image

Cathay Pacific

Hong Kong Airlines adds major routes, in new threat to Cathay Pacific

City’s third-largest airline, which enjoys mainland backing, to fly to London, San Francisco and New York

PUBLISHED : Saturday, 02 September, 2017, 11:55am
UPDATED : Saturday, 02 September, 2017, 3:58pm

Hong Kong travellers will have wider options for long-haul flights, and airlines in the city will face even fiercer competition, as Hong Kong Airlines widens its global reach in a major effort to squeeze arch-rival Cathay Pacific Airways.

Hong Kong’s third-largest airline announced on Friday plans to launch new flights next year, going head to head with local top dog Cathay Pacific on routes to London, San Francisco and New York.

The mainland-backed airline got its hands on the first of 21 state-of-the-art Airbus A350 planes on Friday, and unveiled a new premium airport lounge in Hong Kong.

The airline’s push poses a fresh challenge to Cathay Pacific, which has already suffered huge losses in recent years, caused by competition from mainland and Middle Eastern carriers.

Only one plane lands in Hong Kong as Typhoon Hato wreaks havoc with flight schedules

Ben Wong Ching-ho, chief operating officer at Hong Kong Airlines, took a swipe at a Cathay Pacific’s dominance at Hong Kong International Airport, where it controls almost half of take-off and landing slots with sister airline Cathay Dragon.

“The competition says competition is not good, but I think competition is a good thing,” Wong said. “In all the major cities in Asia [there are at least two airlines]. We think Hong Kong can host two locally based airlines so hopefully, with some competition, we can offer a better selection for the public.”

Cathay Pacific has repeatedly said it welcomes competition as long as it complies with local rules.

“Competition is usually good for consumers and usually bad for firms,” Professor Guillermo Gallego, an expert in logistics at Hong Kong University of Science and Technology, said.

Discounted flights and hotel packages among Cathay Pacific’s bid to cater to ‘price-sensitive travellers’

But he said he did not think Hong Kong Airlines “should position itself as a head-on competitor to Cathay Pacific in terms of price and service quality. HKA may want to aim for a different strategy and in any case it has to compete also against Cathay Dragon.”

Cathay Pacific and Cathay Dragon are still two-thirds bigger – by number of seats from the city – than Hong Kong Airlines and its sister airline, HK Express. They fly to more than 100 destinations across the world, compared to under 60 for the other two.

Ellis Taylor, from aviation news magazine FlightGlobal, said Hong Kong Airlines’ move into long-haul flights could help it overcome its size disadvantage.

“The most obvious problem for Hong Kong Airlines is that it is a much smaller carrier than Cathay Pacific and it lacks the global reach to be an effective competitor,” he said. “To counter that disadvantage, it is relying on building partnerships with other carriers [to fly its customers where it cannot fly] to give it a much larger virtual network. Their step into launching long-haul flights is a major step forward.”

Those partnerships mostly involve airlines selling tickets for other carriers’ flights, but from places where they have a stronger presence than that carrier.

In the last year, Hong Kong Airlines has embarked on an expansion which started with flights to Auckland and Vancouver. It will fly to Los Angeles by the end of the year.

Its push into new territory has ominous echoes of a similar expansion by airline Oasis Hong Kong, now defunct, almost a decade ago.

But Chinese University aviation policy expert Dr Law Cheung-kwok said, unlike Oasis, Hong Kong Airlines’ push could work because of the financial backing of its main investor, the mainland conglomerate HNA Group.

Similarly, Law said: “The mainland aviation market and Asia region has developed rapidly in the past five to 10 years. The overall demand and maturity means Hong Kong is in a much better position to support a second long-haul airline.”

Cathay Pacific is pressing ahead with its own expansion, despite its financial woes, with its own delivery of 46 Airbus A350 aircraft. Hong Kong’s flag carrier on Thursday announced non-stop flights to Dublin, Brussels and Copenhagen, extending its presence across Europe.