Hui said. "It's a bit difficult or ambitious to suggest that we'll be profitable for the whole year. If we can reduce the loss or square up, we'll be doing a very good job."

Dragonair carried 90 percent fewer passengers in May as SARS dented demand for travel. It plans to operate 65 percent of its full schedule next month, 80 percent in August and resume full services as early as September after the World Health Organization removed all destinations except for Taiwan and Toronto from its list of infected places.

The airline flew 30,089 passengers last month, down from 288,055 a year earlier.

"The effect of SARS on the travel business in Hong Kong in May was devastating," Hui said.

Airlines worldwide will lose US$10 billion this year, the International Air Transport Association has said.

Dragonair, controlled by China National Aviation Co, faces another challenge: Cathay Pacific wants to start flights to China, which accounted for more than 70 percent of Dragonair's profit of about HK$540 million (US$69.3 million) last year.

"As far as SARS is concerned, the worst is over," said Hui. "But when you talk about future ambitions and Cathay's plans in China, that's a different story."

Hong Kong's Air Transport Licensing Department granted Cathay a license to fly to Beijing, Shanghai and the southeastern city of Xiamen. The smaller rival was granted a judicial review of that ruling, and the two airlines will probably resume court proceedings at the end of August, Hui said.

Cathay is applying to Chinese aviation authorities for approval to fly to Beijing. Cathay plans to fly three weekly passenger flights and three weekly cargo flights to Beijing by the end of this year.

"They will eventually push for more flights," Hui said.

Dragonair won permission from the Hong Kong government to operate scheduled flights Bangkok twice a day last Friday. It is also in the process of obtaining rights to fly to Tokyo, Seoul, Manila and Sydney.

The past few months has been "the worst for the airline industry," Hui said.
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