US airlines suspend Hong Kong flights over virus concerns

American Airlines Group and United Airlines said they are suspending all flights to and from Hong Kong, which reported its first coronavirus death on Tuesday, the second outside mainland China.

The announcements mean no United States carriers will be flying passenger flights to Hong Kong after this week.

An American Airlines spokeswoman said the airline's suspension of its Hong Kong flights to and from Los Angeles and Dallas had begun on Tuesday and would continue through to February 20.

United Airlines said in response to a drop in demand it would also suspend flights through to February 20. The carrier's last US flight to Hong Kong will depart San Francisco on Wednesday and the last return flight to San Francisco from Hong Kong will depart on Friday.

US government restrictions on flights and people who have visited mainland China that took effect on Sunday have not affected Hong Kong. On Friday, American Airlines suspended its flights to and from mainland China through to March 27.

United Airlines said on Monday it was moving up its suspension of US-bound flights from mainland China by one day to Tuesday. United said it still plans to resume flights to and from China on March 28.

A growing number of international airlines have suspended flights to and from China as the virus spread and several governments have banned the entry of travellers from China.

The world's largest air cargo carriers said they have no immediate plans to add China flights to replace the capacity lost due to steep cuts to passenger travel, as many factories have remained shut after the Lunar New Year.

Aviation data firm OAG said there would be more than 25,000 fewer flights operated to, from and within China this week compared with two weeks ago, with 30 airlines halting services.

About half of the air cargo carried globally is in the belly of passenger jets rather than in dedicated freighters, and the flight cuts have made the Chinese market more dependent on freight hauliers.

But a spokesman for Germany's Lufthansa Cargo said it had reduced its flying schedule, in part to allow pilots to spend the night in Novosibirsk, Russia, rather than in China. Demand from China to Germany fell because of the production shutdown, the spokesman said.

The Lunar New Year holiday has been effectively extended by 10 days in many parts of China, including powerhouse regions such as Shandong province and the cities of Suzhou and Shanghai.

The shutdown represents a fresh challenge to an air freight market that was already weak before the coronavirus epidemic. Global demand fell year-on-year for 13 consecutive months through November 2019 amid slowing economic growth and the US-China trade war, according to the International Air Transport Association (IATA).

"If you're ordering people to stay in their houses it's difficult to keep factories running," Bernstein analyst Daniel Roeska said. "Many supply chains are essentially halted, so there's nothing to transport."

Air cargo represents less than 1 percent of global trade by tonnage. But that amounts to about $6 trillion worth of goods every year - more than 35 percent of global trade by value, according to data from Boeing Co, the biggest manufacturer of freighters.

Korean Air Lines Co Ltd said a fall in Chinese events and meetings due to the coronavirus and related storage and transport shortages had led to a decline in fresh food shipments, such as lobster and salmon. "On the other hand, Chinese transport and request of medical supplies such as masks and cleaning agents is increasing," the airline said in a statement.

A spokeswoman at Japanese airline ANA Holdings Inc also reported rising demand for medical supplies such as surgical masks although shipments of other goods had been delayed.

Once most Chinese factories resume production, dedicated cargo carriers like United Parcel Service Inc, FedEx Corp and DHL are likely to be the biggest beneficiaries of any surge in demand, said Helane Becker, an analyst at Cowen.

"Obviously the lack of belly space means everything goes on main deck," she said, in reference to how cargo is carried in passenger planes compared with freighter aircraft.