Hong Kong International Airport

Lack of space in Hong Kong airport forces HK Express to take expansion overseas

Budget carrier launches new route under arrangement known as fifth freedom, where it will ferry passengers directly from Nagoya in Japan to Guam

PUBLISHED : Wednesday, 02 August, 2017, 7:22pm
UPDATED : Thursday, 03 August, 2017, 1:31pm

As Hong Kong International Airport nears full capacity, with little room for airlines to expand, local budget carrier HK Express has been forced to take its growth abroad, launching its first route between two cities outside Hong Kong.

The low-cost carrier on Wednesday announced new direct flights from Nagoya in Japan to Guam in the Western Pacific, which will start in October, under an arrangement known as “fifth freedom”. It added that it was pursuing more such flights, which allow carriers to pick up and drop off passengers at destinations not in their country of origin.

Aviation experts and a local legislator saw the move as another setback for the city’s aviation hub status, urging officials to start adding more capacity at the airport.

“HK Express has long lamented the lack of available slots, and has made no secret that it may have to expand outside,” Ellis Taylor, Asia finance editor at aviation news portal FlightGlobal, said.

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Airlines can generally only fly routes which either begin or end in their home country.

But the fifth freedom air traffic rights mean that the aircraft of country A, from a service originating in country A, is allowed to embark passengers and cargo in country B and disembark them in country C, according to Jae Woon Lee, an assistant professor at the Chinese University of Hong Kong’s law faculty and an expert in aviation law and policy.

Cathay Pacific and Cathay Dragon have operated fifth-freedom flights for decades – for example, they have flights from Taipei to Tokyo and Fukuoka, though they were largely for historical geopolitical reasons, and even from Vancouver to New York.

CAPA Centre for Aviation analyst Will Horton said that if HK Express’ new aircraft were due for arrival and “there are not local opportunities, fifth freedom can be more attractive”.

According to FlightGlobal’s Flight Fleets Analyser, the budget carrier has 19 narrow-body aircraft, and the airline confirmed it would add five more planes by the end of next year.

Taylor also observed that delays to the construction of the third runway at the airport were “impacting” expansion.

He added that Hong Kong needed to address its immediate runway capacity issues before the third runway was built if it wanted to retain its role as a hub for the region, or face being overtaken by the fast-growing Chinese airports.

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“You certainly don’t want more airlines to follow that route because we want them to keep building a [strong] regional hub,” noted Jeremy Tam Man-ho, a Civic Party lawmaker and professional pilot. He said the trend affecting local airlines was “a loss for Hong Kong” because if it had enough slots then the city would have had a stronger network, which is “the important point about the third runway”.

Lee suggested the politics of air traffic rights would come into sharper focus.

“The fifth freedom is controversial largely because State A and State B (and their national carriers) often view State C airlines as ‘stealing’ their own markets,” he said, adding that it would trigger calls for more protectionism in the region in terms of flying rights.

The Post previously reported that an extra 20 take-offs or landings had been added to the current 1,150 seen per day at Hong Kong’s airport – a first move to reach the target of 1,200 daily flights, though the growth is not fast enough for airlines.

Unlike traditional fifth-freedom flights, which sell through tickets to the final destination, sales for the budget airline’s new flights will be limited to between Nagoya and Guam only. Travellers starting their journey in Hong Kong will not be able to buy a ticket to Guam via the Japanese city.

That policy will allow the low-cost airline to maximise sales on both flights it operates from Nagoya to Guam, and separately to Hong Kong.

Pre-sales for the new route have gone well, sources said. HK Express’ thrice-weekly flight will go up against United Airlines, which flies the route twice a day.

HK Express started direct flights to Guam from Hong Kong last year but pulled them earlier this year due to high costs.