HKG | Hong Kong International Airport

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03 July 2006
DRAGONAIR WELCOMES NEW AIR SERVICES ARRANGEMENT WITH MAINLAND
Dragonair Press Release

(HONG KONG) Dragonair, recently voted the Best Airline - China for a fifth consecutive year in the Skytrax traveller survey, has welcomed the air services arrangement announced today between the Economic Development and Labour Bureau and the General Administration of Civil Aviation of China.

"We welcome the arrangement to liberalise further air services between Hong Kong SAR and the China Mainland as it will offer more opportunities to airlines and provide us with greater growth potential in the Mainland market," said Dragonair CEO Stanley Hui. "In addition, the new arrangement ensures Hong Kong will maintain its position as the pre-eminent aviation gateway to the growing Mainland travel market.

"As the Best Airline on which to fly to and from the Mainland, Dragonair is well-positioned to take advantage of the new arrangement, and we look forward to exploring the opportunities for growth that it presents."

Dragonair currently operates almost 400 flights a week between Hong Kong and 23 cities in the China Mainland.

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New low-cost airline to offer 75.00 stg one-way fare to Hong Kong
4 July 2006

LONDON (AFX) - A new low-cost airline that will fly passengers from London to Hong Kong for just 75.00 stg one-way is due to commence trading soon in a move that will put further pressure on the major national carriers and other long-haul operators.

Oasis Hong Kong Airlines, which will mix low fares with personalised options and high-quality service, will begin flying from London's Gatwick airport to Hong Kong in October this year.

Travellers are set to pay lower prices than offered by competitor airlines and tickets will go on sale in the near future with one-way flights starting from 75.00 stg -- plus tax. The airline plans five flights a week with further routes to be announced in the coming months.

'We are pleased to announce the first ever low-fare, high-quality long-haul flights from London to the Far East and we look forward to launching flights to more destinations in the future,' said Steve Miller, chief executive officer of Oasis Hong Kong Airlines.

'Business travellers as well as consumers are increasingly price conscious and I believe we have an individual business proposition that not only delivers on price, but offers passengers a flexible and high quality service... a term not often associated with low-fare travel,' he added.

The group's Boeing 747-400 planes will also offer 81 luxury business class seats and 278 spacious economy seats. A range of personalised options, such as advance seat reservation, lounge passes or upgrading to gourmet menus, will also be available.

The low-cost airline sector is continuing to grow, with recent research suggesting passenger traffic on low-fare flights will increase by at least 30 pct per annum over the next two years.

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Zhuhai air proposal ridiculed
Alman Loong
Hong Kong Standard
Wednesday, July 05, 2006

Hong Kong's de facto flag carrier Cathay Pacific has ridiculed an initiative by the Hong Kong Airport Authority to position Zhuhai Airport as a "third runway" for the SAR, following its investment in the aviation facility.

Cathay Pacific Airways chief operating officer Tony Tyler says in the the carrier's internal publication CX World that he cannot fathom the logic of Hong Kong International Airport's bid to promote Zhuhai airport in the mainland, as a "third runway" for Hong Kong.

The Airport Authority and Zhuhai Airport signed a deal in February to take a 55 per cent and 45 percent interest, respectively.

According to reports at the time, the authority planned to invest 200 million yuan (HK$194.26 million) in the joint venture to operate the Zhuhai airport, lying to the west of Hong Kong.

It principally serves domestic destinations.

The authority said the joint venture would strengthen relations between Hong Kong and the Pearl River Delta, generating economic benefits through cargo and passenger traffic growth.

Despite what has been promised for the future, Cathay sees things from a different perspective. Tyler complained that "Zhuhai cannot possibly operate as Hong Kong's third runway."

"Zhuhai has no base airline and Hong Kong has no traffic rights from there.

"What passenger would want to fly into Hong Kong, collect their bags, pass through customs, find a ferry or bus to Zhuhai, pass through customs, find a ferry or bus to Zhuhai, pass through border immigration, check in, pass through security again and wait for another flight? It does not make sense."

