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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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3,548 total articles

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96 total articles

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Cathay Pacific annual results: after a lost year, Cathay sees itself back on track - but to where?

15-Mar-2014 2:09 PM

Cathay Pacific's 2013 annual results show the carrier has emerged from its lost year, a period from mid-2012 to mid-2013 when it took sudden action to combat high fuel prices and aircraft maintenance by replacing 747-400s with 777-300ERs, making loss-making long-haul routes profitable almost overnight. During this time there was also large growth in short-haul sectors, which took time to mature. This was fuelled partially by strong regional demand as well as the strategic imperative to increase flights so as to maximise slots at its Hong Kong hub, thereby preventing competitors from using the precious few peak slots left. Any substantial peak hour slot increase is not likely to occur until a third runway is built, sometime after 2020.

The full year profit of HKD2.62 billion (USD338 million) shows a marked improvement over the HKD24 million (USD3 million) profit in 1H2013, when network adjustments were still under way. 2013's profit has been lauded, albeit an improvement from a low base: 2012's profit was only HKD862 million (USD111 million), representing a 0.9% margin. Cathay's 2013 margin of 2.6% is the third-lowest margin in recent times, even lower than 2003 during SARS, when the airline almost grounded its fleet.

This is not an encouraging growth platform, and the mood is considerably dampened by an increasingly competitive environment. Other airlines with stronger hubs are growing traffic, short-haul and long-haul, and this will only increase, further impacting Cathay – irrespective of a possible Jetstar Hong Kong launch. A new cargo terminal has arrived as Cathay concedes cargo is undergoing a structural, not cyclical, change. A CEO change from John Slosar to Ivan Chu occurs as Cathay seems to prefer to reminisce about the past rather than offer brave new strategies. Certainly other full service airlines are experiencing rocky times, but that is small comfort.

Chinese airlines pioneer new international strategies: JVs to overcome internal limitations

12-Mar-2014 1:00 PM

The use of multiple brands and JVs to overcome the antiquated and economic-limiting bilateral air service regime is well established. Malaysia based-AirAsia for example has an affiliate in Thailand to access local routes Thai regulations would not permit it to fly with a Malaysian licence. The model is common with Southeast Asia’s LCCs, and present in Latin America with the Viva LCC group. But Latin America is home to multiple JVs from full-service carriers; Colombia’s Avianca has a unit in Brazil, to name but one.

Airlines in the world’s second-largest market, China, are also forming overseas joint ventures. LCC Spring Airlines has announced Spring Japan while in Jun-2014 regional French carrier Aigle Azur will commenced Paris-Beijing flights after full-service Hainan Airlines purchased a stake.

But whereas other Asian and Latin American carriers establish JVs to overcome external limitations – the bilateral regime's ownership and control restrictions – Hainan and Spring are establishing JVs to overcome the internal limitation of Chinese regulators limiting access to lucrative international routes. This is a new approach to ownership, and may grow even beside gradual international liberalisation efforts.

Xiamen Airlines' 787s could target Fuzhou-New York, the largest unserved trans-Pacific route

7-Mar-2014 12:39 PM

The largest unserved trans-Pacific route by many accounts is between a well known city – New York – and one few have heard of: Fuzhou in China's Fujian province. The unexpected destination may have a low profile but is rich in history: Fujian people are known for their migratory habits and comprise large parts of the overseas Chinese diaspora, where they have created economic activity, from Chinese restaurants to bus services. Besides Chinatown, New York City even has a "Little Fuzhou". Ties remain strong, and in Mar-2013 there were an estimated 201 people travelling from Fuzhou to New York City each day, according to Amadeus Air Traffic.

All of this traffic moves via intermediate hubs, but in the near future Xiamen Airlines could consider deploying its forthcoming 787 Dreamliners on the Fuzhou-New York route. Xiamen would take some beyond traffic, but would make inroads in the point-to-point Fuzhou-New York market. That would be to the detriment of Cathay Pacific, the largest carrier between the two cities, as well as China Eastern and Air China, which are also the main operators on the market.

However, Xiamen Airlines may not find it as easy as that: Fuzhou-New York is a heavy VFR market that lacks premium yields to sustain the non-stop service. But Fuzhou-New York may be the most promising long-haul route for Xiamen Airlines' 787s. Xiamen Airlines is primarily a domestic carrier and China's most consistently profitable carrier. It is rightfully hesitant to embark on long-haul operations that are being encouraged and pushed by the government and it will not help that some members of Xiamen's recently-joined SkyTeam alliance are apparently giving the carrier a cool reception.

Tigerair Mandala slashes capacity and aircraft utilisation levels. Will other Asian LCCs follow?

19-Feb-2014 10:00 AM

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.

Cathay Pacific consolidates Middle East network as competition grows in local and source markets

7-Feb-2014 1:07 PM

Cathay Pacific is consolidating its Middle East network, largely prompted by a flood of capacity in the Middle East-Philippines market. Passengers from the Philippines alone often comprise half or more of Cathay's Middle East flights. The Middle East-Philippines market has grown rapidly, led by a 70% increase in UAE-Philippines capacity as Cebu Pacific launched long-haul flights and Emirates and Etihad increased capacity.

The smaller Saudi Arabia-Philippines market has grown by over 60%. The result has been over-capacity with no winners as the market is intensely price-driven by contractors seeking seats for Filipino migrant workers. Cathay's reductions, while small, are likely only the start of needed consolidation between the Philippines and Middle East.

Cathay is particularly at the losing end as its once-tidy Philippines-Middle East market has come under Gulf and LCC competition that can offer lower fares and more direct services. Some Philippines-Middle East markets require two stops due to triangular routings, which are being discontinued. Also discontinued are services to Jeddah and Abu Dhabi. Air Seychelles, 40% owned by Etihad, introduced Abu Dhabi-Hong Kong services in 2013.

While Cathay may not experience such fierce and sudden competition changes elsewhere in its market, it is an unwelcome example of what such vibrant market conditions including more Gulf, LCC and non-stop competition can do to its network, which has partially relied on traffic other carriers could not or did not bother to carry. While that has been a smart network foundation, it is also a shifting one, as European carriers and even Singapore Airlines have found.

And then there was one: Virgin Atlantic's withdrawal leaves BA as only European airline in Australia

7-Feb-2014 11:47 AM

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.

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