Reuters
- Washington warned it could limit the number of flights Hong Kong-based carriers operate to the US.
- This was a response to strict quarantine measures that forced FedEx to relocate 180 crew.
- Hong Kong now requires a mandatory quarantine for crew who enter the city for more than two hours.
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Washington warned that it could limit the number of flights Hong Kong-based carriers like Cathay Pacific operate to the US.
The warning was made in retaliation for strict regulations that the city earlier imposed, which the US department of transportation says denies "fair and equal opportunity" to US carriers.
Hong Kong's quarantine rules came into force in February and require crew who entered Hong Kong for more than two hours to undergo a mandatory quarantine. These quarantine regulations exempted crew members flying in from the Chinese mainland and Anchorage, Alaska.
Fed Ex has had to move nearly 200 employees out of Hong Kong
These strict regulations have hit US all-cargo carrier FedEx especially hard, as its crew members operate intra-Asian flights, and do not qualify for the exemption. This has forced the company to move some 180 pilots out of Hong Kong.
FedEx has since relocated its Hong Kong-based pilots to San Francisco for operations to continue without the need for repeated quarantine periods and prolonged separation from their families.
"We continue to work with US and Hong Kong government authorities as well as Air Line Pilots Association to address Hong Kong's entry and quarantine requirements for locally-based crewmembers," a FedEx spokesman told Insider.
"We hope that the action taken by the US Department of Transportation will aid in resolving this matter."
The spokesman added that Hong Kong is an important market for the company, and that it would continue to operate and serve its customers there with the safety and well-being of its team members as its "top priority."
The Department of Transportation said the quarantine rules benefit Hong Kong carriers over US carriers
The DOT said however that Hong Kong's measures have made it "impossible" for FedEx to maintain what is a "critical hub in its intra-Asia network," further charging that the city's government has "significantly harmed the US carrier's operations and drastically upended the competitive dynamics of the market."
"The manner in which Hong Kong has imposed its restrictions disproportionately impacts US carriers to the exclusive benefit of Hong Kong carriers. This imbalance denies US carriers their bilateral right to a fair and equal opportunity to compete in the US-Hong Kong market," said the DOT in a statement this week.
In response, the DOT has ordered all Hong Kong-based carriers like Cathay Pacific, HK Express, and Hong Kong Airlines to file their schedules and disclose all their current passenger and cargo services to the US for review, among other requirements. All code-shared services between Hong Kong International Airport, landing at any points in the US, are also subject to this order.
The DOT will be reviewing the filed data, to verify if these flights "may be contrary to applicable law or adversely affect the public interest," which in turn could lead to potential restrictions on where Cathay could fly in the US.
A Cathay spokesman told Insider that the airline had acknowledged the DOT's order to file schedules, and would continue to comply with all applicable aviation regulations.
"Cathay Pacific believes that it is in the interest of the general and traveling public for this matter to be resolved among all relevant parties as soon as possible," the spokesman said.
The spokesman added that the introduction of new crew quarantine measures had also "hit Cathay Pacific hard," and that due to crew resource constraints, the weekly freighter frequency between Hong Kong and the US had been reduced from the usual 35 to 39 flights, to 21 to 28 flights on average.
"We have had to cut our passenger capacity by about 60% of January 2021 levels, and our cargo capacity by about 25% of January 2021 levels, while our operating cash burn has increased by about HK$300-400 million per month," the spokesman said.
Jae Woon Lee, an aviation law and policy expert and an assistant professor at the Chinese University of Hong Kong, told SCMP that the fact that only Anchorage had been exempted from the crew quarantine supported the argument that "the playing field is not level."
According to a report by the South China Morning Post, the exception for Alaska appears to have been made due to it being an essential stopover for Cathay Pacific airline's cargo flights.
The DOT objected to this exception being made for Cathay, saying that the "carve out" provided Cathay with the ability to continue its operations without being impacted at all by the crew quarantine regulations.
"However, this is not a clear-cut case, as the exemption is not based on the nationality of airlines," Lee said. "A bigger question is whether and to what extent Hong Kong's international aviation hub status could be affected."