A new airline with ties to Beijing is trying to muscle into Hong Kong, a patch long dominated by stalwart Cathay Pacific Airways Ltd.
Founded by property magnate Bill Wong (黃楚標), Greater Bay Airlines has ambitions to fly to 104 destinations in mainland China and north, south and southeast Asia, including Bangkok and Phuket. Scheduled flights have not begun yet, with the carrier only receiving its air operator’s certificate at the beginning of this month and an air-transport license still to be procured.
Starting an airline at the tail end of the COVID-19 pandemic, which has decimated travel worldwide, might sound unwise, but 62-year-old Wong, dubbed the Li Ka-shing (李嘉誠) of Shenzhen for his expansive business empire across the border, is not a total novice. He already owns one carrier, Shenzhen-headquartered Donghai Airlines Co, which services a raft of Chinese cities as well as a few regional routes.
Greater Bay Airlines’ entry into Hong Kong also comes at a low point for Cathay, the iconic carrier controlled by conglomerate Swire Pacific Ltd, whose parent is UK-based private family group John Swire & Sons Ltd. Even before the pandemic, Cathay Pacific was affected by its association with the 2019 pro-democracy protests in the former British colony, forcing a change in management.
Hong Kong is sticking to a “COVID-19 zero” strategy, so Cathay Pacific can only watch on as carriers in neighboring places such as Singapore and Indonesia prepare to ramp up international routes. With no domestic market and mainland China’s borders still closed even to Hong Kong, Cathay’s passenger traffic languishes at about 5 percent of pre-pandemic levels.
“We’re starting from new, so we don’t have the burden or the baggage,” Greater Bay Airlines’ chief executive officer Algernon Yau (丘應樺) said, suggesting that the pandemic has leveled the playing field.
Greater Bay Airlines can be more agile and flexible than a legacy carrier like Cathay, he said.
It also has a ready-made traveling public on its doorstep, considering the Greater Bay Area covers Hong Kong, Macau and municipalities in Guangdong Province with a population north of 86 million people.
“Now we’re all starting from the same line,” Yau said in an interview at his office overlooking a hazy Hong Kong Airport and its new third runway. “When business comes back, we can easily catch up and not be left behind.”
Wong declined to be interviewed.
Cathay Pacific, which is almost 30 percent-owned by state-controlled Air China Ltd, seems unperturbed by the potential for more competition.
“There’s a wealth of potential for both business and leisure travel as the region continues to develop,” a Cathay Pacific spokesperson said.
However, there have already been some setbacks.
Greater Bay Airlines, which has three Boeing 737-800 jets on lease and plans to increase its fleet to more than 30 by 2026, had hoped to begin operations on China’s National Day on Oct. 1 with a symbolic flight to Beijing.
That never happened because it did not have a license.
Also, despite Cathay Pacific and Hong Kong Airlines Ltd not formally objecting to Greater Bay Airlines’ license request, the two have tried to stall the approval process, the South China Morning Post reported, citing people it did not identify.
A licensing hearing is scheduled for December.
Hong Kong Airlines is the territory’s only other commercial passenger airline that does not belong to the Cathay group. It has been limping along since its parent, Chinese conglomerate HNA Group Co, buckled under a pile of debt at the start of the pandemic.
Greater Bay Airlines is also unable to generate any cash at present because it cannot sell tickets.
Wong told the South China Morning Post almost a year ago that he expected to spend about HK$2 billion (US$257 million) before obtaining regulatory approvals.
Other details surrounding the airline’s financing are scant and Yau did not elaborate.
“Investing in an airline is a very costly exercise,” said Yau, an ex-Cathay Pacific executive who once ran the airline’s now defunct Cathay Dragon unit. “Our investor Mr Wong is a land developer in Shenzhen, so he has very strong financial support to this airline.”
There is also the question mark over Hong Kong’s future as an international aviation hub if the territory’s strict quarantine measures do not change.
Although Hong Kong Chief Executive Carrie Lam (林鄭月娥) pledged that the territory would retain that title in her annual policy address on Oct. 6, most travelers entering the financial hub still need to spend as long as 21 days isolating in a hotel.
“Demand for flights into Hong Kong remained very weak due to the strict quarantine requirements,” Cathay Pacific chief customer and commercial officer Ronald Lam (林紹波) said on Tuesday, as the company released figures that showed it carried only 131,774 passengers last month.
Despite the difficulties of the pandemic and Hong Kong’s “COVID-19 zero” approach, Greater Bay Airlines could benefit from its timing, with cheaper aircraft, less-congested landing slots and plenty of available pilots, said Brendan Sobie, a Singapore-based consultant at Sobie Aviation.
Another factor going in Wong’s favor is his ties to the mainland. The businessman is a member of China’s key political advisory body, the Chinese People’s Political Consultative Conference.
Yau said that Hong Kong-Beijing would be a fitting first route.
“Greater Bay Airlines will probably be looked at by the regulators relatively favorably,” said Richard Harris, founder and CEO of Hong Kong-based Port Shelter Investment Management. “Cathay is partly owned by British interests, partly by a Chinese airline and partly by Qatar, but what it isn’t, it’s not linked to China as much.”
Yau said that Greater Bay Airlines will be a “value carrier,” somewhere between a budget airline and a full-service one.
Planes won’t have seat-back televisions and customers will be encouraged to use an app to customize their journey before boarding, including ordering food from McDonald’s, for example, or premium whiskey to be served in-flight.
Most pilots and cabin crew are Hong Kong citizens who used to work for Cathay, Dragon or Hong Kong Airlines, he said, adding that Greater Bay Airlines aims to have about 150 employees by December.
“We’re quite aggressive with our plan,” Yau said.
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