Hong Kong Airways as soon as once more needs to develop by launching lengthy haul flights, after that technique almost liquidated the airline again in 2019…
Hong Kong Airways eyes North America flights
Hong Kong Airways CEO Jeff Solar Jianfeng has said in an interview with Bloomberg that the airline intends to as soon as once more launch lengthy haul flights as of 2025.
Particularly, the airline needs to amass at the least three secondhand Boeing 787s, and use these for this service. So far as locations go, North America is clearly the goal, and the airline is evaluating the potential for service to Los Angeles (LAX), Seattle (SEA), Toronto (YYZ), and Vancouver (YVR).
Now, for some background on Hong Kong Airways, the service presently has a fleet of 21 Airbus planes, comprised of A320 and A330-family plane, that are primarily used for flights inside Asia. Nonetheless, the airline was once a lot greater… properly, briefly.
In 2017, the corporate started an enormous enlargement push, whereby the airline took supply of Airbus A350s, with the objective of changing into a very world airline. The airline ended up launching flights to america, together with to Los Angeles and San Francisco. I even had the prospect to assessment Hong Kong Airways’ A350 enterprise class.
Properly, that service lasted for all of a few years, and by early 2020, the service ended all lengthy haul flights, and dumped its A350s.
Hong Kong Airways had been hemorrhaging cash on its’ lengthy haul flights. It additionally didn’t assist that Hong Kong Airways’ guardian firm, HNA Group, wasn’t precisely in monetary spot both.
For a lot of months, the airline was teetering getting ready to liquidation, to the purpose that it couldn’t even pay its employees throughout some durations. Luckily the airline managed to restructure, and has shrunk again into profitability. The airline has gone from having over 50 planes, to having simply 21 planes.
Does Hong Kong Airways’ technique make sense?
Is there any advantage to Hong Kong Airways relaunching lengthy haul flights, when that effort almost ran the airline out of enterprise a number of years again?
I’m typically skeptical, given how poorly this labored out the primary time round. It’s notoriously tough to make cash on extremely lengthy haul flying, particularly whenever you’re not the dominant enterprise airline, with the majority of company contracts. Hong Kong Airways would wrestle to get excessive yield enterprise vacationers, because the airline simply received’t have the schedule, frequencies, or present relationships, of Cathay Pacific.
Making a living on these sorts of routes off leisure vacationers, particularly as a non-preferred airline, isn’t going to be straightforward. We’re again to seeing sub-$700 roundtrip fares from america to Hong Kong, and that’s not going to make airways any cash.
Now, Asia is in a bizarre spot relating to aviation, given the extent to which Mainland China’s worldwide journey demand simply hasn’t recovered. It is a blessing and curse for airways, since airways from Mainland China are working a lot smaller worldwide schedules than pre-pandemic.
It signifies that lots of vacationers from Mainland China are routing via different hubs. On the similar time, there additionally simply aren’t as a lot of them.
To Hong Kong Airways’ credit score, maybe beginning with used 787s would give the airline a greater price construction than flying with model new A350s. Although the particular point out of 787s makes me marvel — has the airline already sourced these jets, as a result of it’s a bit stunning to see an all-Airbus operator go this course?
My intestine tells me that this technique in all probability doesn’t make any sense, and exposes the airline to an pointless quantity of danger, with restricted upside. Is it attainable this finally ends up being mildly worthwhile? Perhaps. However I doubt it’ll be a goldmine.
On the similar time, I’ve to hope that executives on the airline know one thing I don’t, and aren’t simply attempting to run the airline into the bottom once more?
Backside line
Hong Kong Airways is planning on resuming lengthy haul flights, and is contemplating 4 locations in North America. The airline plans to launch these flights with used Boeing 787s as of 2025. I’m skeptical of this plan, on condition that the airline tried this earlier than, and it ended horribly.
May this work out higher, with a decrease construction, and a basically totally different business? Or is the airline setting itself up for failure once more?
What do you make of Hong Kong Airways’ lengthy haul progress aspirations?
