Cathay Pacific is reportedly interested in purchasing shares of Hong Kong Airlines according to Bloomberg. The airline is reportedly interested in purchasing a minority stake in the smaller airline based in the same country. This comes a Cathay Pacific is losing market share in Hong Kong, its home.
The launch of a high-speed rail link, tied with an increasing market share held by Hong Kong Airlines has led to Cathay Pacific being forced to look at options for maintaining its future. One of the options reportedly being investigated is purchasing minority shares in rivals Hong Kong Airlines.
About Cathay Pacific
Cathay Pacific is the flag carrier of Hong Kong. Founded in 1946, the airline was one of the founding members of the OneWorld Alliance, which celebrated its 20th Anniversary one month ago on February 1st. The airline was the last to depart from the old Kai Tak airport in Hong Kong and is now based at Hong Kong International Airport on Chek Lap Kok Island.
In terms of sales, Cathay Pacific is the worlds tenth largest airline. Earlier this year, the airline held an inadvertent sale, when it accidentally priced all of the cabins at the economy fare on one route. Major stakeholders in Cathay Pacific include Air China and Cathay Pacific.
Hong Kong Airlines
Hong Kong Airlines was founded in 2006 and has a fleet of 43 Airbus aircraft. This includes 6 A350s. It is recognised as one of the top 20 airlines in the world by rating agency Skytrax. Skytrax currently rates the airline 4 out of 5 stars. The airline carries both passengers and freight.
Hong Kong Airlines is similar to Cathay Pacific as also being based at Hong Kong International Airport. Additionally, in what was thought to be a publicity stunt the airline also offered error fares on a route back in August.
Hong Kong Competition
There is currently a lot of competition within the Hong Kong travel market. Once dominated by Cathay Pacific, recently two new major players have emerged. Hong Kong Airlines is competing with Cathay Pacific in the long haul market. Closer to home, a new high-speed rail link is providing competition on short-haul routes. 11 of Cathay Pacific’s mainland China short-haul routes are now connected by a high-speed rail link. The Bullet train in China costs half as much as Cathay’s flights.
Bloomberg was not able to name its sources of the potential purchase. The publisher also mentioned that it was unable to confirm the claim with the airlines involved, however, their confidential tip-offs can prove accurate. Bloomberg reports that Hong Kong Airlines said: “Hong Kong Airlines is here to stay and committed to sustaining our long-term growth. We have and will remain open to discussions with strong strategic investors.”
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