Hong Kong Airlines has had seven of its planes seized by the city’s Airport Authority after its failure to make payments. Deepening concerns about the carrier financial difficulties.
Financial difficulties also near cost Hong Kong Airlines its flying license recently.
The seizure was made in accordance to the Hong Kong Airport Authority Ordinance. The government body citing a section of the rules that addresses overdue charges. The statute allows the authority to sell the planes if it’s not repaid within 60 days.
Hong Kong Airlines, whose fleet consists of 39 planes, said that some of its aircraft haven’t been scheduled for operation. They were consequently suspended from service under the Airport Authority’s arrangement.
The company says operations remain normal
The move is the latest sign that Hong Kong’s aviation sector is facing its toughest year since the global financial crisis. Also after months of anti-Beijing protests that have driven away visitors. Cathay Pacific Airways Ltd, Hong Kong’s dominant carrier, has also warned it’s bracing for a significant loss of earnings, Bloomberg reports.
Carriers are losing money on flights in and out of Hong Kong according to an analyst at DBS Group Holdings Ltd.
Neither Hong Kong Airlines nor the Airport Authority elaborated on the missed payments. However the South China Morning Post reported earlier that the company could owe between HK$11 million and HK$17.2 million.
The Airline has also said it was unable to pay all of its staff and announced more route cancellations. Including to Vancouver, Canada and Ho Chi Minh City in Vietnam. It also stopped providing in-flight entertainment from the start of December.
Hong Kong Airlines ranked 24th out of 100 in the SkyTrax 2019 World Airline awards. Its jets have been flying as far as North America and Australia. With cheaper fares than Cathay, the carrier’s troubles have revived memories of Oasis Hong Kong Airlines. It went bust in 2008 after less than two years operating as a lower-cost, long-haul carrier.
As for passengers, the chances are low for them to get fully refunded on tickets. Despite regulations aimed at helping consumers in the event an airline fails.
Source: Bloomberg News