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Speaker 1: Let's get to our guests. Parash Jane, Global Head of

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Speaker 1: Shipping in Ports and Head of Asia Transport Research at HSBC,

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Speaker 1: we wanted to talk a little bit about China's Golden

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Speaker 1: Week holiday travel and airline stock. So Paras, thanks very

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Speaker 1: much for being with us. Anecdotally, it feels like it's

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Speaker 1: been pretty sluggish during Golden Week for travel, particularly long

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Speaker 1: haul um short trips. Maybe a little easier a lot

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Speaker 1: depending I suppose on whether or not we see a

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Speaker 1: change after the Party Congress. So what are you thinking? Yeah,

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Speaker 1: I mean, as as rightly pointed out, go Golden Week

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Speaker 1: compared to last year or compared to certainly pre COVID

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Speaker 1: level is disappointing, but that shouldn't come as a surprise

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Speaker 1: with a constant flare up of cases that we have witnessed.

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Speaker 1: How but on the brighter side, probably we have seen

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Speaker 1: the worst with second quarter when when basically Shanghai was

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Speaker 1: pretty much shot for about forty days. So sequentially we

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Speaker 1: are seeing improvement, but having said that, it pretty much

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Speaker 1: remains a domestic so far as international travel is concerned,

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Speaker 1: we are still at at a mid single digit I mean, yeah,

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Speaker 1: it's recovered from a low single digit, but nothing nothing

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Speaker 1: to take home. To what degree do you expect things

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Speaker 1: to change once the Party Congress is out of the way?

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Speaker 1: President she's confirmed for that. The term is this the

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Speaker 1: time when we might see COVID restrictions east and how

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Speaker 1: long do you think that process might take? And to

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Speaker 1: be honest, it's difficult to say. And over the last

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Speaker 1: two years, I mean it has remained a hope trade

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Speaker 1: and so far as the airline stocks are concerned, the

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Speaker 1: way we are now suggesting client is that yes, it's

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Speaker 1: a matter of when and not if. What we know

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Speaker 1: for sure is that, as in, when there are there

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Speaker 1: are cases under control within China, we have seen the

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Speaker 1: domestic travel returns back to over pre COVID level, and

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Speaker 1: the experience from around the world just that, as in

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Speaker 1: when the border restricts and stall lifted, we have seen

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Speaker 1: a stronger pentup demand. And this is the trajectory that

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Speaker 1: we we are hopeful for whatever is worth. We are

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Speaker 1: modeling the international travel for this year will pretty much

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Speaker 1: remained around five percent level. It will jump back to

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Speaker 1: about a quarter next year before it see a meaningful

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Speaker 1: recovery in four So we have a little microcosms story

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Speaker 1: in Hong Kong that can perhaps help us look a

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Speaker 1: little bit further afield to China. Um, we've had the

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Speaker 1: quarantine basically lifted, uh and uh, but still I remember

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Speaker 1: writing a promo about four or five days ago saying

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Speaker 1: the quarantine is gone, but where are the flights Because

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Speaker 1: Cathay Pacific is only operating here at sixteen percent of

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Speaker 1: pre pandemic seeding and that's pretty shocking. Um, they only

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Speaker 1: expect to be one third by the end of this

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Speaker 1: year and won't get back to normal until That's a

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Speaker 1: long time to wait. Absolutely, and I mean Katy has

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Speaker 1: been over the past past several weeks has been vocal

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Speaker 1: about some of the challenges that they are facing bringing

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Speaker 1: capacity up to the speed with respect to the crew problems,

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Speaker 1: the pilot training, and those are the challenges that can

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Speaker 1: only be solved at a certain pace. I mean, they

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Speaker 1: are looking to hire about four thousand, four thousand people

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Speaker 1: across different businesses at this point of time. I mean,

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Speaker 1: what we are modeling is that we Katy will try

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Speaker 1: try to increase as fast as they can, and we

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Speaker 1: have modeled that we may probably hit about forty capacity

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Speaker 1: level by the end of this year versus cats current

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Speaker 1: expectation of about a third. But yes, it's a long,

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Speaker 1: long haul. Yeah, And is it realistic because every airline

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Speaker 1: in the world is competing for these same sorts of workers.

