Dragonair announced a series of measures in response to the difficult business environment created by the current economic downturn. In an effort to contain costs and preserve cash, the airline will reduce its passenger capacity by 13% from May.

Dragonair Chief Executive Officer Kenny Tang said: ‘Our business has been badly hit since the financial crisis first began to bite late last year and we have seen a significantly reduced demand for premium travel and pressure on our passenger yield due to the low fares in the market. The cost-cutting measures we have initiated since the end of last year are clearly not enough so we have no alternative but introduce further measures to help us preserve cash.’

Details of the cost-saving measures are as follows:
A 13% cut in capacity will be introduced from May 1, 2009 that includes ad hoc suspensions in May. Starting from June 1, services to Bengaluru, Busan, Sanya and Shanghai will be reduced, while all flights to Fukuoka, Dalian, Shenyang, Guilin and Xian will be suspended.

The airline will also park its last operating freighter ’ a Boeing 747-400BCF. It will, however, continue to provide cargo services using the belly space in its passenger aircraft.

At the same time as introducing the above capacity reductions, Dragonair has announced its intention to launch a scheduled passenger service to Guangzhou. The new service is targeted to commence in September, subject to government approval, with a twice-daily flight.

Mr. Tang said: ‘Many of our staff have been through the various challenges Dragonair has faced over the years, including the Asian financial crisis, the fuel crisis and SARS. Each and every time our team has pulled together to work towards a common goal of overcoming the challenges and helping make Dragonair stronger. We are facing exceptional challenges now but I’m sure I can count on the support of our staff to help put us in a better position when the upturn comes.’

‘Dragonair is one of the most recognizable brands in Hong Kong and Mainland China and the airline plays an important role in maintaining Hong Kong’s position as one of the world’s major aviation hubs. Despite the extremely difficult challenges we are currently facing, the Group remains committed to further developing Dragonair’s brand and network,’ Mr. Tang added.