Tyler argues that "the Airport Authority making a purely financial investment in other airports is one thing. The government is well represented on the Airport Authority board and can decide whether that is an appropriate way to invest taxpayers' money."

An authority spokesperson refused to be drawn on Tyler's observations.

Tyler said: "There has to be an answer to capacity limitations at Hong Kong International Airport. But Zhuhai is not it."

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Air HK eyes new aircraft as mainland routes expand
05 July 2006
South China Morning Post

Air Hong Kong, the only all-cargo airline in the city, may buy between two and four aircraft, probably Airbus A300s, after winning the right to start serving the mainland next summer.

The airline leases one A300-600F from Cathay Pacific - which owns a 60 per cent stake in the carrier - that it uses to serve Shanghai five times a week.

Under an air services accord between Beijing and the Hong Kong government unveiled on Monday, Air Hong Kong also won the right to serve secondary cities in China so long as the routes included a stopover in either Beijing or Shanghai.

"Combination routes allow us to collect goods from more than one mainland city, enabling us to develop secondary cities," said David Saechiu, chief operating officer of Air Hong Kong.

Such an arrangement is vital to cargo airlines launching service in secondary markets where the cargo volume is insufficient to justify point-to-point service.

Air Hong Kong has applied for the right to serve 21 mainland cities, including Beijing, Shanghai, Hangzhou, Qingdao and Urumqi in Xinjiang, and plans to begin flights to eight to 10 destinations initially.

Air Hong Kong has a fleet of eight A300-600Fs. Mr Saechiu said the carrier would prefer to expand services using the same model to keep maintenance costs down.

However, shortly after Air Hong Kong declined in March to take up the last two options on its original order of A300Fs, Airbus closed its production line.

The closure was prompted by pressure on Airbus resources as it increased production of the A380 and development of the A350. This will force Air Hong Kong to look for used passenger jets it can convert.

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London for $1,600? Not for long, say the experts
7 July 2006
South China Morning Post

Hong Kong's first budget airline, Oasis Hong Kong Airlines, plans to undercut its rivals savagely with a one-way fare to London of £75 ($1,066) plus tax when it launches the service in October.

The fare, just 40 per cent of the cost of a comparable ticket with competitors, will cover an economy seat on a Boeing 747-400 and include a basic meal.

Including taxes and surcharges, the fare will be $1,600, as opposed to $4,070 and $3,790 offered by Cathay Pacific and Virgin Atlantic respectively.

The budget carrier will run just five flights a week against Cathay's four daily flights on the same route.

Industry sources predict Oasis' price-cutting strategy will have little impact on its rivals.

A disadvantage for the airline is that it will serve only Gatwick Airport, 30 minutes by rail from central London's Victoria Station.

With the operating cost of a flight from Hong Kong to London running at around $1.1 million, analysts said they did not expect the airline to be able to maintain the cheap fares. To break even, it would have to fill all 278 economy seats on the 359-seat B747-400 and sell the remaining luxury seats for $10,000 each.

"It's an impossible task for a start-up airline," an industry source said.

Making it even more difficult is the fact that the airline plans to launch during the shoulder season - the period between high and low seasons - in October.

A spokesman for Oasis said introductory prices and the fare sales structure had yet to be finalised and more details would be released closer to the launch.

A spokesman for Cathay Pacific said the Hong Kong carrier had little to fear from the rival start-up, saying Cathay's fare structure was already competitive enough.

Oasis, formed by husband-and-wife team Raymond and Priscilla Lee, received its air operator's certificate at the end of last year after competitors dropped a lawsuit alleging the aviation authority had fast-tracked the process.

Hong Kong has been slow to enter the budget airline industry, giving foreign budget carriers a head start in the growing global market for cut-price air travel.

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New Boeing 747 enables AirBridge Cargo to double Japan frequencies and launch Hong Kong services

MOSCOW, July 7 /PRRussia/ - Hong Kong will become the latest destination to join AirBridge Cargo's (ABC) growing network in July when Russia's first scheduled all-cargo airline takes delivery of its fourth Boeing 747 freighter.

