Cathay & HK Airlines enter Male as Hong Kong leverages hub and Chinese demand for the Maldives

It is better late than never for Hong Kong to use its proximity and scale with mainland China to cater to the booming China-Maldives market. Chinese nationals are the single largest inbound group to the Maldives, with 230,000 visitors in 2012 - more than double the next largest market, Germany, with 98,000 visitors in 2012. A few weeks after Hong Kong Airlines resumed service to Male, the main gateway of the Maldives, Cathay Pacific on 22-Jul-2013 opened reservations for four weekly flights from 27-Oct-2013. Reflecting inertia at the legacy carrier, Cathay spent over a year deliberating on whether to serve the Maldives, while Singapore Airlines and scheduled/charter carrier MEGA Maldives effectively cleaned up the market.

Cathay's services will bring stiff competition to SIA. Cathay and its Dragonair subsidiary have a far deeper China network than SIA and its SilkAir subsidiary, and connecting through Hong Kong is shorter than via Singapore. But SIA has a strong frequency advantage - double daily - and uses regional aircraft light on premium seats whereas Cathay will use a long-haul aircraft heavy on premium seats.

Although there is considerable wealth in the outbound Chinese leisure market, it is still price sensitive and primarily package-driven. Existing operators Hong Kong Airlines and MEGA Maldives should consider gaining scale to reduce unit costs.