Hong Kong quarantines 130 pilots, stoking supply chain fears | Business and Economy News

November 16, 2021 Stan

Hong Kong, China – Hong Kong has forced 130 Cathay Pacific pilots to undergo 21 days of quarantine, raising fears the aviation hub’s “zero COVID” policy could aggravate a global supply crisis caused by the pandemic.

Hong Kong Chief Executive Carrie Lam made the announcement on Tuesday after three pilots slipped through strict COVID testing protocols and tested positive upon reentering the international financial centre.

All aviation personnel who stayed at a hotel in Frankfurt, Germany, where the three pilots spent their layover would have to undergo 21 days of mandatory quarantine, Lam said.

Authorities sent 130 cargo and passenger pilots, along with cabin crew, to a government-run quarantine facility in the semi-autonomous Chinese territory, which imports more than 90 percent of its food.

“If there are one or two more cases like this, we might lose all our cargo pilots,” Lam said in a press briefing, admitting the move would have a significant impact on the city’s supply chains.

The decision “appears rather extreme”, said Shukor Yusof, founder of aviation consultancy firm Endau Analytics. “Apart from the inconvenience for the pilots, it will likely also incur additional costs to the airline, at a time when its financials are under stress, and weaken Hong Kong’s position as an air hub.”

The move is the latest blow to Cathay Pacific, which is reeling from the impact of the pandemic and mass pro-democracy and anti-government protests in 2019. Once the pride of Hong Kong, the company has laid off nearly 6,000 staff members and axed a regional airline in October last year. The airline reported 7.6 billion Hong Kong dollars ($97.6m) in losses in the first half of the year.

To work around the city’s COVID-19 restrictions, the airline is mulling relocating its pilots to Dubai, Anchorage and Chicago, among other cities. It also now requires all aircrew that arrive in Hong Kong to isolate at home for three days and refrain from social gatherings.

To align with China’s strategy of eradicating the coronavirus, Hong Kong has implemented one of the world’s strictest quarantine regimes, despite not facing any major outbreaks since the start of the year.

The Lam administration has justified the policy, which has frustrated foreign businesses and expatriates, by citing the need to reopen the border with mainland China.

In a bid to satisfy Beijing, Hong Kong last month scrapped most quarantine exemptions and further tightened pandemic control measures.

Authorities have refused to provide a timeline for reopening the international border, despite concerns from some health experts and the business community that the city’s “zero COVID” stance is unsustainable and risks undermining its international status.

Trinh D Nguyen, a senior economist at Natixis, said Hong Kong and mainland China’s zero-tolerance approach came with a heavy cost, particularly as the rest of the world gradually reopened.

The strategy required “rather strict administrative controls of international and domestic mobility that can be rather costly economically, especially for Hong Kong as it depends on international mobility for key sectors such as tourism and finance,” Nguyen said.

Nguyen also warned the impact could extend beyond the city.

“The tightening of controls will further exacerbate Hong Kong, regional and global supply chain’s challenges as Hong Kong is the busiest airport for air cargo for goods such as mobile devices, garments, fresh fruit and seafood,” she said.

Contingency plans

But Tommy Wu, lead economist at Oxford Economics in Hong Kong, predicted the impact of the disruption would be limited.

“The overall impact on the airliner’s operation won’t be severe, given that it may be able to call back some of the staff that are currently under unpaid leave if necessary,” Wu said.

“There are also contingency plans that the airliner can implement to temporarily relocate staff to locations outside of Hong Kong to avoid strict quarantine restrictions, even though these plans will come with additional costs to the airliner.”

Speaking on Tuesday, Lam also defended the decision to grant a quarantine exemption to Jamie Dimon, chairman and chief executive of JPMorgan Chase, who arrived in the city on a private jet on Monday.

“After all, it’s a large bank, which has important businesses in Hong Kong. His itinerary is subjected to restrictions, so the risk is entirely within control,” Lam said.

In August, Hollywood actress Nicole Kidman sparked a backlash after she was allowed to bypass quarantine rules to shoot her upcoming drama series Expats in the city.