Hong Kong Airlines embarks on dual-brand strategy with Hong Kong Express to become LCC

Hong Kong Airlines is the latest carrier in Asia to embrace a dual-brand strategy of complementing the full-service airline with an LCC subsidiary. HK Airlines will transform sister carrier Hong Kong Express, currently almost identical to HK Airlines, into an LCC launching services in the northern winter 2013/2014 schedule - around Oct-2013, giving Hong Kong its first low-cost carrier. HK Express plans to grow to 30 all-economy A320s by 2018, which should make it larger than planned LCC Jetstar Hong Kong.

Partially owned by China's HNA Group, HK Express plans to be a hybrid LCC, offering connections within its operation and that of HK Airlines and other HNA Group carriers, plus perhaps even other airlines. A premium offering may be added in a latter stage of growth. While HK Express may be able to transform into an LCC, its success will depend on the freedom HK Airlines offers it.

The success of the overall dual-brand strategy will depend on HK Airlines effectively marketing itself as a premium full-service airline, which it has yet to achieve. With HK Express taking the lion's share of the short-haul market, HK Airlines will resume its planned long-haul aspirations. There is a path for this strategy to pan out, but it will likely take time with many revisions.