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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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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.
American Airlines’ decision to launch service from its Dallas/Fort Worth hub to Hong Kong and Shanghai is a strategic move to bolster its historically weak positioning in the US-Asia market, and is occurring at a time when some carriers in those markets are enjoying particularly favourable results on their service to North America and are rapidly expanding.
American is also positioning itself to capitalise on the growing demand between Asia and Latin America by funnelling passengers through its largest hub for connections onwards to Central and South America.
The moves by American – which also include axing its service from New York JFK to Tokyo Haneda due to unfavourable operating times – also show a diminished emphasis on Japan as a traditional stop-over as direct services become an imperative to attract and retain high-yielding business passengers.
Indonesia AirAsia and Tigerair Mandala have unveiled plans for further international expansion, with both low-cost carriers in particular targeting the Indonesia-Hong Kong market. Indonesia AirAsia, which is already the largest carrier in the Indonesian international market, is also planning to launch services to Vietnam and India.
Tigerair Mandala has announced the launch of services to Hong Kong from Bali and Surabaya from Dec-2013, supplementing its relatively new Jakarta-Hong Kong route. Indonesia AirAsia is preparing to also launch Surabaya-Hong Kong service in 2014 and is looking at serving Hong Kong from Medan.
The AirAsia expansion could result in the carrier widening the gap in Indonesia’s international market over Lion Air, which is the dominant player in the Indonesian domestic market but has been slower in pursuing international expansion. The forthcoming expansion from Mandala could also result in Tigerair overtaking Lion as a larger LCC group in Indonesia’s international market.
Delta Air Lines' recent outlining of planned expansion from Seattle to Seoul and Hong Kong reflects its continuing strategy of building the airport into an international gateway partially in partnership with Alaska Air Group, Seattle’s largest carrier. Delta has been steadily expanding its operations in Seattle during the last couple of years, a market it may deem more suitable for growing further into Asia than some of its existing hubs – evidenced by the transition of service to Hong Kong from Detroit to Seattle.
Largely absent from Delta’s discussion in the latest Asian expansion from Seattle is any cooperation with SkyTeam partner Korean Air, who has ample service from Seattle to Seoul.
Delta’s silence could be illustrative of a logic that alliances are not a cure all for network optimisation that became especially pronounced during 2012 with the landmark deal between Emirates and Qantas, Air France’s forging of a partnership with Etihad and Delta tabling plans to take a 49% stake in Virgin Atlantic. Those two carriers recently won the US Department of Transportation’s (DoT) approval to forge a trans-Atlantic joint venture whose launch will coincide with Delta’s introduction of Seattle-London Heathrow in Mar-2014.