The unveiling of a new corporate identity this week marks the latest stage of what has been a rapid transformation of Asian airline Hong Kong Express Airways (HK Express) from a full-service operator to a low-cost carrier in less than a year. With almost ten years of experience in the aviation business, the carrier, part of the HNA Group and a sister operation to Hainan Airlines and Hong Kong Airlines, has been reinvented to better meet the demands of the local market and enable the group to better compete in the emerging low-cost sector in Hong Kong.
Hong Kong has for many years been one of the most significant markets across the Asia / Pacific region and a major regional and international hub. Its gateway, Hong Kong International Airport (HKIA), last year welcomed more than 59.9 million passengers and handled 372,040 aircraft movements, representing annual growth of 6.1 per cent and 5.8 per cent, respectively.
“We wanted to establish a new brand for HK Express to reflect and support the amazing transition that HK Express has undergone in the past year, and the fresh, youthful and dynamic sense that the new design inspires fits perfectly with our ethos as Hong Kong’s one-and-only low fare airline.”Andrew Cowen
Deputy Chief Executive Officer, Hong Kong Express
Latest figures show that these increases were driven mainly by Hong Kong resident traffic which was up 13 per cent in December 2013, with visitor traffic growing at a shallower rate of 6 per cent over the same month in 2012. Passenger traffic to and from Mainland China, Taiwan and Japan recorded the most significant increases, due in part to the growing operations of LCCs at HKIA.
“The challenge was clear from my arrival,” Andrew Cowen, deputy chief executive officer, HK Express told The HUB during an interview this week. “There were already around 17 or 18 LCCs already serving Hong Kong as a destination and with the dynamics of the local market set to see further change, the opportunity to establish a LCC venture and gain first mover status in Hong Kong was a clear driver for the Board.”
For Cowen, who has been involved in numerous low-cost airline start-ups and has a CV that includes senior experience at some of the region’s latest low-cost arrivals including VietJet Air in Vietnam, Peach Aviation in Japan and PAL Express in Philippines, following roles at Jazeera Airways and Sama in the Middle East and Go in Europe, the transformation of the business has been an interesting experience. He joined HK Express in March 2013 with the task to lead the separation of HK Express from the group and establish it as a standalone LCC with its own independent management team.
“Many start-up airlines start as a blank sheet but this project was different,” explained Cowen. “In this part of the world there is a massive benefit to holding an AOC and route licences. The task has been to maximise the synergies of the two airlines while reestablishing HK Express as a standalone LCC operation and HK Express' existing AOC and traffic rights has helped us expedite this process.”
The transformation began in June 2013 and by September 2013 HK Express opened reservations for the first of its low-cost flights, launching services to five Asian cities comprising Chiang Mai and Phuket in Thailand; Kota Kinabalu in Malaysia; Kunming in China and Taichung in Taiwan from October 27, 2013. It has already expanded its network with new flights to Tokyo Haneda in Japan from November 7, 2013; Penang in Malaysia from November 14, 2013 and Osaka Kansai in Japan from November 21, 2013. This week It has announced the introduction of a new daily route to Seoul in South Korea, which will commence from March 30, 2014 as it now embarks on a major expansion.
“Already having the AOC was certainly a major asset for us and enabled us to work to this timescale,” said Cowen. However, it has not been as straightforward a process as a start-up business would have been. “We had to completely change the network to maximize aircraft utilisation and we are still overhauling third party contracts,” acknowledged the executive. This was all completed against a backdrop of new local competition as Jetstar Airways continued to seek approval for its own Hong Kong-based business. “Competition does concentrate minds,” noted Cowen.
To support the onward development of the business HK Express has recently appointed two further low-cost specialists: Zhi-min Ma is executive chairman and president and Luke Lovegrove commercial director. Ma, was previously president of West Air in China where he was responsible for guiding West Air through its transition into a LCC, while Lovegrove served previously as chief commercial officer of Peach Aviation in Japan having previously held several senior roles at Tiger Airways, including helping set up Tiger Australia, group business development for Tiger Singapore and commercial oversight for Tiger’s LCC joint ventures across Asia.
HK Express currently operates a fleet of five Airbus A320 aircraft with seating for up to 174 passengers. There are plans to increase the fleet by a further six aircraft this year and negotiations are currently taking place to finalise the acquisition of these additional aircraft. This will be just the first stage of expansion which will ultimately see the fleet grow to over 30 A320s by 2018.
“In 2014, we are planning on adding more than 12 new destinations to our network, offering our Guests the opportunity to travel to over 20 destinations across Asia with unbelievably low airfares”Andrew Cowen
Deputy Chief Executive Officer, Hong Kong Express
“Since going on sale as an LCC last September, we’ve experienced overwhelming demand. Almost 200,000 Guests have flown with HK Express already, with Tokyo and Osaka being the most popular destinations,” said Cowen. “In 2014, we are planning on adding more than 12 new destinations to our network, offering our Guests the opportunity to travel to over 20 destinations across Asia with unbelievably low airfares.”
HK Express will develop a “complementary” network to that of its full-service partner enabling the group to cover a broader range of destinations. “It is hard for a business to compete at the top end and bottom end of the market at the same time so the independent focus of HK Express will ultimately help the group to achieve more,” said Cowen.
The airline’s management remains tight lipped on its growth plans except to highlight that additional services could be introduced into countries already served. “We have to identify where people from Hong Kong want to go. This will underpin our home base and has already proved successful following our social media campaigns ahead of the selection of Tokyo and Osaka as our first new markets following our relaunch, which validated our own analysis,” he added.
With HK Express co-operating closely with its sister carrier Hong Kong Airlines and initially operating with a very similar brand, there have been concerns over possible confusion between the two businesses. The unveiling of the new corporate identity of HK Express this week has gone a long way to dismiss such fears. The familiar red and gold logo is stepping aside to make way for a funkier, fresher brand image that better matches the airline’s new direction.
The new logo and livery incorporate elements of Hong Kong’s iconic Victoria Harbour immediately associating the airline with the city it’s proud to call home. The ‘H’ and ‘K’ of HK Express are extended to remind the onlooker of Hong Kong’s stunning skyline, which is graphically reinterpreted on the rear and tail of the plane, all in a vibrant violet and red that breathe energy and life into the branding.
“The new logo and livery design will be rolled out across all of our branding towards the end of March. We wanted to establish a new brand for HK Express to reflect and support the amazing transition that HK Express has undergone in the past year, and the fresh, youthful and dynamic sense that the new design inspires fits perfectly with our ethos as Hong Kong’s one-and-only low fare airline,” explained Cowen. The first aircraft in new branding is due for delivery in late March.
You can learn more about the plans of Hong Kong Express at this year’s Routes Asia forum in Kuching, Sarawak, Malaysia as Andrew Cowen will be among the high profile speakers during the event’s Strategy Summit. You can learn more about the topics of discussion at the Strategy Summit, here, or more about Routes Asia, here.