US, Hong Kong spat over quarantine rules affecting FedEx ops

The US Department of Transportation (DOT) has issued an order to all Hong Kong-based carriers serving the United States to file schedules, thus opening the door to potential restrictions in response to Hong Kong quarantine rules adversely affecting FedEx Express (FX, Memphis Int’l). The DOT gave Cathay Pacific, HK Express, and Hong Kong Airlines until March 23 to disclose all of their current passenger, combi, and all-cargo services to the United States. They will then have to file all schedules for future new or resumed routes at least 30 days before their launch. The DOT plans to review all of the filed data and verify whether these flights “may be contrary to applicable law or adversely affect the public interest”. In practical terms, the order only applies to Cathay Pacific, the sole Hong Kong-based carrier currently serving the US. The requirement also covers all code-shared services between Hong Kong Int’l and any points in the United States. Normally, carriers authorised to operate to the United States do not need to seek specific approval for their schedules. However, the DOT said that it was introducing this additional hurdle in response to the terms of the quarantine imposed in Hong Kong, which it sees as disproportionately harmful to US-based FedEx. As of February 20, 2021, Hong Kong has mandated all returning flight crews to quarantine for 14 days with services from mainland China and Anchorage Ted Stevens the only exceptions. The DOT said that this exception benefitted Cathay Pacific, which operates a significant cargo hub at the Alaskan gateway. In turn, FedEx employs around 180 crew members at its Hong Kong base who operate flights predominantly within Asia and, as such, do not benefit from the exception. “The manner in which Hong Kong has imposed its restrictions disproportionally impacts US carriers to the exclusive benefit of Hong Kong carriers, and this imbalance denies US carriers their bilateral right to a fair and equal opportunity to compete in the US-Hong Kong market,” the DOT said. It added that despite repeated attempts to address the issue both by FedEx itself and the US government, the Hong Kong authorities have yet to propose any potential solution. The DOT said the preferred way out of the conundrum would be to expand the list of exceptions to include FedEx’s Asian destinations served from Hong Kong. In anticipation of the new rules, FedEx has relocated its Hong Kong-based staff to San Francisco, CA. This adds complexity and costs to the carrier’s operations but is the only effective way to maintain the functionality of its hub in the city. In early March, the Air Line Pilots Association (ALPA) urged the carrier to suspend all layovers in Hong Kong because pilots who test positive are quarantined in “unacceptable conditions”. The union also indicated that Hong Kong has been quarantining in government-run facilities all staff members who might have been exposed to the virus. In a statement to ch-aviation, Cathay Pacific said that it was heavily affected by the new quarantine requirements since most of its staff are based out of Hong Kong. As a result, the airline has had to trim its cargo-only schedule to the US from 35-39 to 21-28 weekly flights. “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 HD$300-400 million Hong Kong dollars (USD38.6-51.5 million) per month. Cathay Pacific believes that it is in the interest of the general and travelling public for this matter to be resolved among all relevant parties as soon as possible,” the airline said. “We continue to work with U.S. and Hong Kong government authorities as well as ALPA to address Hong Kong’s entry and quarantine requirements for locally-based crewmembers. We hope that the action taken by the U.S. Department of Transportation on March 16 will aid in resolving this matter,” FedEx said.