CAD accepts HKE's improvement proposal

     The Civil Aviation Department (CAD) today (November 9) announced that it has accepted the report by Hong Kong Express Airways Limited (HKE) in regard to its sudden announcement in late September on the cancellation of multiple flights during the Golden Week peak travel season in early October.

     The CAD had requested HKE to submit a detailed report on the flight cancellation incident in order to shed light on the root causes and handling procedures, and to formulate long-term solutions to any problem revealed. HKE subsequently submitted the report on October 6 and, upon the CAD's request to make clarifications on the information provided, submitted a revised version on October 24.

     The CAD has rigorously examined HKE's report and confirmed that the flight cancellation incident did not involve any elements that would undermine aviation safety. The incident stemmed from the successive resignations of HKE's safety and emergency and procedures (SEP) trainers within a short period, and the newly recruited SEP trainers were not yet qualified to obtain the necessary approvals from the CAD. Although HKE outsourced the SEP training programme in mid-September, the training progress had been hindered. In late September, HKE made a management decision to cancel flights owing to the insufficient number of standby cabin crew for contingency during the Golden Week in early October. The report revealed the lapses in HKE's internal management and corporate governance, which included poor human resources planning and management, a lack of effective internal communications, underestimation of the impact of the incident and insufficient sensitivity to public concern.

     Against such a backdrop, the CAD believes that HKE's management has the responsibility to conduct a comprehensive review of its own corporate governance and governance effectiveness to prevent similar incidents from happening again. The CAD has noted that HKE expressed profound regret over the disruptions and the inconvenience caused to the affected customers. HKE has also undertaken that there will not be massive flight cancellation of a similar nature in future.

     A CAD spokesman today said, "HKE's report demonstrated that, after filling the vacancies and increasing the number of SEP trainers as well as carrying out a leadership reshuffle, HKE has regained its ability to provide steady flight services. To consolidate its services, HKE, however, must suspend the increase of new destinations, additional flights and new aircraft for new services for the time being. HKE should avoid recurrence of similar incidents by pooling resources together to optimise its internal management and corporate governance, and by consolidating its fundamentals. HKE should also undergo comprehensive and in-depth reform on a continual basis, which should include reviewing its corporate governance structure, enhancing human resources management and strengthening its external communications. Further business expansion can only be considered when the management problems are tackled at root."

     HKE admitted in its report that the root cause of the incident was inefficiency in internal management and corporate governance. HKE will not add new services (destinations and flights approved before the incident will not be affected) during a "consolidation period", between November 1, 2017, and April 30, 2018. HKE is fully committed to implementing a series of rectifying measures to raise its quality of service. The measures include:

(I) Revamping management, for instance to formulate a comprehensive enterprise risk matrix, which would include public relations, branding, finance and staff engagement, and to regularly review the risk index to strengthen governance and identify potential risks;

(II) Improving human resources management, for instance to hire more SEP trainers, to create managerial posts to oversee the regulatory training and development team, to hire more cabin crew members, to reappoint contract cabin crew and office staff on permanent terms and to advance the publishing date of the crew roster from the end of each month to mid-month to give its staff more time to plan for their rest time; and

(III) Improving external communications and risk management, for instance to enhance its customer hotline services and to engage a consultant to improve customer services and public relations.

     The spokesman said HKE had defined a few key performance indicators (KPIs) and aimed at achieving them within the "consolidation period". The KPIs include reducing roster changes per cabin crew per month to increase the stability of the staff's duty schedule, reducing the SEP trainers' headcount ratio per total crew number, increasing the standby cabin crew level, and augmenting the cabin crew complement. All these would help minimise the need to cancel flights due to insufficient standby.

     Having considered HKE's report and the company's proposed rectifying measures, and given the fact that the flight schedule of HKE has been steady in the past few weeks, the CAD has decided to accept the report. The CAD has requested HKE to periodically report on the progress of the implementation of the rectifying measures in the next half year, including the attainment rate of the KPIs. The CAD will continue to closely monitor HKE's operation, especially its performance in the coming travel peak seasons such as Christmas and New Year by the end of this year and the Lunar New Year early next year.

     The spokesman stressed that HKE will only be allowed to operate new destinations and flights when the CAD is satisfied that HKE has implemented various rectifying measures effectively.

Ends/Thursday, November 9, 2017
Issued at HKT 16:55