Hong Kong faces threat over hub status on kangaroo route
Competitive landscape on the flights to Australia has changed with the aggressive expansion of Middle East carriers in the market
Hong Kong used to be a major transit point for the kangaroo route between Europe and Australia, but the city is in danger of losing its shine as a hub for the extra-long flight with the rise of Middle East carriers in the Australian market.
Virgin Atlantic's decision to drop the Sydney-Hong Kong route from May and Qantas skipping the city for its Europe-bound service in March last year meant Cathay Pacific Airways would be the only airline serving the route via Hong Kong, which is also its headquarters.
"The role of Hong Kong as a transit hub for us has been changing," said Wyn Li, general manager in Hong Kong for Qantas. "It used to be a transit hub for European destinations such as London, Frankfurt and Paris for Qantas. But now, we would rather see Hong Kong as a transit point for the mainland or North Asia destinations."
The route was never short of competition. Singapore used to be the most important hub while Hong Kong and Bangkok were alternate stopover points.
The competitive landscape was never the same after Emirates started tapping the market aggressively six years ago.
The Dubai-based carrier swamped the market with up to two flights a day, deploying the large Airbus 380 to Sydney, Melbourne and Auckland from Dubai.
Its extensive network in more than 70 European cities has lured customers and boosted its share of the route to 21.2 per cent in 2012 from 5 per cent in 2001.
After the co-operation agreement between Qantas and Emirates began last year, the two carriers now have more than 45 per cent market share on the route.
Hong Kong seems especially vulnerable to Middle East carriers than Singapore since the latter is a hub for Star Alliance members, the largest airline alliance.
Singapore's Changi Airport saw passenger volume expand 4.9 per cent to 53.7 million in 2013, but the traffic in three of the past four years has grown 10 per cent per annum. In contrast, Hong Kong's traffic has only increased 5 to 6 per cent annually over the past three years.
Dubai International Airport surpassed Hong Kong as the third-busiest airport for international passengers in 2012. Dubai's passenger volume jumped 15.2 per cent year on year to 66.4 million last year, up from 13.2 per cent growth in 2012. Hong Kong handled nearly 60 million passengers.
With mainland carriers having started direct services to Australia from Shanghai, Beijing and Guangzhou, the competition for mainland-Australia traffic is mounting for Cathay.