The arrival of the aircraft, acquired from Nippon Cargo Airlines, will also enable ABC to double its frequencies between Japan, Russia and Europe to four flights a week. The addition of Hong Kong to the network is possible by combining ABC's two additional Nagoya flights with Hong Kong, where it enjoys full traffic rights.

Announcing the extra aircraft, Stan Wraight, Vice President of Volga-Dnepr Group, ABC's parent company, also confirmed that two more 747-200Fs will be joining the airline's fleet in 2007. At the end of 2007 and in early 2008, AirBridge will also take delivery of two new- build Boeing 747-400ERF freighters with a list price of $450 million. He said: "The fourth aircraft will allow us to offer even greater reliability, more balanced schedules and added frequencies and destinations. Our operations in Asia will increase further when two more 747-200s join our fleet in January and March 2007."

The B747-200 aircraft joining ABC in July is a nose and side door loading freighter. This configuration makes the aircraft perfectly suited to the major commodities carried by ABC, such as oil and gas equipment and project cargoes in Russia as well as for general freight traffic. All the new aircraft are powered by GE engines, identical to the rest of ABC's current fleet and the new aircraft in the pipeline.

With the introduction of the fourth aircraft, ABC will offer 10 flights a week ex Frankfurt and four per week ex Amsterdam to Russia, providing daily and twice daily services to Moscow (SVO and DME) and five flights a week to Krasnoyarsk. As well as its current two flights a week to and from Japan, ABC also operates seven services a week to and from Shanghai and four flights a week to and from Beijing in China.

Source: Volga-Dnepr Group press service

About Volga-Dnepr Group

Volga-Dnepr is an international group consisting of aviation, trucking and insurance businesses. Its offices are located in Russia, the USA, UK, China, Ireland and the UAE. Volga-Dnepr Group is the market leader in the global movement of heavyweight and outsized air cargo, controlling 50% of the global market. Volga-Dnepr has a fleet of ten An-124-100s, two IL-76s and five YAK-40s. Its scheduled cargo airline business, Airbridge Cargo, also operates two Boeing 747-200s. Volga-Dnepr Group employs more than 1,300 people of 20 nationalities.

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Air New Zealand cuts Singapore, Los Angeles flights, aims at China, North Asia
12 July 2006

WELLINGTON, New Zealand (AP) - Air New Zealand said Wednesday its halting daily flights to Singapore and not recommencing twice weekly summer season flights to Los Angeles to pursue new more profitable routes in China.

Chief Executive Rob Fyfe said the changes were the start of a "repositioning process" to benefit the airline. North Asian routes represented substantially greater growth prospects than Southeast Asia -- already well-served with international airline capacity, he said in a statement.

"We have the debut of our nonstop 777 service to Shanghai three times a week from Nov. 6," he said.

The airline is also planning a second daily service to London via Hong Kong from October, while the cargo market was driving the carrier's preference "for building North Asia capacity," he noted.

"The Singapore route suspension, which takes effect on Oct. 2, presents Air New Zealand with aircraft and resources to pursue new opportunities ... and for planning ... new international routes," Fyfe said.

The airline currently has less than a 30 percent capacity share in the Auckland-Singapore market, and Fyfe said it had suffered significant losses flying to Singapore in recent years.

Airline group general manager Ed Sims said most passengers traveling to Singapore were connecting with another service, heading to the northern hemisphere.

"Most of these destinations are served just as effectively via Hong Kong," he said.

Tourism New Zealand chief executive George Hickton said the Singapore route was quite well served by other carriers during the peak season.

"Singapore Airlines flies 21 times a week in the peak season between Singapore and New Zealand," he noted.

Hickton said the move would not have a significant effect on New Zealand markets generally.

"It may have an impact on the Singapore market itself but that's not a huge one for us," he said.

Fyfe said the current fuel price environment and soft demand meant the airline would be dropping its Christchurch to Los Angeles service from Oct. 29.

He was committed to seeing Air New Zealand grow profitably, he added.

