Hong Kong-Singapore Travel Bubble Bursts Before It Begins

The travel bubble has burst even before it had a chance to inflate.

The city-states of Hong Kong and Singapore had planned to launch a "travel bubble" on Sunday that would have allowed one plane of 200 passengers to travel each way per day. The travel scheme is being observed quietly by immigration and health officials the world over to see how we might learn to fly once again.

But just before it was set to launch, the travel scheme was pushed back two weeks thanks to a fresh outbreak of coronavirus cases in Hong Kong. A high-society lady of a certain age appears to have spread Covid-19 among a series of ballroom-dance clubs. Of the 68 confirmed cases of the virus announced on Sunday in Hong Kong, two-thirds came from the dance clubs.

The postponement of the travel bubble has sent already-battered shares of Hong Kong's flagship airline, Cathay Pacific (CPCAF) , and its equivalent, Singapore Airlines (SINGF) , lower on Monday. Neither airline has any domestic business whatsoever. So they have been relying on freight cargo to stay afloat, along with a smattering of flights for students traveling to destinations such as the United Kingdom for university.

Cathay shares fell 4.2% on Monday and are now 31.9% lower in 2020. Singapore Airlines ended flat, but are showing a 35.8% loss this year. Those two airlines are the designated operators if flights do get off the ground.

Prior to a planned trip on Monday to Singapore, a client of mine here in Hong Kong had just concluded his Covid-19 test, at his own expense, on Saturday afternoon only for word of the delay to come through. He works for DHL and typically travels to Singapore at least a couple of times per month. There would have been a little leisure thrown in too, as he caught up with friends made during a decade living in the Lion City.

But you have to really want to make the trip. There are four Covid-19 tests required each time, one on each end of your travel. At HK$800 (US$102) a pop, it adds up, particularly when I consider the regimen for my family of four. That's HK$12,800 (US$1,632) for testing alone before we even get off the tarmac if we fancy a long weekend heading to the Singapore Zoo and a spin on the Ferris wheel, the Singapore Flyer, not really the best current choice of name, all things considered. My client will have to pay to take the test again since the results are valid for only 72 hours.

Air fares have also shot up. My client would be relying on company tickets bought before the pandemic. Now, a face-value economy-class ticket for one passenger on Cathay costs HK$10,659 (US$1,360). Multiply that by a family of four, throw in testing, and it's US$7,072 for a long weekend.

At least with the travel bubble, I would not have to pay for a hotel room for 14 days and quarantine on return to Hong Kong. I have to stay in a hotel for two weeks at my own expense if I fly back into Hong Kong from anywhere else, even though I live here. Can't do the quarantine at home. So that puts paid to any travel anywhere else unless you're desperate.

A lot of people are desperate to get out of Hong Kong, although we wouldn't do quarantine because we wouldn't come back. The political situation continues to deteriorate as the puppet government here persecutes pro-democracy and opposition leaders, at Beijing's bidding. On Monday, charismatic student leader Joshua Wong and his fellow activists Agnes Chow and Ivan Lam pleaded guilty to charges of inciting and organizing an unauthorized demonstration - basically, organizing an anti-government demonstration outside police headquarters - and face sentences of up to five years in prison. They have been denied bail ahead of sentencing, and jailed immediately.

Wong was nominated for the Nobel Peace Prize in 2018, alongside Nathan Law, who continues to coordinate pro-democracy activity from London while living in exile, and Alex Chow. The Hong Kong police want to arrest Law, too, as well as at least five other activists who have fled Hong Kong because, apparently, all opponents of the government here will eventually be locked up for some trumped-up charge or another. Alex Chow is studying for a doctorate at Berkeley.

Media tycoon Jimmy Lai, who runs Hong Kong's best-selling tabloid Apple Daily, was arrested in August as Beijing directs its lackeys in Hong Kong to round up its perceived enemies. Freedom of speech, freedom of assembly, freedom of thought are assaulted daily in Hong Kong, the latest petty example being that the national anthem of China must now be broadcast on all radio stations at 8 a.m. every day. It is now also a crime to disrespect the Chinese flag or anthem in Hong Kong, both of which are seen as symbols of political oppression here.

Law, elected to Hong Kong's equivalent of Congress, had already been kicked out of office, while Wong and Agnes Chow had already also been disqualified from running for office in Hong Kong for thinking unpatriotic thoughts. Or so the election officials guessed, since they gave no evidence.

A lot of Hong Kongers had become staunch fans of President Trump, who they view as the only world leader capable of standing up to Beijing. Now, with a presidency for Joe Biden confirmed, they hope he will continue to exert diplomatic pressure on China.

Ironically, travel operators in many Asian nations are hoping for success for Hong Kong's travel bubble with Singapore in their own bid to welcome back tourists from China. If the Hong Kong-Singapore link works, other Asian nations are likely to pursue such schemes with China and Australia. Hong Kong reportedly has nine other nations on its list as prospects for a mutual-travel agreement.

Meantime, a prospective bubble between Australia and New Zealand failed to materialize after Covid-19 surged again in Australia. The Baltic nations of Lithuania, Latvia and Estonia started mutual travel in May but the arrangement burst in September.

Hong Kong's Hang Seng index recovered from early losses to end essentially flat for the day, up 0.1%. It is still 6.0% in the red for the year so far.

Singapore's Straits Times index was one of the region's stronger performers on Monday, advancing 1.3%. But it is also well below water in 2020, down 11.6% year to date, as Southeast Asia muddles through one of the worst Covid-19 outbreaks in Asia.

Travel shares will tend to rise and fall with prospects for international travel. Hong Kong's social and political prospects, however, appear only to be heading for the worse.

At the time of publication, Alex Frew McMillan had no position in the securities mentioned.