Budget carrier Hong Kong Express to add more seats

Airline pushing the limits to reduce unit cost and maximise slot usage

PUBLISHED : Tuesday, 20 October, 2015, 6:31pm
UPDATED : Friday, 23 October, 2015, 2:30pm

Budget airline Hong Kong Express will be the world’s first operator of an Airbus A320neo plane with 188 seats – eight more than its maximum at present – as it tries to maximise slot usage at Hong Kong’s overcrowded airport.

“The single biggest issue in Hong Kong is slots,” chief executive Andrew Cowen told the South China Morning Post. “So we have to utilise our slot pool as efficiently as possible.”

The move to cram more passengers on board is also driven by the airline’s need to reduce unit cost, which is particularly crucial for budget carriers like Hong Kong Express that is advertising fares as low as HK$22 on its second anniversary.

Four A320neo planes Hong Kong Express will take delivery next year will come with two seats more than the current maximum capacity used by peers such as Easyjet.

Cowen said even if that means a cost advantage of less than 1 per cent, “The key for smaller low-cost carriers (LCCs) like us is to keep finding ways to reduce the unit cost difference between us and the much larger LCCs we are competing with....We have to take every opportunity.”

He added his airline has driven down unit cost difference with leading budget airline AirAsia to just 15 to 20 per cent. AirAsia operates out of much cheaper cities than Hong Kong and with a much larger fleet.

Hong Kong Express’ current fleet of single-aisle Airbus planes consists of 13 A320ceos configured with 174 or 180 seats. These are the older models of A320neos (new engine options).

Cowen said Airbus’ redesign of the neos’ interior allows for six more seats in the original space of a lavatory row, while its latest “smart-lav” technology essentially tucks one rear lavatory into the galley to produce space for two more seats.

Its existing fleet will also be retrofitted to have 188 seats, he said. He declined to elaborate on the cost, only saying the investment should pay back “in less than a year”.

Hong Kong Express will also become the first operator in North Asia to fly the longer A321s that are configured with 230 seats, compared with a traditional 220-seat layout, when it takes delivery of four of that model next year, Cowen said. It plans to grow its fleet to 20 A320 family planes by the end of next year.

Cowen said the long delay for Hong Kong to approve the third runway makes slot and aircraft utilisation a more acute issue for airlines than elsewhere. “We have a number of routes where it makes more sense to put up a larger aircraft than to use up slot with extra frequency,” he said, citing Phuket as an example where the airline plans to deploy the larger A321.

The budget airline has also protested against the new levy regime the Airport Authority has proposed for financing of the third runway. Transiting passengers will be asked to pay HK$70, economy class travellers HK$90, and long-haul premium class passengers up to HK$180 extra under the plan.

Cowen said the burden on budget airline travellers is disproportionately high. Philip Herbert, Hong Kong Express’ government affairs manager, said economy class travellers are being unfairly asked to subsidise transiting passengers.

Cathay Pacific Airways has said transit traffic accounts for 40 per cent of its passenger volume.