The national carrier, 82 percent owned by the government after a near-bankruptcy in 2001, has been restructuring its operations for the past four years.

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Hong Kong air war looms
Geoff Easdown, WITH AGENCIES
12 July 2006
Herald-Sun

AUSTRALIANS will enjoy heavily discounted fares between Hong Kong and London when a new discount airline takes to the skies later this year.

Oasis Airlines, based in Hong Kong, will charge just under $185 (taxes and levies excluded) for a one-way fare between the former British colony and Gatwick airport.

Australians taking advantage of the offer, due to begin in October, will have to travel to Hong Kong with a major carrier before boarding their Oasis flight.

The new carrier, which has bought two Boeing 747-400 jets and plans to quickly expand to 25 aircraft, intends to emulate Australian discount carriers Virgin Blue and Jetstar by charging extra for onboard meals and drinks.

But no surcharge will apply to food carried on by passengers and consumed mid-flight.

Based on yesterday's advertised Web prices, a return Qantas Melbourne-Hong Kong fare (taxes included) can be bought for $1118 for travel between October and November.

Oasis has announced that it will charge pound stg. UK75 ($A184.60), plus levies and taxes for one-way travel between Hong Kong and London's Gatwick Airport.

Yesterday Qantas was charging $1915 for a heavily discounted Melbourne-London return economy fare (taxes and levies included) for travel between October and November. The standard Melbourne-London return flexi-fare, which includes the ability to claim refunds and cancel and change flight arrangements, costs $3061 for the same travel period.

Oasis is one of a number of carriers aiming to replicate the success of short-haul, low-cost discount airlines.

The business was founded a year ago by a husband-and-wife team of property investors Raymond Lee, and his wife, Priscilla.

The chief executive, Steve Miller, was founder and first chief executive of Hong Kong based Dragonair, which was recently bought by Cathay Pacific.

"The low-cost long-haul model has numerous advantages," said Mr Lee, a part-time clergyman millionaire who calls himself pastor.

Oasis recently won approval from Hong Kong's Air Transport Licensing Authority to operate scheduled flights to London, Milan, Cologne, Berlin, Oakland and Chicago.

Mr Lee said Oasis hoped to raise about HKD$10 billion ($A1.7 billion) in an initial public offering in mid-2007 to fund expansion.

On its London route, Oasis will compete with Cathay, British Airways, Virgin Atlantic and Qantas, all of which will offer more frequent flights.

The Lees, who own 60 per cent of Oasis, and others, have put up HKD$800 million ($A137 million).

Allan Wong, chief executive of Hong Kong consumer electronics maker Vtech Holdings holds a 15 per cent stake.

Oasis says it will operate five flights a week between Hong Kong and Gatwick.

Its two 747-400 aircraft are each fitted with 81 business-class seats and 278 economy-class seats, the airline said.

[Rachmaninov]

Super great news for we HKers who study in London!

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11 July 2006
CEREMONY MARKS START OF MAJOR CONVERSION ON FIRST NEW B747-400 FREIGHTER
Dragonair Press Release



(HONG KONG) A ceremony to mark an important stage in the conversion of the first of five new Dragonair freighter aircraft was held on Saturday in Xiamen.

Attending the event were Dragonair CEO Stanley Hui, Toh Mun Wah, Vice President (Maintenance Operations), Singapore Airlines, P.K. Chan, Chairman of Taikoo (Xiamen) Aircraft Engineering Company and Roy Baerwolf, Boeing Site Manager of The Boeing Company as well as other representatives from these companies.

A 10-foot-wide opening had been made on the left hand side of the aircraft for the ceremony. The creation of the opening, for the cargo-loading door, marks the start of the major conversion work needed to transform the passenger/cargo aircraft into a dedicated freighter.

Work on this first freighter is scheduled to be completed in mid-October; it is then due to enter service in November. Four more B747-400 freighters are scheduled to be converted from passenger aircraft and added into the fleet by the end of 2008 – one in 2006, two in 2007 and one in 2008. Dragonair purchased the aircraft from Singapore Airlines in 2004.

