Airline industry carnage leaves Hong Kong families struggling but billionaires are sitting pretty
- Billionaires’ wealth has increased during the pandemic while the aviation industry, which employs tens of millions, is mired in existential crisis
- The thousands employed at Hong Kong International Airport and in tourism appear set for even more hardship, unlike the city’s mega rich
There is a cruel irony that this carnage is occurring as the world’s billionaires have never had it so good. A UBS report shows that the wealth of billionaires increased in all major economies between April last year and July this year.
The US’s top 20 tech billionaires are more than US$250 billion richer over that period, with Jeff Bezos at Amazon US$73 billion richer and both Mark Zuckerberg of Facebook and Elon Musk at Tesla US$45 billion richer. The Hurun report says 257 people became billionaires in China this year, with Alibaba founder Jack Ma 45 per cent richer, with a net worth of US$58.8 billion.
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Cathay Pacific Airways announces its largest job cuts in history
Travel data group Cirium says 43 airlines have gone bankrupt so far this year, with many more expected to follow in the final quarter. Rob Morris, head of Cirium, said: “If there is any silver lining in all of this, it is that things were so bad that governments had no option but to support.”
My only surprise in reading the Cirium numbers was to discover that 46 airlines failed in 2019 and 56 in 2018, with an annual average of 40 for the past seven years. Most years, these collapses have been among tiny airlines with 10 aircraft or fewer.
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International carriers such as Cathay, Singapore Airlines, Lufthansa and British Airways have most of their aircraft parked. The new pandemic surge lends even more substance to IATA’s fear that global aviation will not return to normal until at least 2024.
IATA CEO Alexandre de Juniac was blunt: “Absent additional government relief measures and a reopening of borders, hundreds of thousands of airline jobs will disappear. But it is not just the airlines and airline jobs that are at risk. Globally, tens of millions of jobs depend on aviation. If borders don’t open, the livelihoods of these people will be at grave risk.”
Drawing on data from Airports Council International, they say airports have lost 60 per cent of their passenger flow, losing US$104.5 billion in airport revenues. Among the world’s top airports, Atlanta’s passengers are 57 per cent down in the first half of 2020 compared to the same period in 2019, while in Beijing they are down 74 per cent and Shanghai 68 per cent.
At Hong Kong International Airport, which employs more than 78,000 people, one can only imagine the economic shock waves through tens of thousands of Hong Kong families.
The Air Transport Action Group says 46 million jobs are at risk worldwide – more than a half of the 88 million jobs supported worldwide by aviation. In Europe, they see Lufthansa, British Airways, Ryanair, Air France and Scandinavian Airlines at severest risk.
In the United States, absent a new bailout package agreed by Congress, it says Delta, American, United, Boeing, GE Aviation and Rolls-Royce face a grave risk. IATA says bailouts to the aviation industry so far amount to US$180 billion worldwide.
“The pandemic remains an existential crisis,” ACI world director general Luis Felipe de Oliviera said. “Airports, airlines and their commercial partners need direct and swift financial assistance to protect essential operations and jobs.”
This will, of course, exclude our small, select band of billionaires. They will continue to defy the economic gravity that is dragging most of us down – unless, by chance, they make the mistake of investing in an airline.
David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view