Dragonair plans to reduce capacity by 13 percent to cut costs.

The Hong Kong-based carrier, a unit of Air China-affiliated Cathay Pacific Airways Ltd, will reduce flights between Hong Kong and Sanya to five a week and suspend flights to Dalian, Shenyang, Guilin and Xi'an from June.

It will use smaller A320 or A321 jets on 10 flights a week to Shanghai, it said on Apr. 17. Currently it operates 13 flights a day between Hong Kong and Shanghai.

"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," said Chief Executive Officer Kenny Tang.

The airline will also park its last operating freighter - a Boeing 747 jet but will continue to provide cargo services using space in its passenger aircraft.

It has filed an application to the Hong Kong SAR government to launch two daily flights to Guangzhou from September. The service will offer more connectivity via Hong Kong from Dragonair's regional destinations including India, Japan, South Korea, Thailand, Malaysia and Taiwan into the Pearl River Delta region, the carrier said on Apr. 17.

The carrier will also adjust flights to other countries, including Japan.