The freighter fleet expansion enhances Dragonair's presence on the international cargo stage, and will help it facilitate trade between the China Mainland and its biggest trading partners.

The airline currently operates six freighters, and the new aircraft will take its all-cargo fleet to 11 by the end of 2008.

[dicksonlai]

HKIA Press News

Passenger Throughput at HKIA Increased 10.3% in June

(HONG KONG, 16 July 2006) - The growth of passenger throughput at Hong Kong International Airport (HKIA) remained robust in June with a total of 3.6 million passengers passing through the airport, representing a year-on-year increase of 10.3%. Boosted by the busy traffic, June's aircraft movements grew by 7.4% from last year, reaching 22,910.

Passenger traffic for the first quarter of FY 2006/07 ended June 2006 also recorded a double-digit growth to 11 million, representing a strong 10.5% increase compared to the same period last year.

Cargo throughput grew steadily last month with total tonnage reached 290,000 tonnes, up 3.6% when compared to the same month last year.

Commenting on last month's air traffic performance, Airport Management Director of the Airport Authority Hong Kong Mr Howard Eng said, "Visitor traffic is the major source to fuel the impressive passenger growth, in particular those from the Chinese Mainland and Southeast Asia. We are confident that the strong growth momentum will continue as passenger throughput is building up to the summer peak."

Passenger expectation grows alongside rise in passenger traffic. HKIA spares no effort to enrich the choices of services, destinations and frequencies so as to meet the growing passenger demand. Saudi Arabian Airlines which has operated air cargo service at HKIA since 2002 launched a new weekly passenger service between Hong Kong and Riyadh via Manila on 15 July.

Over a rolling 12-month period from July 2005 to June 2006, passenger throughput reached 42.6 million, a year-on-year increase of 8.7%. Cargo volume and aircraft movements rose by 8.2% and 11% respectively, amounting to 3.5 million tonnes and 275,500.

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More landing slots in the pipeline
15 July 2006
South China Morning Post

China's aviation administration, under increasing pressure to provide more landing slots and keep flights on time, yesterday unveiled plans to shorten the distance between approaching aircraft from 10 kilometres to six kilometres.

Previously hampered by radar systems that could not cope with the shorter landing distances, the General Administration of Civil Aviation of China (CAAC) said that improvements meant China could land more aircraft in a shorter space of time.

CAAC yesterday announced that it would set up a body to liaise with airports, air traffic control and airlines to set up the new measures.

It is expected that, by the 2008 Olympics, the distance between landing approaches at Shanghai airport on the route between Shanghai and Beijing will drop to 10 kilometres from 20 kilometres, allowing the airport to accommodate more aircraft.

Hong Kong Dragon Airlines, which connects 23 mainland destinations with Hong Kong, over the past three months has paid a heavy toll in terms of its schedule because of the longer approach distances.

The percentage of departures on time in March was 38 per cent, 33 per cent in April and 36 per cent in May, as opposed to 47 per cent, 50 per cent and 41 per cent respectively for the same period last year, according to Dragonair data.

Due to the proximity of the airports in the Pearl River Delta, flights approaching or departing Hong Kong International Airport are falling into the Guangzhou flight information region where the volume of growth in air traffic has had a significant impact on Hong Kong airspace capacity.

"CAAC is serious about the problem of congestion and delay caused by insufficient air space and more measures will be implemented by stages," said an official.

Industry veterans and politicians have suggested either combining air traffic control in the region or enlarge Hong Kong's flight information region as ways of combatting the problem.

A government commission said yesterday China aimed to build 42 new airports in the next five years.

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Hong Kong's Dragonair reports 10 percent jump in passengers in first half of 2006
18 July 2006

HONG KONG (AP) - Dragonair, Hong Kong's second-largest carrier, said Tuesday its passengers increased by 10 percent in the first half of 2006 amid strong demand in the travel industry.

The airline said it carried 2.61 million passengers in the first six months of the year, compared with 2.37 million in the same period last year.

