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Airline Operation

Hong Kong Express Will Continue To Operate Independently After Acquisition



As the first airline established in Hong Kong, Cathay Pacific has been a leader in the global aviation industry for decades. Whether it is route network, service quality or innovation, it has been regarded as a model by Chinese airlines.

21st Century Business Herald

However, such a good airline has suffered consecutive losses in 2016 and 2017, setting a first consecutive loss in its 73 years of existence, and the quality of service has also declined. In order to reverse the situation, Cathay Pacific launched a three-year transformation plan in early 2017. Now, the three-year transformation plan is coming to an end.

  • What kind of changes has Cathay Pacific made in the past two years?
  • What are the successful experiences and unsatisfactory?

On March 27, 2019, Cathay Pacific Airways announced that it will acquire Hong Kong Express this year. Why did Cathay, which has never been involved in low-cost airlines, suddenly make a move to Hong Kong Express? Lu Jiapei, customer and business president of Cathay Pacific Airways, accepted an exclusive interview with the 21st Century Business Herald on April 17th to explain the Central Committee.

Three years of transformation effectiveness

“21st Century”: Regarding the restructuring plan of your company, what changes have been made to the company’s structure in the past few years?

Lu Jiapei: In 2017, it was mainly the adjustment of the head office, especially the management. The purpose of the restructuring is not only to reduce costs, but to speed up the decision-making of the entire organizational structure. The restructuring of overseas branches was mainly done last year, except for one or two countries, the entire restructuring was basically completed.

“21st Century”: Can you more specifically explain what has changed within the company after the restructuring?

Lu Jiapei: We mainly look at how the organization can cooperate with the company’s development. For example, to create a new product, the entire process of communication will be in the same team, so the whole process will be clearer.

There are several major changes overseas. For example, in the airport area, the former terminal department has a special organization, and the airport freight service is also separated. Now it is centralized by the same director. Because the aircraft is especially a passenger aircraft, there are passenger luggage and freight transportation below, so the cooperation between the two teams is very important. In addition, e-commerce and online marketing talents are recruited overseas, because many things are now data.

“21st Century”: In the two years of the implementation of the restructuring plan, what do you think you have done right? What are the places that are not quite satisfactory?

Lu Jiapei: In fact, one or two years is a very short time for airlines, so in the past, we have mainly done the most basic – how to manage our income and improve service levels. In addition, we have long-term plans, such as the development of the fleet and route network in the future, to prepare for the opening of the third runway in Hong Kong. More importantly, the development of the entire Greater Bay District in the next few years, we have also spent a lot of thoughts on these aspects.

As for the unsatisfactory places, I will tell my colleagues to pay attention to three points. The first point is be down-to-earth. Second, to response faster. The world is changing fast, and you need to make changes in a short time. The third is that innovation must be bolder. Some time ago we did not do well in these three areas.

Hong Kong Express will continue to operate independently after the acquisition.

“21st Century”: Cathay Pacific is acquiring Hong Kong Express. After the completion of the acquisition, what plans does Cathay Pacific have for the development of express delivery?

Lu Jiapei: The basic plan is there. We hope that Express will continue to be a low-cost airline that will not turn it into another Cathay. Its operations will also be relatively independent. In fact, it is not yet fully acquired, but it is expected to be completed within this year.

“21st Century”: Why is Cathay Pacific involved in the low-cost market?

Lu Jiapei: In fact, we have been observing the development of low-cost airlines for a long time, and there are many examples at home and abroad (acquisition of low-cost airlines). We never said that we should not do cheap flights, just now the opportunity is coming. In addition, we have seen that the market has certain demand for low-cost flights, and this part is lacking by Cathay.

“21st Century”: After the acquisition of Hong Kong Express, Cathay Pacific accounted for more than half of the Hong Kong market, will the price system be more stable?

Lu Jiapei: Competition has always been very intense in Hong Kong. In addition to local companies, there are now more than 110 airlines flying to Hong Kong airports. There are also more than a dozen low-cost modes local plus foreigns. This kind of competition will certainly put some pressure on the price. In fact, non-low-cost carriers including us sometimes have very competitive prices. In the future, we will continue to do more promotion of fares.

