For some small operators, a merger is perhaps the best survival tactic in the cutthroat aviation industry.
Hong Kong's two small money-losing airlines, which have a common shareholder, are synchronising routes and integrating management and sales operations to seek elusive profitability, according to company sources.
Hong Kong Airlines has merged its management team with that of Hong Kong Express Airways, laying off 14 pilots in the process.
HNA Group owns a 45 per cent stake in each of both carriers while casino magnate Stanley Ho Hung-sun and other individual investors own the rest of Hong Kong Express. HNA also owns Hainan Island's Grand China Airlines and is planning to list it in Hong Kong.
To rationalise resources, the two carriers will combine their management teams and their sales and marketing functions. Under the new structure, Hong Kong Express president Ronnie Choi and Hong Kong Airlines chief executive David Lui will jointly handle corporate development.
Until now, the two airlines have competed for air rights and aircraft resources, even though they have a common shareholder.
Hong Kong Airlines rejected the suggestion that an expansion slowdown was behind the layoffs. Chairman Ren Weidong had unveiled a plan a year ago to expand routes to 30 cities and the fleet size to 40 aircraft by 2010.