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Hong Kong Airlines to increase fleet, expand regional presence
The Chinese airline reveals latest move in its bid to upend Cathay Pacific in the world's fastest growing airline market
By adding more than 50 new aircraft over the next four years, Hong Kong Airlines (HKA) is taking yet another step toward unseating Hong Kong flagship carrier Cathay Pacific from its position of dominance in the region.
HKA corporate governance chief Kenneth Thong told Bloomberg television last week that HKA has paid the deposit on four Airbus A380 aircraft orders, with six more pending. Each A380 carrier is priced at $375 million.
Reaction from at least one regional rival was blasé.
“We welcome and are constantly equipped to deal with competition," said Ivan Chan, corporate communication manager at Dragon Airlines. "Our long-term strategy of building a core network and providing quality services remains unchanged.”
According to a 2011 Bloomberg Businessweek article, Hong Kong Airlines handles less than 10 percent of outbound Hong Kong air traffic. But the carrier is moving aggresively to expand its market share against Cathay.
Hong Kong Airlines IPO is next move
A division of China’s HNA Group, Hong Kong Airlines plans to hold a $300 million initial public offering (IPO) in the third quarter of this year.
Funds raised will allow new aircraft purchases, a new training center for airline crews and construction of a new command post at Hong Kong International Airport.
The airline's 2012 plans also include 15 new aircraft and the start of all-business-class long-haul flights to London beginning in March.
While most Asia-Pacific carriers are deliberating on increases to passenger fees to offset expenses related to a new carbon trading scheme launched by the European Union, Chinese carriers have so far refused to abide by the new plan.
"China will not cooperate with the European Union on the ETS, so Chinese airlines will not impose surcharges on customers relating to the emissions tax," said Cai Haibo, deputy secretary-general of the China Air Transport Association, according to Reuters.
It appears the snub has not caused a rift between Europe and China, as HKA's Airbus order is likely to forge ahead.
HKA is already calculating its next move into the European market.
“We think the business connection between Asia and Europe is going to be in a very exciting state in the next couple of years, after the (economic) crisis is over,” said Thong. “What we’re doing now is planning for the aftermath.”