As for the acquisition of the HK Express whether it would be more stable in terms of price, it is hard to say. Because the price is mainly determined by the market. For the customer, it is not just one of our airlines that can decide. But our view is that prices must be attractive, but safety comes first, and overall service and branding are important too.

“21st Century”: When the Dragonair was acquired, the two companies spent a long time to integrate. Now that Hong Kong Express is controlled by a completely different mainland company, will it bring integration problems?

Lu Jiapei: We hope that the operation of HK Express is relatively independent. Nowadays, many airlines in the world have developed low-cost subsidiaries, but at the beginning many companies have not joined together. Slowly, many companies have transit arrangements. So although the Express will operate relatively independently, we hope to make the transfer seamless (cohesion). Therefore, we will not spend a lot of time to integrate Express into Cathay Pacific. Instead, we must pay more attention to the transfer arrangements of our passengers.

Utilize the new positioning and coordinated development of the Greater Bay Area

“21st Century”: Is Guangdong, Hong Kong, Macau the Greater Bay Area an opportunity or a challenge for Cathay Pacific?

Lu Jiapei: A few weeks ago, I took a group of general managers to visit some companies in the Greater Bay Area, including some technology companies. There are many technology companies in the Greater Bay Area that are developing very fast. The things they develop may help the airlines. In turn, Hong Kong’s advantages in internationalization and marketization may help them to go out.

In fact, airlines are a very interesting role. On the one hand we are their customers, and many of the things they have developed may be useful to us. On the other hand, they are also our customers. In fact, we added ten new destinations last year, especially in foreign countries. Our new destinations and flights over the past few years, Boston, Dublin, Seattle, etc. are all IT centers. This will allow the Greater Bay Area to connect with the international IT center, which is a small contribution made by Cathay Pacific as a Greater Bay Area airline.

“21st Century”: In the planning of the Greater Bay Area, Guangdong will also add and expand several airports, will it intensify the competitive pressure on Hong Kong routes, how to deal with it?

Lu Jiapei: This issue can be seen from several different perspectives.

First, the market in the entire the Greater Bay Area has developed rapidly. Now that Hong Kong is building its third runway, both Shenzhen and Guangzhou have made new progress. But with so much investment and new construction, it is still unable to meet the demand, so the market is getting bigger and bigger, and it is definitely enough for everyone.

Second, as an international airline, we have a long history and more than 200 locations around the world. Our overseas branches are also responsible for sending guests and investment travel to Hong Kong and then going to the Greater Bay Area through Hong Kong. This is a big advantage for us.

There is also the development of the entire the Greater Bay Area. In fact, different airports, different companies, cooperation is very important. Although every airport on the ground is building new terminals and runways, the coordination of airspace requires each unit to participate in cooperation. We know that the National Civil Aviation Administration has spent a lot of thoughts to connect different airports and so on, and try to coordinate the development of each airport. In terms of positioning, the relevant documents of the Greater Bay Area are very clear: Hong Kong is the central hub of international air transport. As a Hong Kong airline, we are a very important player.

In addition, we have a lot of actions in the intermodal business. Since the beginning of the previous year, we have already had a joint venture in the maritime industry. We started with Hong Kong and Macao. In November last year, we cooperated with the Pearl River passenger transport. Now, basically all the shipping in the the Greater Bay Area has been connected. The next step is the bus joint venture. In January this year, the Civil Aviation Authority signed a new agreement with the Hong Kong SAR Government to develop a bus line through the Hong Kong-Zhuhai-Macao Bridge. We look forward to connecting the rails later, which will involve a lot of complicated arrangements and it will take time to study.