Stanley Hui, the airline's chief executive officer, said he believes the performance will be better in the remaining half.

"We saw a stronger second half, with individual and group traffic rising again, expecially to secondary routes in the mainland (China)," Hui said in a statement.

But he added that high fuel prices will put pressure on the airline in the second half of 2006.

The statement also said cargo in the first half increased by 4.6 percent on year, from 179,931 metric tons (197,924 short tons) to 188,180 metric tons (206,998 short tons).

Dragonair has a large stake in the world's fastest-growing aviation market, China, covering flights to nearly two dozen cities. Its major rival, Cathay Pacific, recently acquired the company in a HK$8.22 billion (US$1.05 billion) buy-out.

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Higher air fares on way for travelers
18 July 2006
Hong Kong Standard
English

The Hong Kong government has approved eight airlines, including local carriers Cathay Pacific Airways and Dragonair, to raise passenger fuel surcharges for the second time in three months to offset higher costs.

Cathay will be allowed to increase surcharges 6.9 percent on long-haul flights to HK$481 per ticket from August, compared to HK$450 currently, the Civil Aviation Department said Monday. Cathay also gained approval to increase short-haul surcharges 7.3 percent to HK$117 from HK$109, the regulator said.

Apart from Cathay, the new short- haul surcharge will also apply to flights operated by Dragonair, Air China, China Eastern Airlines, China Southern Airlines, Shandong Airlines and Xiamen Airlines, as well as Royal Nepal Airlines, the department said. The eight airlines have already raised their fuel surcharges once, in May this year, by up to 20.6 percent. On that occasion, 48 other airlines also raised their surcharges.

Cathay chief operating officer Tony Tyler did not rule out more increases in fuel surcharges in future if high prices persist. He told local media Monday any further rises in fuel costs will need to be passed to customers.

``The latest increases won't fully offset the rise in fuel costs this year,'' said South China Securities analyst Andes Cheng. ``Cathay and other airlines will still need to shoulder some of the increased fuel costs by themselves, so their earnings this year will be impacted.''

Jet kerosene changed hands in Singapore at US$90.70 (HK$707.46) a barrel Monday, up 40 US cents on the day. The spot cargo price closed the day's trading at US$92.45 a barrel.

The average cost of kerosene for Cathay will rise to US$80 per barrel this year, 19.4 percent higher than last year, according to forecasts issued last week by investment bank Credit Suisse.

High fuel costs slashed Cathay's net profit by 25 percent to HK$3.3 billion last year, despite a 19 percent increase in turnover to HK$50.9 billion. The cost of fuel accounted for more than 33 percent of Cathay's operating costs last year, the company said previously.

Air China was also hampered by high fuel costs, reporting net profit increased only 0.9 percent to 2.4 billion yuan (HK$2.33 billion) last year despite recording over 970 million yuan in one- off gains from yuan revaluation. China Eastern slid to a 467.3 million yuan net loss last year, compared with a net profit of 320.7 million yuan the year before.

Last week, Cathay reported passenger traffic rose 11 percent to 8.14 million in the first half this year, while cargo traffic increased 8 percent to 96,255 tons.

``Cathay's numbers confirm that the revenue environment remains strong,'' investment bank JPMorgan said. ``Nevertheless, high oil prices continue to erode all of these gains, thus limiting the upside potential for the shares.''

Monday, Cathay shares fell 1.8 percent to HK$13.35. Air China lost 1.8 percent to HK$2.85 and China Eastern fell 2.9 percent to HK$1.01.

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Air NZ unveils strategy
21 July 2006
National Business Review

Airline hopes to make comeback in UK passenger market

Graeme Kennedy

Air New Zealand expects the launch of its daily London services through Hong Kong in October will help it claw back some of the share of the UK passenger market it has lost.

The airline used to have half the total UK-New Zealand market of 200,000 passengers with its service through Los Angeles.

But total passenger numbers have grown to 300,000 and, still with one daily flight, Air NZ has seen its passenger numbers drop 10% and its share fall 30%.

