Cathay's Knock-On Effect in Hong Kong

Many flats in Discovery Bay are vacated by Cathay staff

 

The termination of the Cathay Dragon airline last week has already had a knock-on effect in the property market.

Someone I know who lives in Discovery Bay told me today how many of the residents there work for Cathay and they have had their salaries cut by 20 to 40 percent for flight attendants, 40 to 60 percent for pilots, or either one or even both spouses have lost their jobs and they immediately have to find a cheaper flat to live in or leave Hong Kong.

A friend described "tsunami" of empty flats

The result is a lot of people moving out and flats left empty. He described it as a "tsunami". 

A property agent in Discovery Bay says there is an increase in flats renting at HK$65,000 per month available. 

The same thing is happening in Tung Chung too.

In the last three months over 60 renters have given up their flats according to Joe Lee of Midland Realty.

"I've never seen so many people giving up their rented apartments in my career," Lee said. "Local crew members who were let go or had their salaries cut are terminating their leases."

Of those who still have jobs at Cathay have opted to swallow the pay cuts, though the airline unions criticized management for not giving the flight crews and pilots more time to consider the new contract, let alone give them a chance to negotiate for a better deal.

However, at this point having a job is better than none at all, and Cathay has reported the majority of Cathay pilots and flight attendants have opted for permanent pay cuts. 

Chris Beebe warns of Cathay's "bullying"

Chris Beebe, general secretary of the Hong Kong Aircrew Officers Association, said if the airline's comments were accurate, it would serve "as proof that bullying and intimidation" worked.

"The real [payback] may come in the months and years ahead as pilots remember how they and their families were dealt with harshly and opportunistically when most vulnerable," he warned.

While the pay cuts are severe, the projections for air travel don't look good. The International Air Transport Association projects airline revenues for 2021 to be half that of 2019 due to the global pandemic.

The cuts at Cathay have contributed to Hong Kong's unemployment rate to rise to a nearly 16-year-high of 6.4 percent with tourism taking the biggest hit. 

Simon Lee Siu-po, co-director of the international business and Chinese enterprises program at Chinese University, warned the jobless rate could rise to 7 percent or more by year's end after the wage subsidy ended.

Tung Chung as seen from a plane

"Those who didn't joint the second stage of the [wage subsidy] scheme have already axed staff, such as Cathay Pacific," he said.

"After November when the wage subsidy scheme ends, companies may start to lay off staff. The situation will be more serious in early next year when companies are due to close their accounts for the year end."

Yep 2020 has been a complete wipe out in many ways.

Hearing and reading these sad stories make you appreciate whatever you have... left.