Albert K. Field Albert is my name, and travel the world is my game. I began my passion for travel at a very young age, I started this website as a strong means to further explore the world of frequent flyers programs (FFP). The relationship between customers and service providers in the aviation and hospitality industry always seems to be in opposition, however, since the introduction of United Airlines’ Frequent Flyers Programm since 1972*. This has significantly eased the middle spectrum between 2 parties. While the aim of airlines is still to generate more revenue; but for us,as consumers, are also given the opportunity to participate in the bargaining and exploiting from service providers. Living in a world of globalization where big data becomes vital for simulating successful economical activities, most of us will have to travel to other locations whether willingly or unwillingly, while you hearing all this fascinating stories about others, In fact, you too, can blend into the trend. It may not sound like how media illustrates, but indeed there are possibilities for us to have more spontaneous travel without getting held back by financial situation. My website consists of reviews of airline premium cabin products,airport lounges and stay reports of 5-star hotels and their executive lounges across the globe. In addition to all of that, I care the most about their frequent flyers program and loyalty program, which also includes banking partners. Plus, I spontaneously put up reviews and news update regarding premium water brands and restaurants. The purpose of this website is to share all of this information with my audience as well as inviting you to be part of my journey.

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Fleet Management

Air France Continues Fleet Renewal Plan With 60 A220-300s & 38 A350-900s On Order



A220-300 Air France

The Air France–KLM Group yesterday(17 December) has firmed up an order for 60 Airbus A220-300 aircraft as its continuous plan to modernise its single-aisle fleet. The aircraft are intended to be operated by Air France and the airline is scheduled to take delivery of its first A220 in September 2021. On December 11 Air France-KLM also approved an order for 10 additional Airbus A350-900s, summing Air France’s order to 38. As part of a long-haul fleet simplification strategy to replace the early retired A380s, these airplanes’ arrival will also allow the company to accelerate the departure of its Airbus A340s during the first quarter of 2021.

“We are glad to see that Air France is endorsing the A220 as a great step towards fleet optimisation for large network carriers. The largest Airbus A220 order from a European carrier to date speaks volumes on Air France’s ambitious sustainability drive. The modern and fuel efficient Airbus A220 will contribute to lower fuel burn and CO2 emissions significantly compared to older generation aircraft, We thank Air France for the confidence placed in Airbus and for its investment in our latest technology aircraft.” 

Christian Scherer, Airbus Chief Commercial Officer

Air France’s Current Long-haul Fleet Consists Of 107 Aircraft:

  • 15 Airbus A330s,
  • 4 Airbus A340s,
  • 2 Airbus A350s,
  • 9 Airbus A380s,
  • 68 Boeing 777s, 
  • 9 Boeing 787 Dreamliners.

Air France’s Future Long-haul Fleet Plans Only 4 Families:

  • Airbus A330s,
  • Airbus A350s,
  • Boeing 787s,
  • Boeing 777s.

Air Canada A220-300 Takes Off
Air Canada A220-300 Takes Off

The A220, formerly Bombardier CS300, is the only aircraft purpose-built for the 100-150 seat market; it delivers significant fuel efficiency and wide body passenger comfort in a single-aisle aircraft. The A220 brings together state-of-the-art aerodynamics, advanced materials and Pratt & Whitney’s latest-generation PW1500G geared turbofan engines to offer 20% less fuel burn per seat compared to previous generation aircraft. The A220 offers the performance of larger single-aisle aircraft. The A220 has all the credentials to win the lion’s share of the 100-to-150-seat aircraft market, is an ideal aircraft model to be part of Air France-KLM fleet renewal and consolidation plan initiated by the recently appointed CEO Benjamin Smith.

Air France is planning to use the 60 Airbus A220-300s to replace its fleet of single-aisle A318s and A319s.

“Rationalising and modernising the fleet is central to our effort to regain our leading position in Europe, It will strengthen our performance from both an economic and operational standpoint, and will help us deliver on our ambitious sustainability agenda. Offering a 25% reduction in fuel consumption compared to previous-generation aircraft, the Airbus A350-900 is a jewel of European expertise and a passenger favorite. We are excited to see it become a core asset of the Air France fleet.”

Benjamin Smith, CEO of Air France-KLM Group

Air France A350-900 Wing
Air France A350-900 Wing

The A350-900 marks a new phase in Air France’s fleet modernisation strategy. Within 5 years, more than half of the company’s fleet will be made up of new-generation aircraft, Air France took delivery of their first Airbus A350 named Toulouse in September this year with a brand new business class product, the airline will be replacing their older Airbus A340s with the A350-900s and potentially Boeing 777-200ERs and Airbus A330s in the coming years.

