September 5, 2017 / 11:34 AM / a year ago

Budget airline Hong Kong Express expects to add widebody aircraft to fleet

HONG KONG (Reuters) - Low-cost airline Hong Kong Express Airways, part-owned by Chinese conglomerate HNA Group, plans to add widebody aircraft to it fleet eventually to make use of limited airport slots and allow for growth to longer-range destinations, its chief executive said on Tuesday.

HK Express Chief Executive Officer Andrew Cowen poses in front of check-in counters at Hong Kong Airport in Hong Kong, China September 5, 2017. REUTERS/Bobby Yip

The airline and sister carrier Hong Kong Airlines have been expanding rapidly in a challenge to Hong Kong’s dominant airline, Cathay Pacific Airways (0293.HK), which last month reported its worst first-half loss in at least 20 years amid increased competition that lowered fares.

“I think we will certainly progress to widebodies,” HK Express Chief Executive Officer Andrew Cowen told Reuters. “One solution to the slots constraints is to perhaps do fewer frequencies but with widebodies. Obviously widebodies would also allow us to go further afield.”

HK Express flies to 28 destinations in mainland China and other countries such as Japan, Thailand and Vietnam with a fleet of 20 A320 family narrowbody aircraft. It flies to Tokyo, Osaka and Seoul four times daily from Hong Kong International Airport, where slots are limited and availability is constrained until a third runway opens in 2023.

The carrier, which is not listed and does not disclose its earnings publicly, has grown its capacity by about 48 percent in the last year. Cowen said it was unclear whether the carrier would report a profit this year amid what he described as “aggressive discounting” by rival airlines.

Cowen declined to put a timeframe on a move to widebody aircraft but named the Boeing Co (BA.N) 787 and the Airbus SE (AIR.PA) A330neo and A350 models as potential options.

“We haven’t made any firm decision,” he said. “We are just looking forward about different options and ways about meeting that market demand and strengthening our position in the market.”

Hong Kong Airlines, which is also part-owned by HNA but not positioned as a low-cost carrier, operates widebody A330 aircraft and last week took delivery of its first A350 as part of an expansion into the North American and European markets.

Cowen said HK Express did not coordinate with Hong Kong Airlines on destination selection and flight timings but the pair were planning to begin deepening their relationship in the coming weeks, eventually developing into a codeshare. “It is going to be a step-by-step rollout,” he said.

A Hong Kong Airlines spokeswoman said: “We have just signed the interline agreement with Hong Kong Express. However, there is no codeshare agreement under discussion for the time being.”

Editing by Jacqueline Wong

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