Feb 17, 2013

Cathay Dragon stalks new and less new HK competitors

All the signs are now aligned for a mega brawl to break out in Hong Kong skies by the middle of the year to wish nei hou 你好! to Jetstar Hong Kong. Gulp.

Ben Sandilands — Editor of Plane Talking

Ben Sandilands

Editor of Plane Talking

Mysterious image found in overnight emails

When photos of a rebranded airline start circulating in Hong Kong it is a clear sign that it is almost certain to happen, which is why most close observers of Cathay Pacific expect it to soon ‘align’ the look and feel of its Dragonair subsidiary to its own image as Cathay Dragon.

With its similarly styled network of single aisle and twin aisle destinations throughout China, the Cathay Pacific look alike, feel alike, Cathay Dragon, with a powerful dragon on its side, would encourage the parent airline’s enormous range of customers to remain loyal to it as Hong Kong experiences the upheavals, and temptations, of new or renewed competitors.

Which now looks much more likely to include a Jetstar Hong Kong venture than it did for a while late last year, when the application by joint venture partners  China Eastern and Qantas went missing in the wilderness of uncertain or unresolved policy settings that includes the SAR as well as the PRC.

Additional inscrutable email image

Jetstar Hong Kong has secured a policy benediction if that is the right term in Beijing, so the feeling is that Hong Kong will come to the same conclusion of its own volition as soon as there is a bit of space to put between the announcements. Jetstar HK has also made some reputedly very well connected appointments to its top management.

However the plot as well as the pollution has been thickening over the Pearl River delta skies ever since the various key interests in both SAR and PRC aviation decided it was more likely than not that there would be one or more low fare carriers based in Hong Kong sooner rather than later.

Which is why on current declarations Jetstar Hong Kong can expect to fly against a subsidiary of China’s Spring and Autumn Airlines  春秋航空 to use its full name, and a rebranding of Hong Kong Express  香港快運航空有限公司 in the same period, which should sort out who is going to be last to run out of money after a few ruinous years or more.

There  are other complications. In its always incredibly deep and minutely researched style CAPA recently looked at how Hong Kong Airlines, part owned like Hong Kong Express Airways by the mainland’s Hainan Group, has ambitions for countering Dragonair/Cathay Dragon in the keenly priced but more upmarket service stakes between the SAR and China, and no doubt some of the other nearby markets wherever traffic access looks possible.

This means that we have waiting in the pits of the  oriental version of an aviation Colosseum not Lions v  Christians so much as three LCCs, Jetstar, Spring and HK Express, ready to mortally wound each other, and Cathay Pacific and its Dragon lined up against Hong Kong Airlines, which earlier in its existence was its own worst enemy, doing crazy things like flying daily all premium A330s between Hong Kong and London Gatwick for dozens of punters per near empty return flight.

Cathay Pacific is the outright favorite to win every contest it joins at this stage. It has more than 40% of the Hong Kong market for air travel, and the most amazing collection of lounges on the planet in the one airport out at Chek Lap Kok, and the undivided attention and establishment clout of Air China as its principal owner.

In its generalised guidance on such things, Cathay Pacific seems confident that the answer to low fare airlines is to have enough full service low fares available on every flight where there is a low fare competitor to ensure that the competitor never makes a Hong Kong dollar on any of its flights, ever, for as long as it takes to arrive at ‘ever.’

On the other hand it might decide it wants to do the separate low cost thing anyhow, meaning that there might be a Cathay reptile of lesser prestige but just as sharp a bite as a dragon waiting to make its entry too, if called upon.

We won’t know if there is until it is practically upon us.

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2 thoughts on “Cathay Dragon stalks new and less new HK competitors

  1. ltfisher

    Great penultimate para Ben, although I’m not keen on the imagery of a[nother] “Cathay reptile”.

  2. J.W.

    the images should not be taken seriously, they have been in the public domain since last year and as the article states the Dragonair brand was reevaluated last year and due to its strength in china looks set to remain.

    the movement in lccs in the HK is interesting at present HK Express has just rebranded for the second time in 12 months and is continuing to push aggressive pricing for a timetable of leisure destinations which typically involve unattractive red-eyes in many cases. personally i think they are being met with skepticism by the market in terms of safety record and their links to HNA group – there’s certainly no revolution in low cost travel occurring as a result of them.

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