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Hong Kong Express Will Continue To Operate Independently After Acquisition

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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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Route Network

Emirates Restores Passenger Services To 7 More Cities, Allow Transit Between 48 Cities

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Emirates Boeing 777-300er
According to a statement from the Dubai Tourism Board, from July 7, Dubai will allow foreign tourists to enter, and foreign residents holding a Dubai residence visa will be able to enter the country today.
Emirates will be offering scheduled flights for passengers from seven additional cities in the month of July. This will add the total number of destinations that Emirates is offering to 48.

According to Emirates, from July 15, the Emirates A380 will return to the sky and fly to London Heathrow Airport and Paris. No airline in the world is as closely linked to the A380 as Emirates. Before the outbreak, Emirates operated 8 A380 flights daily on the Dubai-London Heathrow route alone.

Other airlines only operate a few A380s, but Emirates’ A380 fleet exceeds 100. In January of this year, Emirates was operating a total of 123 A380s.


Added DestinationDate Of Resumption
Khartoum
from 03 July
Amman
from 05 July
Osakafrom 07 July
Naritafrom 08 July
Athensfrom 15 July
Larnaca
from 15 July
Romefrom 15 July

Emirates will be offering scheduled flights for passengers from the above seven additional cities in the month of July.

Passengers can now transit from Emirates’ network of 48 destinations through Dubai airport following the announcement that the city will be open for business and leisure visitors from 07 July, with new air travel protocols that facilitate travel for UAE citizens, residents and tourists while safeguarding the health and safety of visitors and communities.

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Route Network

Delta Air Lines Returns To Shanghai On June 25, First U.S. Airline Resume Flights To China

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Delta A350 Take Off In Toulouse
Delta Air Lines announced today that it will resume the Seattle-Shanghai Pudong route on June 25, the route will have a stopover at Seoul Incheon Airport and the route is operated twice a week.
From July onwards, Delta Air Lines will resume the Seattle-Shanghai Pudong and Detroit-Shanghai Pudong routes, which will also have a stopover at Incheon Airport and each route is to be operated once a week.
Since the suspension of Sino-US routes caused by the Covid-19 pandemic in February this year, Delta Air Lines is the first American airline to resume Sino-US routes.
At present, several Chinese airlines have announced flight schedules to the United States for July, including Air China’s route between Beijing and Los Angeles, China Southern Airlines’ route between Guangzhou and Los Angeles, and China Eastern Airlines’ Shanghai-New York route etc.

Shanghai neon city
Shanghai neon city, Nanjing Road

Due to the outbreak of the COVID-19 pandemic in China at the end of January, Delta Air Lines announced on January 31 that it will suspend all scheduled passenger flights to China. The flight suspension was extended at the end of April and it has continued till this day. However, as China’s domestic pandemic situation is controlled, the market demand for flights from the United States to China has increased significantly. The situation coincided with the China Civil Aviation Administration’s targeted strict restrictions imposed on the Sino-US routes as an effort to cooperate with the overall national pandemic prevention strategy.


Delta Cargo Flights To Asia
Delta Cargo Flights To Asia, Image by James Jones

After several rounds of “confrontation” between the relevant departments of the two countries, the current weekly flight volume is set at the scale of four flights each week between China and the United States, and American airlines have finally been approved to reopen Chinese routes.

According to the press statement released by Delta Air Lines, the Shanghai-Seattle route will be operated by the Airbus A350-900 aircraft, and Delta Air Lines is committed to providing clean and safe travel services for passengers.


“We are excited to resume our services between the U.S. and China, as economic and social activities start to recover, with a mission to connect the world, Delta is committed to getting our customers to their destinations safely and confidently, especially at this critical time. We are implementing unprecedented health and safety measures and practices, so customers are assured of ease and safety at all points of their journey.”

Wong Hong, Delta’s President – Greater China and Singapore

Delta Air Lines schedule for June, July and beyond:
RouteFlightDepartureArrivalOperating DaysFleet
SEA-ICN-PVG28723:304:45June 25-26 A350
PVG-ICN-SEA2889:157:15June 27-28 A350

Passenger service (June 25 – 30)
RouteFlightDepartureArrivalOperating DaysFleet*
SEA-ICN-PVG28723:304:45ThursdaysA350
PVG-ICN-SEA2889:157:15SaturdaysA350

Passenger service (July 1 – Oct. 24)
*Note: Transitions to A330-900 starting August 1.

RouteFlightDepartureArrivalOperating DaysFleet
DTW-ICN-PVG28319:0000:15FridaysA350
PVG-ICN-DTW2844:458:20SundaysA350

Passenger service (July 1 – Oct. 24)

In addition to Delta Air Lines, another U.S. carrier, United Airlines, has also been approved to resume scheduled passenger flights in China, and it should soon announce its latest related flight plans.

On June 19, the US Department of Transportation rejected China’s application for further increase in the number of weekly flights and insisted on maintaining the current plan for 4 flights each.

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