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HK Express to grow to 15-20 aircraft in 2016, pursuing LCC hybridity with A321s and interlines

Analysis

HK Express, Hong Kong's only LCC, expects to add A321s to its all-A320 fleet, allowing it to grow, despite constraints on traffic rights and slots. HK Express in Oct-2015 will mark two years as an LCC. HK Express should carry over two million passengers in 2015, and end next year with 15-20 aircraft, including 5-10 A321s.

The carrier has cut over from Travel Sky to Navitaire, enabling connecting itineraries and stronger control over ancillary revenue products. Ancillary revenue accounts for approximately 15% of the airline's revenue, with HK Express CEO Andrew Cowen targeting 20%.

Initial connections between HK Express flights could grow to connecting to/from sister carrier Hong Kong Airlines, with later interlines to/from other carriers that want to use Hong Kong's hub position. HK Express moved into profitability in Dec-2014 and was profitable in the first quarter of 2015, projecting a full year of operational profitability in 2015.

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