While Hong Kong Airlines recently received a cash injection, it doesn’t seem like that’s preventing the airline from having some planes impounded.
Hong Kong Airlines’ Struggles
Hong Kong Airlines has been on the brink of going out of business for a while now, as the airline has been unable to pay staff, has had to shut off inflight entertainment, and has had to axe routes and return planes.
Earlier this month the airline was given a critical deadline by the Air Transport Licensing Authority of Hong Kong. They had looked into Hong Kong Airlines’ finances, and had determined that they “deteriorated rapidly,” to the point that they no longer meet the minimum standards to have a permit.
The airline was informed that they had just days to find new investors or more cash, or else their license could be suspended or revoked. At the last minute the airline received a cash injection from parent company HNA Group.
However, that certainly doesn’t secure the long term future of the airline, and it even apparently leaves the airline in a situation where some of their planes are being impounded.
Why Hong Kong Airlines Planes Were Impounded
Danny Lee at the South China Morning Post writes about how the Airport Authority of Hong Kong (AAHK) has confirmed that seven Hong Kong Airlines planes at the airport have been impounded over unpaid parking fees.
Interestingly this doesn’t actually involve “active” aircraft, but rather involves seven planes that have been parked, as the airline has cut their route network to curb losses. It seems that the airline hasn’t been paying the standard parking fees for these planes. This decision has been made to protect the financial interests of the AAHK and the government.
Hong Kong Airlines confirmed this in a statement:
“Due to network consolidation, some of our aircraft have not been scheduled for operation and are currently suspended from service under the Airport Authority’s arrangement. Our current operation remains normal.”
The seven planes have been stored for anywhere between 56 and 318 days, so they’ve racked up considerable fees. The cheapest parking at the airport is allegedly about 94 HKD (12.05 USD) per 15 minutes, so estimates are that the airline owes somewhere around 11 million to 17.2 million HKD to the airport (1.41 million to 2.21 million USD).
What Exactly Is Hong Kong Airlines Thinking?
I’d be curious to know Hong Kong Airlines’ logic with leaving these planes parked at HKG for so long, which is known to be one of the most expensive airports in the world:
- Did the airline not know they were going to park the planes for extended periods of time, so decided it didn’t make sense to fly them elsewhere?
- Did they figure it was better to rack up debt with the airport than to spend the “cash” on flying the plane somewhere else?
- Did they think the airline wouldn’t be around to have to pay the parking bill?
I’ll be curious to see how Hong Kong Airlines handles this. It seems like they don’t have any immediate uses for the planes, so I wonder if they’ll let the fees keep accumulating, or if they dig into their cash injection to pay this off.
With the airline only continuing to shrink, it does seem odd that they’ve had some planes parked for nearly a year at Hong Kong Airport. You’d think they’re return some of these planes to the leasing companies, even at a huge loss, because they could at least be making money somewhere else, no?