Hong Kong Airlines is to expand its network into North America with the launch of non-stop flights between Hong Kong International Airport and Vancouver International Airport from June 2017 bringing a third operator into a market already served by Air Canada and Cathay Pacific Airways.
The carrier, part of the HNA Group, will offer a daily flight from June 30, 2017, initially using a 283-seat Airbus A330-200 but likely to be switched to the A350-900 once the first of its aircraft are delivered towards the end of next year. The new flight will be the first time in almost ten years that Air Canada and Cathay Pacific Airways have faced competition on this route - the now-defunct Oasis Hong Kong offered flights between June 2007 and April 2008.
Hong Kong Airlines has 15 A350-900s on order and is due to receive its first aircraft in August 2017 but it will not be deployed on scheduled long-haul flights until the final quarter of next year after an initial period of familiarisation on regional routes. The carrier has yet to confirm its operational plans for the aircraft which could see it used for flights into North America or Europe, although it is highly likely that the aircraft will replace the A330 on its existing Hong Kong – Auckland link.
“We need to consider whether the focus is North America or Europe or a mix of both, and whether we go into primary markets or secondary markets. All of that is still in play and open,” the airline’s assistant director of commercial Michael Burke told our media partner FlightGlobal during a recent interview.
The growth into North America represents a significant step forward in the airline’s international strategy. The main focus of its foreign services are into markets across China and Japan with Australia and New Zealand its only current long-haul destinations. The selection of Vancouver is a low-risk strategy given it is an estimated market size of almost 480 PPDEW (passengers per-day each-way), according to data for the last year (12 months to October 2016) from the AirVision Market Intelligence tool from Sabre Airline Solutions.
Air Canada currently operates a daily Boeing 777-300ER rotation between Hong Kong and Vancouver, while Cathay Pacific has two flights per day using the same aircraft type. The latter will grow its frequencies from March 2017 with the introduction of a third rotation which will operate on a three times weekly basis using an A350-900. This represents its first frequency growth on this city pair since the mid-2000s when it also previously operated a third rotation while Oasis Hong Kong served the market. This was suspended and the airline reverted back to its double daily schedule just months after its rival collapsed.
Hong Kong Airlines will be a much stronger competitor than its predecessor with the huge backing of HNA Group. The carrier started operations in 2002 under the name CR Airlines and was purchased by China’s Hainan Airlines in 2006. It currently operates 34 aircraft which includes nine Airbus 330-300 and nine Airbus 330-200 widebodies.
“As of today, Hong Kong Airlines has established a vast destination network covering over 30 major cities in the Asia Pacific. Our passenger traffic will reach a record high of 6.6 million, bringing our market share of Hong Kong airport to approximately ten per cent,” said Zhang Kui, co-chairman, Hong Kong Airlines.
Capitalising on Hong Kong’s prime location along the Maritime Silk Road and tapping the momentum of China’s ‘One Belt, One Road’ initiative, Hong Kong Airlines will continue to expand into new markets by adding new destinations such as major cities in North America, while also seeking to identify new routes to launch to untapped markets. These initiatives are set to meet the needs of China outbound passengers, particularly in the Pearl River Delta region. With the launch of a route to Seoul, South Korea this December, Hong Kong Airlines will have announced a total of eleven new destinations in the calendar year, including the Gold Coast – the sole direct flight from Pearl River Delta region.
It is estimated that its expansion into Vancouver will generate approximately 431 jobs in British Columbia (BC) both at the airport and in the tourism industry, $15.5 million in wages, $8.6 million in taxes and $24.4 million in Gross Domestic Product across the province. The daily flight will also create more options for BC businesses to reach customers, suppliers and investors in Hong Kong, according to Vancouver Airport Authority.
“Hong Kong Airlines is a well-known, family-friendly airline based in a world class city, and we are thrilled to be able to offer the public even more options to travel between Vancouver and Hong Kong,” said Craig Richmond, president and chief executive officer, Vancouver Airport Authority. “Every new airline that chooses to fly to Vancouver International Airport means more jobs for the local economy and creates new opportunities for British Columbians.”
A closer look at bi-directional O&D demand data on the Hong Kong – Vancouver city pair shows that annual traffic grew for the first time this decade in 2015 to their highest level since 2010. However, while O&D demand grew 10.9 per cent in 2015, yields declined with average fares falling 18.2 per cent to their lowest level since 2009. The local demand accounts for around 44 per cent of the total leg traffic on this city pair and highlights how Hong Kong Airlines’ regional connections from Hong Kong will help support the additional capacity being added into the market from its flights next year.