"The UK market will grow to 500,000 and we will lift our share with the daily schedule through Hong Kong - and retain traffic we have been losing to other carriers, particularly Asian," Air NZ international airline group general manager Ed Sims says.

The airline's second daily London service from October 28 will increase its total UK capacity to almost 4000 one-way seats a week to the UK.

Mr Sims says the Boeing 777s that replaced 767s on the Auckland-Hong Kong route from July 1 will be transferred to the Osaka service while 747s will operate the new west-bound flights through to London.

He says 747s will continue to fly Auckland-Los Angeles but 777s will take over the Los Angeles-London sector, saving the airline an estimated $62 million a year in fuel costs.

The Hong Kong-London service will make Air New Zealand the industry's only round-world carrier.

This may not mean a lot to New Zealanders familiar and comfortable with long-distance travel "but UK passengers tend not to be and they like the idea of managing a round-world trip on one westernised English-speaking airline.

"And there is always a market premium for a carrier of the destination they are leaving or travelling to.

"Being a round-world carrier to New Zealand is a big advantage and we are already seeing this in forward bookings - for London-Hong Kong, London-Hong Kong-Auckland and round the world."

Mr Sims says another big advantage is Air New Zealand's position as the only Star Alliance carrier on the London-Hong Kong sector.

"There are a lot of Star operators in the UK and [continental] Europe markets but currently no vehicle to Hong Kong, which is a strong high-yield corporate route out of London."

He says Air New Zealand plans to add one or two new destinations a year over the next decade. "We have our new service to Shanghai from September 6 - our first major destination since San Francisco in 2004 and Fukuoka eight years ago, although [Fukuoka] lasted only three years."

"We received our sixth of eight 777s this week and in the past 17 months have refurbished all eight of our 747s with lie-flat beds and through-cabin in-flight entertainment.

"And the first of our four 787-9s will be delivered in February 2010 when the last five of our original nine 767s will have left the fleet."

Air NZ's probable future destinations include South America and India to tap in-bound tourism, new cities on the US west coast, and Canada where Vancouver is being considered as a top priority.

But Mr Sims says other routes will be dropped - such as Singapore, which after 40 years will cease to be an Air NZ destination from October 2 because of declining loads that have left the carrier with a less than 30% market share.

The summer-season Christchurch-Los Angeles direct services have also been scrapped while Auckland-Tahiti-Los Angeles frequencies are likely to be cut back.

"We are looking closely at destinations that are not making returns," Mr Sims says. "There will be a more efficient evaluation of existing routes and markets that are losing their appeal."

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Air Niugini resumes flight
By ALEX RHEENEY
21 July 2006
PNG Post Courier



AIR Niugini will resume its service to Hong Kong next month after an eight-year absence. Chief executive officer Wasantha Kumarasiri announced yesterday that the service will be an extension to their Manila service, which will now be brought forward to Tuesday instead of Wednesday. The return flight on Wednesday evening will also be via Manila, arriving in Port Moresby early Thursday morning. The announcement coincides with a deal Air Niugini struck with Air New Zealand to maintain its Boeing 767 aircraft in Hong Kong, instead of New Zealand. Mr Wasantha said maintenance checks on the 234-seat plane will now be carried out in Hong Kong by the Hong Kong Aircraft Engineering Company (HAECO). We are excited about returning to Hong Kong as this opens up trade and business opportunities as well as new source market for tourism from China for the country.

With Hong Kong airport being one of the busiest in Asia, Air Niugini s scheduled service into Hong Kong offers a number of excellent options for same day connections to and from Europe, the Middle East, India and the United States, he said in a statement. The ground work has been finalised in Hong Kong and we are looking forward to the service commencing on August 8. He said that concurrent with the Hong Kong service, the airline will boost capacity on the Port Moresby Brisbane sector with an additional flight each Wednesday. I am very pleased to add that the extra service means our customers have access to daily flights from Australia to PNG via Brisbane. Air Niugini suspended its service to Hong Kong in May 1998 due to a global decline for air travel to and from Asia during that period, about a year after Britain handed sovereignty over the island metropolis to China. Inbound air travel to PNG from China is expected to increase with the Chinese Government owned Chinese Metallurgical Construction Company set to play a major role in the Ramu nickel/cobalt project in the Madang Province, after it signed an agreement with the PNG Government to get an 85 per cent interest in the project. The Chinese government also recently categorised PNG and seven other Pacific states approved destinations for Chinese tourists , in a bid to get island nations to capitalise on 31 million Chinese tourists that the World Tourism Organisation say traveled outside mainland China last year.

