The city's aviation watchdog has allowed Hong Kong Airlines to expand its fleet to 22 aircraft from 20 after an improvement to its on-time performance.
The Civil Aviation Department gave approval for the airline to add two Airbus 330s to its fleet last week pushing its fleet size above the cap imposed in August after the airline was plagued by prolonged flight delays during a No 10 typhoon. The airline could not clear its passenger backlog even a week after the typhoon.
The relaxation on the cap does not mean the department has lifted the restriction entirely. It was still monitoring the airline closely and approved the increase in its fleet on a case-by-case basis, the department's spokesman said.
The airline will take delivery of two more A330s and two A320s this year to replace existing aircraft. In light of the fleet expansion ban, Hong Kong Airlines has also postponed its plan to transform its sister company, Hong Kong Express Airways, into a budget carrier.
Yang Jianhong, chief executive of Hong Kong Airlines, unveiled in May a plan to meet upcoming competition from Jetstar Hong Kong, a joint venture between Qantas' Jetstar and China Eastern Airlines. Yang had expected Hong Kong Airlines' new budget carrier would start selling tickets before Christmas.
Hong Kong Airlines' chief operating officer Jeff Sun Jianfeng said the carrier was still looking at the budget market and would closely monitor how Jetstar Hong Kong's business model worked in the city.
After hiring engineers and ground staff, Hong Kong Airlines' on-time performance bounced back to 80 per cent from September 16 and was above 85 per cent at present, Sun added. It was as low as 70 per cent last July. Bad weather, ground handling changes and staffing problems had contributed to the performance problems.
After cutting its cash-draining, all-business flights to London in September and routes to Tokyo and Osaka, the airline had returned to the black, Sun added.
The row between China and Japan over disputed islands in the South China Sea also trimmed passenger demand between the two nations, as well as transit passengers going via Hong Kong to and from the countries.
An overdue payment to the Airport Authority, which reportedly amounted to HK$70 million, had been resolved, Sun said.
"We have now come to terms on the credit period about which we had different opinions before," he said.
Meanwhile, the airline this month restarted services to Maldives and will increase the frequency of flights to Hangzhou and Fuzhou.