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Speaker 1: How challenging is this going to be? It will be challenging, right,

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Speaker 1: And we we have seen over the last two y

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Speaker 1: as the stringent COVID districts since in Hong Kong. And

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Speaker 1: at the same time, if you look at some of

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Speaker 1: the Middle Eastern carriers who were who were early in

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Speaker 1: terms of reopening, has been has been hiding a lot

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Speaker 1: of pilots around the world, has been attracting talent, and

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Speaker 1: we have we have seen some some of those exodusts.

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Speaker 1: But remember, like so far as a kathay and as

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Speaker 1: as a brand disconcern, it's it's probably will not be

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Speaker 1: very difficult for Kathy to bring those those pilots, but

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Speaker 1: training of those will still take time. Just looking at

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Speaker 1: Kathy stock, it's up about five and a quarter percent

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Speaker 1: over the past month, So obviously investors the kind of

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Speaker 1: like this story, but moving a little bit patiently. Um,

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Speaker 1: do you think once China is able to open up more? Um,

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Speaker 1: let's say, once we get past the pandemic, because China

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Speaker 1: has isolated itself a little bit more, will people travel

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Speaker 1: as much abroad as they used to? I mean, as

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Speaker 1: as I told in my opening remarks, if you take

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Speaker 1: what we have seen around the world, each of the

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Speaker 1: market has surprised us on the upside in terms of

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Speaker 1: the trajectory of recovery, and that recovery is not only

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Speaker 1: limited to the leaser travel. Despite a lot of skepticism,

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Speaker 1: we have seen even the business travel returns back. So

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Speaker 1: as as they say, old habits die hard, so we

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Speaker 1: are very, very optimistic that as soon as the travelerstics

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Speaker 1: since are lifted, we will see see a return up

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Speaker 1: anti demand. And I just want to get your thoughts

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Speaker 1: almost happening with freight as well. Uh, there's the error

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Speaker 1: of supply bottle next passing and are we switching into

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Speaker 1: something new now? Absolutely? I mean for air cargo in particular,

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Speaker 1: one of the reason why the rates remained remained so

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Speaker 1: high was an absence of ballet capacity, and the Transatlantic

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Speaker 1: route gives us a teaser with the with the ballet

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Speaker 1: capacity to turning back. We have seen freight rates normalizing

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Speaker 1: on those routes. But so far as Asha is concerned,

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Speaker 1: so far as Hong Kong. China is concerned with with

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Speaker 1: big three Chinese airlines belly capacity not returning back in

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Speaker 1: a hurry, and the fact that the Russia Ukraine air

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Speaker 1: space closer means longer route to the Europe means that

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Speaker 1: normalization may take a bit longer and which should be

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Speaker 1: positive for the air freight rate from the airline's perspective.

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Speaker 1: Back to your idea of old habits die hard? Do

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Speaker 1: we're talking mostly external travel, I suppose by by Chinese citizens.

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Speaker 1: What about how attractive is China now for tourists coming in?

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Speaker 1: So I mean the whole story of of China's travel

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Speaker 1: has been the China's outbound tourism, and so far as

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Speaker 1: v file is concerned, visiting frends and relative that that

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Speaker 1: will likely to emerge pretty much instant, instant tennisly. And

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Speaker 1: so far as business travel is concerned, I mean, as

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Speaker 1: as long as it opens in the truest sense. I think,

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Speaker 1: perhaps with a lag, but you will see people returning back. Okay,

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Speaker 1: just briefly, is Kathay Pacific one of your top picks?

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Speaker 1: And if not, what is? Yes? Indeed, kathy Pacific remains

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Speaker 1: our top pic and our story has been over the

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Speaker 1: last six months is that what drives the airlines stocks

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Speaker 1: are the news flows and we have plenty of them,

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Speaker 1: particularly with respect to Hong Kong and Kathy, and those

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Speaker 1: have been basically driving the share price. Excellent, Parash. Thank

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Speaker 1: you very much for being with us, taking out the

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Speaker 1: time to come into our studios as well. Always a

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Speaker 1: very nice chat with you, Parash. Jane who's Global Head

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Speaker 1: of Shipping in Ports and Head of Asia Transport Research

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Speaker 1: at HSBC