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Hong Kong

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Hong Kong

IATA Code
HK
Airlines
International Airlines serving this country (excluding codeshares)
Airports

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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HK Express plans for 50 aircraft in 2018 as it seeks all-new destinations for Hong Kong

5-Feb-2016 11:00 AM

Few low cost airlines have had route pickings as lucrative as those of HK Express. Although its hub airport of Hong Kong has significant slot restrictions and an underwhelming business reception to LCCs, there was significant pent-up demand. This was especially the case to markets in Northeast Asia, where LCC penetration remains lower than in Southeast Asia. HK Express' relaunch as an LCC in Oct-2013 fortuitously coincided with the depreciating Japanese yen and Korean won, further boosting outbound Hong Kong travel. In Feb-2016, 43% of HK Express' seats are to just three cities: Osaka, Seoul and Tokyo.

In Feb-2016 HK Express will operate 13 A320s but plans rapid growth to 50 by the end of 2018, effectively requiring the airline to take one aircraft every month for the next three years. HK Express plans to open four to six new markets in 2016, and at the end of the year will receive its first A320neo and A321ceo. Existing markets could expect additional capacity (frequency increase or replacing A320s with A321s). But as HK Express saturates core opportunities in existing markets, it will need to grow in the more classical LCC sense of stimulating demand in destinations largely new to Hong Kong. Already it plans to open new destinations around Southeast Asia (Laos, Myanmar) and the Pacific Islands (Guam, Saipan). Sister full service airline Hong Kong Airlines also plans to serve Saipan, highlighting the growing challenge of overlap between the two airlines, which do not have a defined dual brand strategy.

Cathay Pacific's difficult 2016: hedging loss, growth cuts, A350 delay, unions, 10 abreast response

27-Jan-2016 2:11 AM

Asia's flag airlines are a stately bunch. They have generally avoided the major public upsets of European and American peers while state or family/conglomerate ownership grants a long term mindset, and their renowned service casts a public halo. Cathay Pacific especially strives for continuity. Thus it is an upset when, as now, prospects for the year shift.

2016 was to be notable for Cathay, financially and strategically. Cathay expected further benefit from fuel as it came off hedges. Delivery of its first 12 A350s were to open new routes, restore frequencies and right size capacity. This has changed – but not because of the Chinese economy, as some will be quick to speculate. The continuing decline in fuel prices has likely seen Cathay's unrealised hedging losses increase (to approximately USD1 billion) with much to become realised losses. This is in an environment where mainland Chinese carriers are unhedged and other competitors have shorter hedging obligations, disadvantaging Cathay in an over capacity market.

Growth is expected to be cut owing to a further A350 delivery delay and pilot union "contract compliance" that greatly reduces flexibility and the ability to train new pilots, limiting expansion. These new challenges add to existing concerns over weak passenger and cargo yields, and a falling stock price.

Further integration with wholly owned Dragonair is still planned (possibly with a re-branding) while finally moving to 10 abreast 777 economy seating reduces unit costs but invites an unwelcome response from passengers.

HNA Group: four airlines form U-FLY Alliance, world's first LCC grouping, showing HNA consolidation

22-Jan-2016 2:42 PM

China's HNA Group was expansive even before the deals it has made over the past year, where it acquired stakes in various companies including Brazilian airline Azul, the lessor Avolon, the ground handler Swissport and the ride-sharing service Uber. The group became wider but still fragmented, with the companies hardly stitching together to deliver synergies, or at least to avoid competitive overlap.

That will start to change with four HNA airlines forming the world's first LCC alliance, the U-FLY alliance. They operated 67 aircraft at the end of 2015 and project a fleet exceeding 218 by the end of 2020.

