Hong Kong’s Aviation Market Is Undergoing The Biggest Changes In Years

Hong Kong’s aviation market has been undergoing some big changes recently. At this time, the airlines do not only compete against each other but also face competition from the bullet train.

Anyhow, let’s take a look at some of the changes.

The Chinese Bullet Trains

China introduced bullet train service from Mainland China to Hong Kong last September.  Even though it might take longer to travel to Hong Kong by train, the train drops the passengers off right in Downtown Hong Kong. Accordingly, taking the bullet train might actually be more convenient. Additionally, traveling on the bullet train is cheaper than flying.

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Chinese Bullet Train
The Chinese bullet train travels at speeds of up to 120 mph. Photo: Wikimedia.

Travelers from Hong Kong can travel to 44 destinations in Mainland China and reach Beijing in 9 hours.

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The bullet train is definitely a threat to the airlines. The cheaper price and added convenience have led to a decrease in demand for flights.

Cathay Pacific profitable again

Cathay Pacific is Hong Kong’s oldest airline. It was founded in 1946. The airline has struggled in recent years; however, it seems like it might have finally turned things around. After posting a net loss of about $160 million in 2017, the airline is expected to report a profit of $293 million for 2018.

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Cathay Pacific Boeing 777
Cathay Pacific is the flag carrier of Hong Kong. Photo: Cathay Pacific.

The airline successfully implemented its “transformation program” and was able to cut operating costs while experiencing a growth in capacity and a strong cargo business.

The struggles of Hong Kong Airlines

While Cathay Pacific seems to have left the worst behind, at least for the time being, Hong Kong Airlines is struggling. The airline has been experiencing financial problems and is currently trying to restructure. Reportedly, it is considering reducing the size of its fleet from 38 to 28 aircraft by cutting 10 Airbus A330-200s.

Hong Kong Airlines A330
Hong Kong Airlines currently operates a fleet of 38 Airbus aircraft. Photo: Wikimedia.

Additionally, the airline has not been able to take delivery of the four brand-new Airbus aircraft, three A350-900s and one A330-300, it had ordered. Supposedly, Hong Kong Airlines is not able to pay for them at this time.

Cathay Pacific thinking about acquiring stakes in Hong Kong Airlines and Hong Kong Express

Last but not least, Simple Flying reported the other day that Cathay Pacific is considering the acquisition of a minority stake in Hong Kong Airlines. Cathay Pacific is losing market share in Hong Kong, and the purchase of a minority stake in Hong Kong Airlines might help Cathay Pacific in securing its future in Hong Kong.

Additionally, Cathay Pacific has confirmed that it is thinking about the acquisition of a stake in Hong Kong Express, even though it already owns the regional airline Cathay Dragon.

Taking part ownership in Hong Kong Airlines and Hong Kong Express would allow Cathay Pacific to eliminate the two competitors in the Hong Kong market.

With all the changes, it will be interesting to see what the future holds for the aviation market in Hong Kong.

What do you think of the recent changes in the Hong Kong aviation market?

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Caden Teo

The media around the world says that Cathay Pacific is interested in acquiring HK Express which is another Hong Kong based airline that is also a budget carrier. I am confused. Is Cathay Pacific acquiring both HK Express and Hong Kong Airlines or is it just acquiring one of them?… Read more »