Hong Kong Airlines to compete with Cathay Pacific for business travelers

AMONG the initiatives we expect to see in 2012 is the launch by Hong Kong Airlines of all-business class flights from Hong Kong to London Gatwick, in direct competition with Cathay Pacific Airways.

At the same time, Cathay will be introducing a new premium economy class in March 2012, although London is not in the list of initial destinations that named Singapore, Sydney, New York, Toronto and Vancouver. Cathay said London along with Los Angeles and San Francisco will be added subsequently.

Hong Kong Airlines’ initiative is a bold one, considering the state of the European economy. There are reservations about its sustainability. Singapore Airlines (SIA), which introduced all-business class flights to the United States in 2008, went through a rough patch soon after its introduction when the world lapsed into a recession and it had to cut back on the service. But that’s a different story as SIA, with good reputation and a healthy balance sheet to boot, is in a class of its own.

And Cathay most certainly is not going to stand idly by. Its business class fare costs considerably more than the US$2000 indicated by Hong Kong Airlines. However, nomenclature aside, the competition is likely to pit Hong Kong Airlines’ business class against Cathay\s premium economy, although according to Cathay’s General Manager for Product Alex McGowan, “trading down from business class into premium economy is not the game we’re in.”

Mr McGowan added: “It’s for people in economy who want more space, more exclusivity, and a few details like better catering and wine. It is also about capturing people who may want not to travel in economy but can’t afford to travel in business class.”

Hong Kong Airlines too must be eyeing potential upgraders but not excluding possible downgraders, which in the same way may explain why Cathay is axing first class and reducing the number of business class seats to make room for premium economy on its Boeing 777-300 ERs.

It would appear that Hong Kong Airlines’ initiative is ill-timed. There may yet be an ironic twist if the deepening economic woes continue to cause downward shifts of the market – such circumstances that have benefitted UK budget carrier EasyJet in targeting business travelers.

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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