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One of two administrative regions of China, Hong Kong has experienced an advancing aviation industry for a number of years. Hong Kong's only civil airport is Hong Kong International Airport (HKG), a leading passenger gateway in Asia and one of the busiest airports in the world in terms of international passengers and cargo flights. With over 85 airlines, HKG is the hub for Cathay Pacific, Dragonair, Air Hong Kong, Hong Kong Airlines and Hong Kong Express. Although Hong Kong does not have a national airline, Cathay Pacific would be the closest to such. The Civil Aviation Department is the aviation authority in Hong Kong, responsible for providing air traffic control services as well as reporting to the Government.
Airports in Hong Kong
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Indonesia’s Tigerair Mandala is boldly slashing capacity by about 40%, hoping to lead by example as it responds to overcapacity and challenging market conditions. The capacity cuts will reduce the carrier’s average aircraft utilisation rate to less than nine hours, which is very low for an LCC operating a new fleet of A320s.
Reducing utilisation is an unusual move in Asia’s low-cost sector, where expansion continues at an ambitious rate despite signs of overcapacity in several major markets including Indonesia. But reducing utilisation and even temporarily grounding aircraft is a more common response by LCCs in other regions during periods of low demand.
More Asian LCCs should consider adopting the strategy used by leading European LCC Ryanair, which parks up to 80 aircraft every winter. So far only tiny Tigerair Mandala, which is roughly number 35 among the 47 LCCs in Asia-Pacific, has taken the initiative.
And then there was one: Virgin Atlantic's withdrawal leaves BA as only European airline in Australia
It is no mere coincidence that, just as Virgin Atlantic announced an end to its Hong Kong-Sydney services, thereby withdrawing from the Australian market, an ad from Australia's largest travel agency proclaims: "There are hundreds of prices and ways to get to the UK and Ireland from Australia."
The Australia-Europe market has undergone profound change, each step adding more competition. Gulf carriers occupy a powerful presence, there are new and expanded entrants like China Southern and Garuda Indonesia, Qantas partners with Emirates while British Airways and Cathay Pacific, as well as Air New Zealand and Cathay, have become friends. The result of these partnerships and new carriers is to offer more options, opening up multiple destinations in what is a fragmented market. London-Sydney is the largest market between Europe and Australia, but accounts for only around a tenth of passengers in that market.
Pressure by Delta Air Lines on Alaska Airlines in Seattle continues through service additions on routes where Alaska is the dominant or lone carrier – Vancouver and Fairbanks, Alaska. The latest moves underscore Delta’s build-out of Seattle during the last year to solidify connecting traffic for its gateway to the Pacific, and the now familiar increasing competition with its long-term partner Alaska Airlines.
Alaska is all too aware of Delta’s encroachment, evidenced by the recent acknowledgement of Alaska’s management that the two carriers have no plans to codeshare on Delta’s recently announced spate of new US domestic north-south markets from Seattle to feed the legacy carrier’s expanding international network from Tacoma International Airport.
As it works to add service to six of Alaska’s top 10 domestic markets from Seattle by Sep-2014, Delta during the next year also plans to compete with Alaska by launching service from Vancouver to feed its international operations in Seattle. The new service not only continues to heighten tension with Alaska, but also adds a new layer of competitive dynamics to carriers offering service to Asia from Vancouver, which is just 204km north of Seattle.
As Delta Air Lines continues a seemingly open attack on its partner Alaska Air Group at its Seattle hub, Alaska Airlines is stressing that alliances like its long-time pact with Delta are complicated. Its overall message is that it will work with Delta where it is mutually beneficial and compete vigorously as Delta continues its encroachment.
Delta’s latest moves are in two of Alaska’s key north-south markets on the US Pacific west coat – Portland and Seattle. Ironically, Delta seems to be practicing what Alaska executives recently stressed to analysts – removing emotion from evolving competitive dynamics. As Delta continues its moves into Alaska’s markets unabated, it certainly is showing no emotion as Seattle continues to rise in prominence in Delta’s domestic and international network.
Just how the current competitive build-up by Delta in Alaska’s markets will affect their long-term relationship is uncertain. But in the meantime Alaska continues to post financial results that are among the best in the US industry, which means that it has a strong foundation from which to defend itself.
US Airways believes it can recoup lost revenue triggered by a 16 day US Government shut-down after recording reasonably solid 3Q2013 results, including higher than expected unit revenues for the three months ending 30-Sept-2013.
As the outcome of the US Department of Justice (DoJ) challenge to block the merger of American Airlines and US Airways is tough to predict, both carriers are moving forward in network expansion on a stand-alone basis. For US Airways it means international expansion from its Charlotte hub as a means to close the gap in a variable financial performance from 2Q to 3Q, while American appears to be crafting a Pacific strategy that entails a build-up in Dallas/Fort Worth to strengthen its position in the trans-Pacific against United and Delta.
A 16-day US Government shut-down and continuing pressure created by the devaluation of Japan’s currency did not hinder Delta’s 3Q2013 earnings growth as profits improved by USD444 million year-on-year to USD1.2 billion (excluding special items).
With corporate demand holding steady and holiday bookings looking relatively solid for Nov-2013 and Dec-2013, Delta CEO Richard Anderson is declaring the carrier will post an all-time record profit during 2013.
Delta throughout much of 2013 has been riding a wave of positive momentum despite some miscalculation in the spool-up of its Trainer refinery, and the continuing pressure from the devaluation of the Japanese yen. Even as it makes proclamations of record profits for 2013, Delta’s CEO Richard Anderson stresses that the carrier is keeping its head down as it works to continue the carrier’s advancement.