Hong Kong Airlines expands its regional network ahead of long haul growth to Australia, N America

For Hong Kong Airlines, operating in the shadow of one of the world's largest network carriers means having to be nimble and run its business differently. Hong Kong Airlines has ridden mainland China's international surge to regional Asia and the airline, turning nine in November, is preparing to grow long haul, which will provide critical reductions in its cost base. Australia is the immediate opportunity but will likely be tested with charters over an initial period to secondary cities, where Australia offers open skies. It cannot serve the main cities as Cathay uses Hong Kong's full traffic right allocation there. Hong Kong Airlines' challenge across its network - and one day to India and North America, it hopes - will be to find enough niche opportunities.

Having partners outside the HNA group will be critical and also a sensible strategy given the large non-oneworld capacity at Hong Kong airport. A possible re-branding could help improve awareness and market reception while an IT switch could give it more control over its business. Hong Kong Airlines will need to be bolder and a first-mover. It is considering flexible European-style business class and, like Cathay, putting economy seats into the first zone of A330s, currently used only by business class seats. Hong Kong Airlines sees Cathay's and SIA's premium strategies unsustainable given weak returns. Hong Kong Airlines must find the middle ground in the market while also not stepping on its growing LCC, HK Express.