HK Express CEO Update

Transcript

Andrew Cowen:The difficulty that HK Express is facing, obviously, you know, based in Hong Kong, is an ongoing scarcity of slots, and yet, very happily, very strong demand. You know, people really responding very well to our low fares. So it's really a question of how do we resolve that conflict, in a sense. And our decision was to not complicate the fleet too much because the A321 is, of course, a very similar aircraft to the A320 and can be flown by our pilots with really very, very minimal additional training. So really sort of meet that increased demand with larger aircraft, but really with very, very little incremental cost. We expect to fly our A321s with 230 seats, so that's going to be 50 seats more than our 180-seat A320s. So that gives us very good capacity. addition, particularly on, you know, some of our more popular routes where, for various reasons, we can't increase frequencies. But it also answers a little bit what some people are saying, well, shouldn't carriers based at Hong Kong, given the scarcity of slots, you know, move to bigger aircraft? So we are listening to that as well. It's really transformed our commercial setup and ability to engage with our customers and really to give them a lot more choice in the different things that they want to purchase alongside their seat. It's not really understood, but LCCs actually to my mind, give a lot more choice than full-service carriers. You know, one-way fares, you know, meal, not a meal, extra, you know, etc., etc. You know, which seat you'd prefer and so on. So, you know, Navitaire has enabled us to significantly increase the range of options we can offer our customers. And it's helped us very much on the financial side as well. where we now get something like 20% of our revenues through ancillary channels, and that depends on, you know, the Navitaire system. It's very understandable that many Hong Kong people were quite concerned by, you know, the MERS crisis, given, you know, a history of SARS and swine flu and bird flu and so on. And certainly in the early days of the MERS crisis, it was not clear how long it would go on for and whether it would accelerate and grow or whether it would become contained. We were actually very happy that it seemed to come under control. I mean, aside from just the human factors, we were very happy that it seemed to come under control quite quickly. And although we saw quite a drop-off in demand When the Hong Kong government announced a red alert, that demand, I'm happy to say, has recovered back to normal already. It's not really that much of an issue. We are somewhat mixed, open-minded really still about dedicated LCC terminals versus combined terminals. I think I'd rather see airport costs go down altogether, rather than just, you know, through the avenue of an LCC terminal. Many of our customers are connecting, many of our customers might travel long-haul on business and then, you know, on an LCC for their regional travel, and, you know, that's facilitated by being in one terminal. We also understand the airport argument that extra terminals mean extra security staff, cleaners, and so on. So I think we favor a more hybrid terminal option. Also, a lot of the airport costs, in fact, not so much the airport itself, it's monopoly suppliers or duopoly suppliers. So I think part of the debate must be about creating more access for, you know, additional suppliers to come into airports, and that would certainly work to reduce, you know, general airport costs.

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