Transit in the other direction, inbound to mainland China, will remain banned at a time when China's aviation regulator has severely limited the number of international flights due to concerns over the spread of coronavirus.

That has caused ticket prices for those looking to return to China to soar.

Cathay will be the main beneficiary of the new policy, which the South China Morning Post reported was aimed at helping students resume studies at overseas universities, given rival Hong Kong Airlines flies only regionally in Asia.

Cathay Chief Customer and Commercial Officer Ronald Lam said on Wednesday that opening mainland transit flights would improve its passenger volumes and that it could gear up at short notice to add flights.

He said one-third of Cathay's passengers were transiting the airport at present for connecting flights, down from around 40 per cent to 50 per cent before the pandemic when mainland passengers were allowed to transit in both directions.

Cathay on Wednesday reported a record first-half loss of HKUS$9.87 billion (US$1.27 billion) and warned it did not expect a meaningful recovery in passenger demand for some time.