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Hong Kong Express Plans 30% Cheaper Fares, Challenging Cathay

June 27 (Bloomberg) -- Hong Kong Express Airways Ltd. plans to offer fares that are 30 percent cheaper than the lowest prices offered by competitors when it converts to a budget carrier in October, challenging Cathay Pacific Airways Ltd.

Hong Kong Express, an affiliate of Hong Kong Airlines that is backed by China’s HNA Group, plans to have a fleet of 30 planes in five years, Deputy Chief Executive Officer Andrew Cowen said in Hong Kong yesterday. The airline will have five Airbus A320s by September, he said.

“For too long, the people of Hong Kong have been denied the opportunity to travel at low cost to China and the rest of Asia because of high fares,” Cowen said. “It is well known that air fares to and out of Hong Kong are among the highest in the world.”

The carrier, which will fly to cities in China, Southeast Asia, Japan and South Korea, expects to break even in two years, Executive Chairman Yang Jianhong said . Jetstar Hong Kong, a venture owned by Qantas Airways Ltd., China Eastern Airlines Corp. and Shun Tak Holdings Ltd., is also planning low-cost flights from Hong Kong to lure cost-conscious passengers from Cathay Pacific, the city’s largest carrier.

Hong Kong Express will oppose the government awarding an operating license to Jetstar Hong Kong because of limited slots and parking space at the city’s airport, Yang said.

Jetstar Hong Kong is still waiting for a license to start operations in the former British colony. The carrier said earlier this month that it is having a “positive and ongoing dialog” with regulators and is confident of winning approval at the end of this year.

The Hong Kong government has said it won’t process any applications to start airlines until it completes a review of criteria for designating local carriers.

Hong Kong Airport isn’t currently used by any low-cost carriers as a hub. Oasis Hong Kong Airlines Ltd., which operated budget long-haul flights, collapsed in 2008 after racking up losses of about HK$1 billion ($129 million) in less than two years.

To contact the reporter on this story: Jasmine Wang in Hong Kong at jwang513@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

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