A350-900 Air France
A350-900 Air France

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Airline Operation

British Airways & China Southern To Codeshare On 14 Routes



British Airways A350 Wingtip

From the 2rd January 2020, British Airways(BA) and China Southern Airlines(CZ) will expanded their 10 codeshared routes since 2017 to 14; the new joint venture agreement was signed at Beijing Daxing International Airport today(17th December); the two airlines will start joint venture cooperation on 6 routes between China and the United Kingdom, and reciprocal frequent flyer program benefits will be updated to these routes as well.

Joint Venture Ceremony Beijing Daxing Airport
Joint Venture Ceremony Beijing Daxing Airport

British Airways was one of the very first foreign airlines to switch their entire operation in Beijing to the new Daxing International Airport, the airline is hoping to benefit from the new dual-hub model emphasised earlier by the former SkyTeam member – China Southern Airlines. China Southern Airlines will attach greater focus on their new hub at Beijing Daxing International Airport; the Guangzhou – Beijing dual-hub strategy was first initiated in 2018, with the airline’s aim to operate two extensive long-haul networks in both the north and south of China, with estimated 250+ aircrafts to be stationed at Beijing Daxing, 900+ flights daily to be operated by 2025.

China Southern will be steadily increase expand new routes from Daxing to Europe and the United States, and substantially increase the domestic network’s support for international routes and partners. Currently China Southern Airlines has attained approval from the CAAC on 6 international routes from Daxing, including one daily flight to London.

14 Codeshare Routes Between China and the UK:

As part of the joint venture cooperation, the two airlines will implement code-sharing cooperation on mutually operated routes, including the following:

  • Sino-British long-haul routes:
    • Guangzhou-London Heathrow, (CZ)
    • Wuhan-London Heathrow, (CZ)
    • Sanya-London Heathrow, (CZ)
    • Zhengzhou-London Heathrow,(CZ)
    • Beijing Daxing-London Heathrow(CZ) (2020)
    • London Heathrow-Shanghai Pudong, (BA)
    • London Heathrow- Beijing Daxing; (BA)
  • BA domestic codeshare routes:
    • London Heathrow-Edinburgh,
    • London Heathrow-Glasgow,
    • London Heathrow-Manchester,
    • London Heathrow-Newcastle,
    • London Heathrow-Belfast;
  • CZ domestic codeshare routes:
    • Shanghai Pudong-Shenyang,
    • Shanghai Pudong-Harbin,
    • Shanghai Pudong-Changchun;

*More route frequencies and the Chinese and British domestic routes connecting them will be expanded in the codesharing agreement.

“We are delighted to announce this joint business which will bring the UK and China closer together by providing British Airways and China Southern Airlines customers with a wide range of benefits. The agreement reinforces our commitment to boost tourism and business travel between the two countries and we look forward to strengthening the relationship further.”

Alex Cruz, British Airways’ Chairman and CEO

China Southern Airlines Tail B-1205

In the past two years, the business and tourism markets between China and the UK have to continued to enjoy rapid growth, 2,4 million passengers travelled between the two countries during the period from September 2018 to August 2019, a year-on-year growth of 18.2%. China Southern quickly opened new destinations to London Heathrow from Wuhan, Sanya and Zhengzhou during this period, so a joint venture with UK’s biggest airline has become extremely important. China Southern had started codeshare agreements with Qatar Airways, American Airlines, Finnair and Emirates earlier after its decision on leaving the SkyTeam alliance.

OneWorld is not the biggest airline alliance out there, and its representation in mainland China is close to non-existent, with China Southern establishes partnerships with so many OneWorld member airlines this quickly, one may start to think of their intention of becoming a OneWorld member, however, It is worth noting that while the cooperation between China Southern Airlines and OneWorld Airlines is getting much closer, Cathay Pacific and Star Alliance founding member – Lufthansa quietly started codesharing in several European and Australian routes, and China Eastern has also reached out to OneWorld’s Qantas. We can only expect that more and more cooperations between large airlines will break through the restrictions of the alliance in the future.

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