Hong Kong Airlines and HK Express - complex segmentation as they overlap on Hong Kong-Japan routes
Dual brand strategies are being put to the test as Hong Kong Airlines relaunches services to Tokyo and Osaka. Its last foray in these markets was before it separated from what became the robust and fast-growing LCC - HK Express. Tokyo and Osaka are HK Express' two largest routes and account for nearly a third of all seats. Ostensibly the two will focus on different market segments, but the core passenger group for each is the leisure traveller.
Hong Kong Airlines is preparing for significant long haul expansion, including codeshares to major Australian cities and its own deployment to North America and Europe. Tokyo and Osaka may indicate what premium traffic and discretionary premium leisure passengers it can win, as well as whether the market sees enough value and sophistication in Hong Kong Airlines or would rather pay more for established Cathay Pacific, or less for HK Express. Hong Kong Airlines and HK Express will jointly account for 24% of both Tokyo and Osaka capacity, compared with Cathay's approximately 43%. The LCC market between Hong Kong and Japan has grown rapidly to where LCCs account for 27% of the total market, including 23% to Tokyo and 35% to Osaka - all from near zero five years ago.
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