Hong Kong aviation

Virgin Australia takes on Cathay Pacific and Qantas with Hong Kong-Australia flights

Airline will have five Hong Kong-Melbourne flights a week starting in July, on route controlled by the other two carriers

PUBLISHED : Tuesday, 21 March, 2017, 3:20pm
UPDATED : Wednesday, 22 March, 2017, 1:06am

Hong Kong is set to get a boost as an international aviation hub for outbound Chinese travellers, with new flights between the city and Australia taking off this summer.

Cash-strapped Virgin Australia will join forces with mainland conglomerate HNA Group to launch flights five times a week from Melbourne to Hong Kong from July. The two are embarking on a partnership to compete on the Hong Kong-Australia route long dominated by Cathay Pacific and Qantas Airways.

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The new partnership ensures Hong Kong benefits from the rising number of mainland travellers flying overseas.

It comes at a time when mainland travel has been a boon to Australia, which received 1.2 million Chinese visitors last year, a figure that has more than doubled in five years. The forecast is for that to grow to four million in a decade.

Beijing and Canberra also sealed a deal late last year to have an unlimited number of flights between them; Hong Kong was not included as it negotiates its own air traffic deals.

John Borghetti, Virgin Australia Group chief executive, said: “Hong Kong and Greater China is a key pillar of our international strategy, allowing us to tap Australia’s fastest growing and most valuable inbound travel market.”

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Borghetti’s counterpart at Australia’s national carrier and dominant rival Qantas, Alan Joyce, said he relished new competition benefiting consumers.

We expect some serious discounting across the board
David Flynn, Australian Business Traveller

David Flynn, editor of the independent Australian Business Traveller website, said an airfare war would ensue. “This is the first threat in decades to the comfy Qantas-Cathay Pacific duopoly ... and it’s a fight those two airlines won’t walk away from,” he said. “We expect some serious discounting across the board.”

Ellis Taylor, an editor at Flight Global, said financially challenged Cathay Pacific had anticipated the new flights with price cuts in the past couple of months, but maintained “much stronger control” on the route.

Some 59,000 travellers a month flew between Melbourne and Hong Kong in the final three months of last year, according to government data.

Cathay will now control 60 per cent of bookings – with 21 flights a week – on the route, compared with 27 per cent for Qantas, with seven flights, and 13 per cent for Virgin, with five weekly flights, according to Flight Global.

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Australian regulators approved the team-up between Virgin and HNA, which owns a 19 per cent stake in the airline, meaning its units Hong Kong Airlines and HK Express can help fly Virgin passengers to and from the mainland. Virgin can also help the two Hong Kong airlines fly passengers to a range of Australian destinations from Melbourne.

Virgin Australia’s link to Hong Kong – potentially a connection with sister airline Virgin Atlantic to London – on the city’s own version of the “Kangaroo Route” that flies passengers one-stop between Australia and Europe also revives competition.

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That will help reaffirm Hong Kong’s hub status, whose long-term future was recently called into question by Qantas boss Joyce.

“There’s no doubt that some travellers will do the ‘Double Virgin’ and turn this into yet another Kangaroo Route option – albeit one with a long stopover before the Hong Kong ‘hop-over’ – and this will only remind people of Hong Kong’s utility as an Asian hub to the rest of the world,” Flynn said.