U-FLY will be beneficial for HNA. The airlines – HK Express and three from mainland China: Lucky Air, Urumqi Air and West Air – will work together for revenue and cost synergies. In the long term this cooperative action will hopefully spread across the HNA group and integrate it more effectively. The alliance's objective is to "build U-FLY to span the globe, similarly to existing full service airline alliances", and it reflects the ambition and high aspirations that often characterise Chinese aviation. The existing global alliances have attractions that are structurally different to passengers and prospective airline members. U-FLY is likely to provide some cohesion to various HNA LCC brands. Other LCC groups – AirAsia, Jetstar, Viva and FastJet – already benefit from the power of a single brand structure.

American Airlines’ flawless merger ignored by Wall Street. 2016 should provide stronger performance

18-Jan-2016 9:27 PM

Few would counter the conclusion that, so far, the merger between American Airlines and US Airways has been nearly flawless. In late 2015 the company executed the most successful passenger systems cutover in the recent history of US consolidation. With a unified customer interface, American is now in a position to start exploiting some revenue synergies inherent in the merger.

In parallel with meticulously planning the complex technology transition to a single system, American has worked since the close of its merger three years ago to slash nearly USD3.6 billion in debt. Between 2014 and Sep-2015 the company paid USD350 million in dividends, and repurchased nearly USD4.5 billion in stock. Its top line profits for the first nine months of 2015 jumped 89% to USD4.3 billion. But American’s stock in 2015 traded at a discount for much of the year, as investors became spooked over the company’s efforts to match fares of ultra low cost competitors.

One of American’s top priorities for 2016 is to continue to improve its operational performance and to close the gaps with Delta, which has become an industry leader in many operational metrics. Operational performance is set to become an even more distinguishing factor in the consolidated US market place, and the battle lines between full service airlines and ULCCs could become more pronounced in 2016.

Air Canada in Asia: seeking JVs as up-gauging/density drives growth, with limited frequency increase

31-Dec-2015 8:40 PM

Developments in the Asia-North America market have been dominated in recent times by the growth of US airlines (American Airlines in Asia, Delta’s Seattle hub, United’s secondary China network), partnerships (Japan JVs, Delta’s flirtations with Korean Air and Skymark) and the greater presence of Asian carriers (ANA, Cathay, EVA and mainland Chinese carriers).

Air Canada is also making its move. Its growth may appear more subdued. This is because frequency growth has only been 15%; but RPKs have grown 46% (and ASKs 43%) due to up-gauging to larger aircraft, deploying more dense configurations (as on its 777-300ER fleet) and improving load factors. Air Canada would like frequency growth in Beijing and Shanghai, but has been unable to obtain commercially viable slots – even though American and Delta have in recent times.

Air Canada is still working through a JV with Star partner Air China and is looking for more partnership opportunities, including JVs. ANA is interested in bringing Air Canada into its trans-Pacific JV with United, but United is not so inclined. Air Canada would like to see partnerships develop better offline coverage, as it does not anticipate launching new Asian destinations. Another longer term objective is building up its sixth freedom strategy, which is so far concentrated on the US-European market.

HK Express begins year 3 as LCC; a greater threat to Cathay than Jetstar Hong Kong would have been

8-Dec-2015 1:16 PM

Jetstar Hong Kong flies after all: although Hong Kong rejected the application of the proposed LCC in Jun-2015, much of Jetstar Hong Kong's strategy and rationale has been realised by HK Express, which is now in its third year as a LCC. HK Express is arguably having a larger impact on travel and market stimulation – and competition to Cathay Pacific – than Jetstar Hong Kong would have. HK Express launched earlier, securing a sizeable slot pool, and its positive market reception is pressuring sister full service carrier Hong Kong Airlines to be more visible and competitive.

HK Express' successful transformation and growth is also giving confidence to its HNA Group owners to deepen its experimentation with LCCs; Chongqing-based West Air has taken up the LCC platform and others will follow – including on long haul flights. A strengthening HNA Group, across full service and low cost spectrums, will pressure Cathay in ways Jetstar Hong Kong would not have been able.

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CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.

This content is exclusively for CAPA Membership Subscribers

CAPA Membership gives you the latest aviation news and alerts, access to CAPA articles, reports, and our leading aviation data with optional premium add-ons.