Beautiful Virgin Islands

Tuesday, Jun 03, 2025

Airline industry carnage hits families but billionaires are sitting pretty

Airline industry carnage hits families but billionaires are sitting pretty

Billionaires’ wealth has increased during the pandemic while the aviation industry is mired in crisis. The thousands employed at Hong Kong airport and in tourism appear set for even more hardship, unlike the city’s mega rich.

Remember the old story about how to become a millionaire – start off as a billionaire, and then invest in an airline. As the pandemic recession wreaks havoc through the global aviation, travel and tourism industries, with Cathay Pacific last week joining a long list of floundering airlines worldwide, this adage never has been more chillingly true.

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.

Clearly, none of them have dabbled in the airline industry. I am reminded that Tony Fernandes, who bought AirAsia in 2001 for US$1, must be wistfully mulling those numbers as he closes and writes down his airline operations in Japan, Indonesia, Thailand and elsewhere in an effort to maintain his flagship AirAsia as a going concern.

I wonder at the prospects of Bill Wong, the Hong Kong-based property billionaire. He bravely launched Greater Bay Airlines
in Hong Kong just as Cathay Pacific was closing down Cathay Dragon and laying off more than 8,000 staff worldwide.

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.

The difference this year is that the list includes many of the world’s more significant airlines. Where they are not bankrupt or in Chapter 11 proceedings, they are madly scrambling to gather billions in government support.

The list excludes giants such as Boeing, Airbus, GE Aviation and Rolls-Royce, which have been plunged into crisis as the buyers of their aircraft and engines have been grounded and put on life support. Boeing has reported a second-quarter loss of US$2.4 billion, with revenue down 25 per cent and aircraft deliveries down 71 per cent. Its 747 production line, running since 1970, has been shut down.

The crisis facing the aviation industry is extraordinary and unprecedented. It is a grim litmus for the state of the global economy as a new wave of the 1Covid1-19 pandemic locks down Europe and scrambles US politics in the run-up to the November 3 presidential election.

International Air Travel Association (IATA) data released just a month ago predicts global air traffic down 66 per cent in 2020 compared with 2019, with airlines worldwide expected to report losses amounting to US$128 billion up to December. With most needing passenger load factors of around 80 per cent to break even, the average load factor this year has been 58 per cent, even with massively reduced air traffic.

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.”


The International Civil Aviation Organisation forecasts that airlines will lose up to US$400 billion in passenger revenues this year, with losses up to US$95 billion next year. They say international air travel is taking two-thirds of this hit, with the Asia-Pacific region – the world’s busiest air travel market – accounting for a quarter of losses. In a rare brighter moment, they saw some resilience in domestic air services. In China, for example, services are back up
to near pre-pandemic levels.

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.”

No sector illustrates more clearly the stark severity of the recession that is now engulfing us. Given the huge importance of the travel and tourism sector
to an economy like Hong Kong, it seems impossible to understate the severity of the challenges to be faced in the coming couple of years by so many Hong Kong families.

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.

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