HK Express hopes to be in black after only two years as budget carrier

HK Express hopes to break even on its second year as Hong Kong's only home-grown low-cost carrier (LCC) by targeting popular northern Asian routes and younger travellers.

The airline, which changed from full-service to a no-frills operation last October, has more than doubled its passenger traffic, tripled its routes and cut costs by a third in the past year, said deputy chief executive Andrew Cowen, adding that its planes were now 10 per cent fuller.

"Hong Kong is one of the most LCC-competed destinations in the world," Cowen said, referring to the 18 other LCCs that operate in the city.

But LCCs accounted for less than 6 per cent of the air-travel market in Hong Kong, compared with 30 per cent in Europe and the US, and up to 60 per cent in Southeast Asia, he said.

"There is huge need for low-cost travel here and our traffic increase demonstrates LCC works in Hong Kong, even though it is a high-cost environment."

Unit cost, as measured by cost per available seat kilometre - an indicator of airline capacity - had been cut to five US cents since HK Express became a budget airline, while passenger load factor, a measure of capacity utilisation, had risen to nearly 80 per cent, Cowen said. That compared with 4.5 US cents for AirAsia, the region's leading LCC, he added.

"Converting a full-service airline into an LCC is not about doing two or three things, it is doing 2,000 to 3,000 things," Cowen said.