It took 16 years but Hong Kong’s Cathay Pacific has realised the benefits of having a low-cost carrier
- After repeatedly resisting the growth of the sector and trying to stymie low-cost rivals, airline has taken the plunge with its acquisition of HK Express
It took Hong Kong’s biggest airline 16 years to arrive at the conclusion that it needed a low-cost outfit. Now, instead of starting from scratch, Cathay Pacific Airways has bought five-year old HK Express to keep pace with rivals in the budget sector.
Cathay joins a long list of established Asian airlines to bolt on a budget firm, following in the footsteps of Singapore Airlines, which set up Tigerair and Scoot, and Qantas with its Jetstar brand, as well as Japan’s All Nippon Airways, which created low-fare units Vanilla Air and Peach.
But aviation analysts hold mixed views on whether the city’s flagship airline will benefit significantly from the acquisition deal announced on Wednesday.
CAPA Centre for Aviation chief analyst Brendan Sobie said Cathay would be able to take the fight to its regional competitors, but gaining control of a rival airline was only one part of the solution.
“Purchasing an LCC [low-cost carrier] will not be a solution for a lot of the issues Cathay faces, and these will still need to be resolved as part of a new wider strategy that is emerging,” he said. “However, taking on HK Express strategically is the right move and should improve its long-term position in an extremely competitive and challenging market.”