Cathay Pacific: A storied carrier bruised by Hong Kong’s protests

Since June 9, Hong Kong is witnessing large scale protests, mostly non-violent, that have sought the withdrawal of a much-debated extradition bill.

Cathay Pacific airlines, Hong Kong’s flag carrier, Saturday announced a “zero-tolerance” policy for employees taking part in the ongoing protests that have rocked the city-state for the past three months. Since June 9, Hong Kong is witnessing large scale protests, mostly non-violent, that have sought the withdrawal of a much-debated extradition bill, an independent enquiry against law enforcement agents, and the enactment of universal suffrage.

The airline, headquartered at the Hong Kong International Airport, has in recent weeks come under serious pressure from mainland China to deter employees from joining the demonstrations, resulting in multiple resignations and terminations. Its share value has also taken a beating.

The extradition bill, currently suspended, aims to make it possible for criminal suspects from the city to be taken to mainland China for trial.

Why has Cathay Pacific attracted mainland China’s ire?

The Hong Kong airport shutdown

On August 13 and August 14, protesters almost brought the Hong Kong International Airport to a standstill and a very large number of flights were cancelled. The Hong Kong airport authority was forced to obtain an interim injunction from the High Court to prevent protesters from obstructing access to the airport.

Video clips of violent clashes between demonstrators and the police were widely circulated online.

The disruption at one of the world’s busiest airports was a major loss of face for city authorities. Over 200 Cathay Pacific flights were cancelled, and the airline’s shares fell to their lowest in 10 years.

Repercussions for Cathay Pacific

Founded in 1946, Cathay has been associated with Hong Kong’s British past and has strong sentimental value for Hongkongers. To this day, Swire Pacific, a UK-incorporated company, owns a 45% stake in Cathay Pacific.

On August 9, the Beijing-based Civil Aviation Administration of China (CAAC) issued a warning to Cathay Pacific that those among its staff taking part in the “illegal protests” would not be allowed to travel to and from mainland China. It instructed Cathay that only those flights having CAAC approved crew lists would be allowed to enter Chinese airspace.

Initially, Cathay had refrained from acting against employees who took part in the protests. This position changed after the forced closure and reopening of Hong Kong’s airport under tight security.

On August 16, Cathay Pacific CEO Rupert Hogg resigned along with a key deputy. According to The South China Morning Post, the two officials were seen in a positive light by the employees and were part of a management overhaul that had been successful at bringing Cathay out of its loss-making position of previous years. Hogg was replaced by a mainland Chinese national.

The airline has now made multiple statements pledging support for the Hong Kong government while criticising employees joining the protests.

What this means for other businesses in Hong Kong

Pro-democracy activists fear that mainland China’s iron-fisted approach towards Cathay Pacific is intended to serve as a warning for the rest of Hong Kong’s business sector.

Several multinational companies having operations in mainland China currently have their regional headquarters in Hong Kong. Increasing numbers of these companies could now find it difficult to operate from the city if they do not toe Beijing’s line.

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