HK Express Update
HK Express Commercial Director Jonathan Hutt discusses the airline’s new commercial plan, interline strategy and opportunities for growing the network. The airline is looking at serving potential secondary airports in Japan, where HK Express already has nine destinations that account for 60% of its total traffic. HK Express’ initial interline to Phuket with Hong Kong Airlines has been successful, leading the partnership to be expanded to more HK Express destinations in Southeast Asia. HK Express also has begun interlining with Delta Air Lines and will soon begin interlining with Virgin Australia. A new partnership with Dohop will facilitate more interline partnerships.
Transcript
Jonathan Hutt:What is the new commercial plan for HK Express? I think the new commercial plan for HK Express is really a consolidation of what we have right now, really reexamining where we need to look at getting better synergy out of our network, finding new opportunities at slot-constrained airports, but also looking to some of the core markets we have which are underserved and finding new destinations which are really going to tap into the strong demand for short-haul traffic from Hong Kong outbound, but also tap into the Pearl River Delta area, which we have been doing in the past, but still allows us a huge room for scope. On top of that, we're looking to find far more efficient ways of really delivering and connecting the product that we're doing to optimise our revenue far better in the peaks and also to find new strategies to deal with the seasonal low periods and find a better synergy with the marketing campaigns that we're doing across the region. I think in the past, you know, the Hong Kong market has 4 carriers and at times they've really cannibalized business rather than growing the market. And I think what we're seeing moving forward is that we now realize that we have to have a better idea of where our core business is, where we need to develop that, and what our market segment is. With HKE, we are working with HKE in a very different way now. We do not have a very strong presence in the mainland China market, but as Hong Kong Airlines do. And so we are doing a lot more in terms of interline, whereby we can get a lot of that traffic from major cities such as Beijing and Shanghai where we do not have access, and using that to create interline into destinations which appeal to them in Southeast Asia, for example. So our network has in fact changed in the way we do our slot allocation to encourage more of that interline traffic. And in a very short period of time, we've seen some very concrete and promising results. So we have launched with Phuket, and now we have already looked at Saipan, Nha Trang, and Da Nang as new destinations for interline. Well, I think we are pretty blessed in the market that we have. 60% of our capacity is very much into Japan, and many people will see that as an element of risk involved in that. However, there is so much demand from the Hong Kong market that we're looking to, number one, add density on some of our core routes and also to find new open-short itineraries by opening up secondary cities in Japan, which we feel we are getting a lot of encouragement from provincial government and also local airports to do so. So that's very much part and parcel. Again, with mainland China, we're looking at where we need to be. The new airport in Beijing coming up may give us an opportunity to enter One of the most important markets in mainland China. I think originally interline was something we weren't really focused on, but when we did actually start to really make it one of our core targets for 2017 and 2018, we saw some very, very strong revenue growth and revenue quality was much, much stronger. So we have literally seen with the expansion of the interline with HK, the volumes hit. Close to $200,000 additional revenue per month per route from that. So indeed, though it is quite small, this is happening within a very short period of time. So we're only going to see that sort of revenue expand rather rapidly as we roll out our new interlines with Delta, hopefully with Virgin Australia and a few other airlines that we're working with now. Dohop platform is actually encouraging to us, in fact, in that it allows us to retain the conversation with the customer, a direct B2C type of connection, which is of course ideal for a low-cost airline rather than rely on a GDS type of interline arrangement where we don't really have that. So with this new type of Dohop platform, we're actually adding convenience to the, to the consumer. We're also actually allowing greater scope for ancillary sale. And furthermore, for follow-up with disruption notification, for passenger services, for loyalty. All of this with Dohop, it means that we can work not only closely with the passenger and another airline, but also with the airport to have a much more holistic approach of rolling out that interline at each and every touchpoint. You know, I think, you know, any low-cost carrier is always looking for strong partnerships as long as everyone's on the same page in terms of direction. And there's really strong network synergy, then there's scope for that. I think with uFly in the future, when we have much more alignment in our strategic direction and the synergies there, then there is scope for much more development. But in each and every case, we'll have to look at also looking at partnerships beyond the uFly Alliance to make sure that we have a very strong, holistic and multi-pillared approach to partnership. I like coming to CAPA because I come to learn and I come to meet. And I think even within the first morning of day 1, I've been able to take on board something which is very, very new and has allowed me to question not only what I did in the past, but what I'm doing now. And the fact that it's already encouraging that type of thought process even before the end of day 1 means I'm going to be taking a lot of that to share with everyone when I get back to HQ.
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