Hong Kong newcomer Greater Bay Airlines appeals to government to ‘strike balance on allocation of air traffic rights’ to boost competition

Hong Kong newcomer Greater Bay Airlines (GBA) has appealed to the government to strike a balance on the allocation of air traffic rights so it can compete in a market dominated by the city’s flagship carrier Cathay Pacific Airways as it planned to double its fleet to six aircraft by the end of the year.

GBA chief executive Stanley Hui Hon-chung said the fledgling airline aimed to open up more routes, including services to Manila in the Philippines and Ho Chi Minh City in Vietnam.

He said the airline also wanted to boost frequencies on popular routes such as Taipei, but expressed frustration over the process for increasing services.

Hui was speaking to the Post on the airline’s maiden flight to Osaka, Japan, on Friday.

“We have been telling our government the reason why we want a higher number of frequencies on certain routes is because of the market environment,” he said.

“If we do not have enough frequencies, we simply cannot compete effectively with other airlines and if we cannot compete effectively with other airlines, that may not be in the interest of travellers because once you have, say, domination by certain airlines, then the travellers will not have any choice.”

Hui, 73, has more than 40 years’ management experience in aviation, including senior roles with Cathay Pacific, AHK Air Hong Kong, the now-closed Hong Kong Dragon Airlines and the Airport Authority Hong Kong.

He said government needed to strike a balance, but expressed his hope that the administration would help newcomers into the market.

“We want our government to understand that when a small airline enters a market, there are lots of competitive issues there and that’s the sort of thing the government should, and I hope they have, take into consideration the allocation of traffic rights,” Hui said.

The Air Transport Licensing Authority is responsible for approving air services between Hong Kong and the rest of the world, but the Transport and Housing Bureau reviews airlines’ commercial bids to operate routes and awards the traffic rights.

The licensing authority last year awarded the carrier a five-year permit to operate commercial flights on 104 routes, including 48 to the mainland. Services to Taiwan, Japan, South Korea and other destinations in the Asia-Pacific region were also approved.

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Andrew Yuen Chi-lok of Chinese University’s Aviation Policy and Research Centre said traffic rights sometimes included a limitation on frequency.

“One of the major challenges for GBA is to build up a comprehensive network and improve connectivity for its customers. In addition to fares, flight frequency will be a decisive factor for passengers’ airline choice,” Yuen said.

The carrier will operate three flights a week to Osaka, in addition to daily services to Taipei, Tokyo and Bangkok. The low-cost carrier also flies to Seoul four times a week.

Hui said GBA had hoped to move to daily flights to Osaka, but was hampered by manpower shortages at Kansai International Airport and appealed to Japanese authorities to tackle the problem so they could increase the frequency “as quickly as possible.”

He admitted the carrier would need time to become better known among travellers and travel agents, but that bookings had been “decent”.

Hui said Tokyo was a particularly popular route and added he wanted to add a third Japanese destination, Kyushu’s Fukuoka airport, another destination popular with Hong Kong tourists.

He explained the airline wanted to double its number of leased aircraft to six Boeing 737-800 jets by the end of the year, which meant hiring 30 more pilots on top of the present 40.

The carrier announced in March it had ordered 15 Boeing 737-9 MAX aircraft, with the first of the new airliners delivered next year and the rest expected by 2027.

GBA has also signed a letter of intent to buy five Boeing 787 Dreamliners, which are popular with airlines on long-haul routes.

With China having opened up after other Asian markets, Hui said that they would consider mainland China routes such as Beijing when there was capacity in the next six to eight months.

Bill Wong Cho-bau, the GBA chairman and the tycoon behind Shenzhen-based Donghai Airlines, has pledged to invest HK$2 billion (US$255 million) in the new company, which is stepping into a market served by Cathay Dragon until the 35-year-old regional carrier was grounded for good in 2020 amid the coronavirus pandemic.

But GBA has faced a string of setbacks as it prepared to get off the ground, including getting its air operating certificate from the government.

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The carrier made its debut flight to Bangkok in July last year and Hui was upbeat on when the new airline might turn a profit.

He said: “We need to have a certain scale. I would say really by about next year, hopefully, we will do more than break even.”

Hui explained that GBA was competing with other airlines on lower fares, but that there were plans to introduce business class on two aircraft being brought in by the end of the year to meet demand for premium service on routes such as Tokyo, Beijing and Shanghai.

He said he saw “everyone” as the competition and admitted he had his eye on Cathay.

“Of course, Cathay is always the biggest airline in Hong Kong. There is no question about that,” Hui added.

Friday also marked the first daily direct services by Cathay’s budget carrier HK Express between Hong Kong and Vietnam’s Hanoi.

HK Express will launch a special offer of HK$68 for a one-way ticket, excluding government taxes and fees, between May 3 and 6 for travel between May 8 and July 11.