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Hong Kong needs its own home-based budget airline

Edward Lau says Hong Kong should follow its regional competitors and welcome a home-based low-costcarrier, not least because it would provide travellers with more choice while promoting overall growth

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Hong Kong is rightly proud of its aviation industry. We have one of the best airports in the world, and some of the most talented aviation professionals anywhere. This city is truly Asia's hub for aviation. However, I'm confident we can do even better.

Many focus on the need for a new runway. But, as I write, Hong Kong's aviation industry is on the cusp of another huge opportunity that the wider world has already embraced. That opportunity is low-cost air travel. And best of all, in the short term, we don't need to lay any new tarmac to take advantage of it.

According to Amadeus, a ticketing database, 38 per cent of European air travel is now via low-cost carriers. In the United States, the figure is 30 per cent. Capa Centre for Aviation says that the market share of low-cost carriers has reached 57 per cent across South Asia. But in Hong Kong, it places it at just over 5 per cent. We have to ask ourselves what is driving the low-cost revolution elsewhere, and why Hong Kong is being left behind.

The answer to the first question is simple. All over Asia, more people want to fly. According to Airports Council International, Asia will be home to half of the 10 busiest airports in the world by 2016. Today's travellers often want to spend money on what they do when they arrive at a destination, rather than on how they get there.

Hongkongers are no different. Last year, a poll conducted by the University of Hong Kong's public opinion programme found that nearly 70 per cent of us planned to travel on a low-cost airline in the next 12 months. Some 81 per cent said we would rather spend more on what we do when we get to where we are going than on our air ticket. The problem is that, as Capa puts it, Hong Kong is limited in part by "a lack of low-cost carrier capacity".

To put it bluntly, Hongkongers lack choice. Demand outstrips supply. We miss out on what many markets across Asia already have - a truly integrated aviation sector, where low-cost carriers operate in partnership with traditional full-service airlines. This kind of airline mix would allow Hong Kong to pull in a balanced mix of high-value tourists from Southeast Asia, Japan and Korea.

But it isn't the only choice that Hong Kong is missing out on. Other markets provide stark comparisons. For example, Japan had no low-cost carriers based in the country until 2012. It also had some of the most expensive airfares in the world. Domestic passenger growth was flat.

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