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Hong Kong aviation

Hong Kong in danger of losing its status as aviation hub, Qantas chief warns

Boss of Australian carrier says rising competition from Middle East and growth in flights from mainland China threaten Asian airports

PUBLISHED : Sunday, 19 March, 2017, 8:59pm
UPDATED : Monday, 20 March, 2017, 2:57pm

Hong Kong is in danger of losing its role as an international aviation hub because of intense competition, the boss of Qantas Airways has warned.

In an interview with the Post, Alan Joyce, chief executive of Australia’s national airline, said Middle East airports and explosive growth in flights from mainland China to global destinations threatened to undermine dominant Asian airports, a view shared by analysts.

Qantas’ Irish-born boss is the architect of non-stop 17-hour flights planned between Perth and London, the first direct service between the continent and Europe, which will see travellers benefit in bypassing Hong Kong or Singapore for faster trips.

Job cuts expected as Cathay Pacific targets 30 per cent savings in head office management costs

“The danger for a lot of the Asian hubs is that they were the premium hubs for a long time and what we are now seeing is the Middle Eastern hubs competing on the West and now the Chinese on the East and North,” Joyce said.

“There are now so many hubs, so many carriers operating the same strategy and competing against each other, and that will be a battle that is great for the consumers, and I don’t see any end in sight.”

Qantas has tipped non-stop Australia to Europe flights to Paris and Frankfurt as part of its future, a response – on top of partnering with Gulf carrier Emirates Airlines – to a need to carve out a new strategy on flying direct.

Some evidence of an unfavourable trend emerged last week as Cathay Pacific Airways, which reported an annual loss of HK$575 million, acknowledged that increased direct flights from the mainland were hurting Hong Kong’s flagship carrier.

Greg Waldron, Asia managing editor for aviation consultancy Flight Global, said hub activity was shifting but it would not be the death of it altogether.

At 17-plus hours, this Qatar Airways flight from New Zealand is the world’s longest

Singapore Airlines “has realised a counterpoint” – embracing the low-cost game to keep going, and diversifying away from a Singapore hub by creating and pouring resources into a new local Indian airline, Waldron said.

“They realised that the hub model isn’t going to work as perfectly and they are looking at other ways to make money,” Waldron said. “There is so much competition now and it has happened so quickly and I think it’s an insoluble problem for Cathay Pacific.”

Will Horton, an analyst with CAPA Centre for Aviation, said Singapore had adopted a more flexible approach to regulation and accommodating non-local airlines in the city state.

“[Regulation] has been to Cathay’s benefit but in the long term will hurt the Hong Kong hub, especially as Cathay tapers growth. This is ]about]... policy, for example Hong Kong being very restrictive about third country code shares. Hong Kong will need to seek new sources of growth, but many prospective foreign partners will have moved on to other hubs.”

Defending the Hong Kong hub, an Airport Authority spokesman said there was still strong demand in the region for global air traffic.