Born in 2013, Hong Kong Express is well known to Asian passengers. The company operates a network of 25 destinations, in particular to Japan (11 cities), Thailand (4) and Korea (3). Hong Kong Express also serves Taichung in Taiwan, the Mariana Islands and Ningbo in China, Danang and Nha Trang in Vietnam and Siem Reap in Cambodia. The company is owned by Chinese group HNA - which also owns Hainan Airlines - is heavily in debt. Hong Kong Express carried 4.1 million passengers on its 24 aircraft last year.
A drop in the ocean compared to giant Cathaywhich offers a network of 103 destinations on its 183 aircraft. Cathay carried 35.4 million passengers last year and made a profit of HK$2.4 billion (€265 million).
In fact, Cathay Pacific's acquisition of the low-cost carrier is a masterstroke, as it will give the Swire group - owner of Cathay - control of three of Hong Kong's four airlines - with the notable exception of Hong Kong Airlines, also owned by the HNA group. In terms of number of seats, Cathay and Cathay Dragon had in 2018 a market share from 40% to 47% with the acquisition of Hong Kong Express.
It will also be the first major acquisition since the takeover of Dragonair in 2006, which has since become Cathay Dragon and specialises in regional flights, notably to China and Japan.
You can never say never in air transport
After denying that low-cost was having an impact on its traffic, Cathay Pacific has changed its tune in recent years, even raising the possibility last summer of creating a low-cost subsidiary to stem the decline in its market share in Hong Kong in the non-premium segments. Hong Kong Express appears to be the perfect opportunity, as the company has already been in existence for many years, is well established in the region and, above all, does not cannibalise the premium offer of Cathay's flagship brand.
Cathay CEO Rupert Hogg has already stated that the HK Express brand and budget concept will be maintained, reassuring travellers who fear a weakening of competition in Hong Kong.
At the press conference announcing the company's 2018 financial results, Cathay Chairman John Slosar justified Cathay's turnaround. " You can never say never in air transport, because it's a very dynamic business in which you have to be ready to change when opportunities arise. "he said.
