Hong Kong Airlines aims to work with tourism authorities to improve off peak demand for Cairns and Gold Coast

Hong Kong Airlines plans to further increase capacity to Australia in 2018 during peak periods and is hoping to work more closely with tourism authorities to support more flights during off peak months.

Hong Kong Airlines launched services to Australia in Jan-2016 with a seasonal service on a Hong Kong-Gold Coast-Cairns-Hong Kong circular routing. It quickly upgraded the route to year-round and this year has added frequencies. In the current winter season, Hong Kong Airlines is operating five weekly flights on the Hong Kong-Gold Coast-Cairns-Hong Kong route for most of July, August, September and October compared to three weekly flights for the same period last year.

Hong Kong Airlines assistant director commercial Michael Burke told Blue Swan TV on the sidelines of the 1-Aug-2017 CAPA Australia Pacific Aviation Summit in Sydney that Hong Kong Airlines plans to serve Gold Coast and Cairns with a daily flight during peak periods in 2018, including over Chinese New Year. However, he said the airline still needs to reduce the route to three to four weekly flights during off peak periods due to a lack of demand. “We need the support of the tourism bodies to develop the product and the awareness during those weaker periods to allow us to offer a sustainable daily year-round service,” Mr Burke said.

Mr Burke credited a strong relationship with Tourism Australia, Tourism Queensland, Tourism North Queensland, Gold Coast Airport and Cairns Airport for making Hong Kong Airline’s first Australia route an initial success. “It’s gone well,” he said.

Hong Kong Airlines flew 55,000 passengers to and from Australia in 2016 with an average load factor of 68%, according to BITRE data. In the most recent month of available data, May-2017, Hong Kong Airlines’ Australia traffic was up 83% year over year with an average load factor of 70%.

The biggest opportunity for further growth in Hong Kong Airlines’ Australia traffic is to stimulate more traffic to Queensland during the off-peak periods. As Blue Swan has previously reported, Hong Kong Airlines has been keen for several years to serve Melbourne and Sydney but is not able to launch services to any of the four main Australia gateways due to bilateral constraints.

See related report: Time for Hong Kong to come to the table and negotiate a new air services agreement with Australia

However, Hong Kong Airlines is now selling Melbourne as a destination using codeshare partner Virgin Australia. Virgin Australia launched five weekly flights on the Melbourne-Hong Kong route in Jul-2017. Mr Burke said Hong Kong Airlines is hoping Virgin Australia will be able to expand in the Australia-Hong Kong market – with more frequencies from Melbourne and services from more Australian gateways – despite slot constraints in Hong Kong.

Hong Kong Airlines could potentially serve Adelaide, which enjoys open skies along with Cairns and Gold Coast. Mr Burke said China Southern Airlines’ launch of services to Adelaide is an interesting development because Chinese visitor traffic to Australia is focused heavily on the east coast – from Cairns to Melbourne. The successful dispersal of Chinese tourists to other regions of Australia would drive a new phase of growth in Chinese visitor numbers to Australia and enable more airlines from greater China to serve more secondary destinations.

“China Southern is the clear market leader from China to Australia. Where they go others will then follow,” Mr Burke said. “For them to be commencing more regional services is extremely positive frankly for the whole market. They will grow and develop the market and develop the tourism product in those regions away from that eastern corridor where most Chinese tourists are currently focused. That’s very positive for the future. We should all collectively hope that they actually succeed.”

Hong Kong Airlines one-way weekly seat capacity to Australia: Jan-2016 to Jan-2018

Source: CAPA – Centre for Aviation & OAG.