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Officials fail to address fears over airline merger
21 July 2006
South China Morning Post

"The fact there will be a cross-shareholding [between Cathay and Dragonair] doesn't mean there won't be any competition. I don't believe we should draw such a conclusion. It is too early to say."

Eva Cheng Yu-wah, permanent secretary for Economic Development, to Legco, July 18, 2006

"With regard to our major markets, the merger will not reduce competition. The response from the aviation industry is positive. A cross-holding of shares does not eliminate competition."

Michael Wong Wai-lun, deputy secretary for Economic Development and Labour, at the same Legco meeting

You don't have to have an MBA to figure out that when one company buys another, the likelihood of them continuing to engage in price competition against each other to capture or sustain market share evaporates before the ink dries on the new contract.

What is particularly unsettling about the above statements is that Ms Cheng is leading the consultation process which may result in Hong Kong catching up with all other major economies in Asia by introducing a competition law.

Moreover, only seven legislators bothered to show up to hear the government's position on the merger on Tuesday. Ms Cheng and her mob always may have been unlikely to answer any concerns raised but one would have thought the topic of interest to just about every constituent the legislator represents.

Perhaps aware Mr Wong et al had failed miserably to answer concerns about the merger's impact on the travel sector, they ducked out the back door of Legco to avoid an inquisitive media throng.

As senior government officials, Below Deck will assume that Ms Cheng and Mr Wong are aware that a dominant market position - such as that which cross-shareholders Cathay, Dragonair and Air China will enjoy between Hong Kong and Beijing, where they will offer 90 per cent of flights - is bad for consumers. This leads us to ask why they would make such statements.

But just in case their knowledge of how supply and demand affects market prices is a bit rusty, here are a few examples of how a lack of competition is putting a dent in the travel consumers' pocketbooks.

If you want to buy the cheapest return airfare to London that Cathay Pacific offers next month, you'll be paying $5,970 before taxes for travelling 9,740km as the crow flies.

This means you fly about 3.26km for every $1 you spend, round trip. Four airlines offer direct flights to Heathrow every day.

Fly the same airline to Los Angeles next month, when they will be the only carrier to offer a direct service, and you'll pay a buck for every 2.49km you fly before taxes.

To be fair, Below Deck doesn't have total visibility into the factors that make up Cathay's ticket prices, so let's look at some other routes that compare similar distances.

Hong Kong-Bangkok is one of the most competitive routes in Asia, with 13 airlines directly connecting the cities, although some not daily. If you buy Cathay's cheapest seat next month, you'll pay a buck for every 1.53km you fly.

Fly to Hanoi, a market which only Cathay and Vietnam Airlines serve - often sharing one aircraft - and your dollar buys you 0.43 of a kilometre.

To Singapore, another route with many airlines fighting for the travel spend, each dollar will move you 3.67km. To New Delhi, which is served only by Cathay and Air India, your buck buys you 1.54km of flight before taxes.

Our government may still be unclear about whether Cathay, Dragonair and Air China will compete on the half-dozen mainland routes they will dominate but Cathay doesn't appear to. Nowhere in its five-page discourse rationalising why the merger was good for Hong Kong - which the government used to explain its position to legislators on Tuesday - does it mention lower ticket prices for consumers. It knows better.

On the whole, the merger is likely to benefit the greater economy. But you cannot deny the fact it will open the door for the new partners to abuse their dominance of some of the busiest routes connecting Hong Kong to the mainland.

No one is suggesting they will but the possibility will be created by the merger come August when the deal is expected to be approved by shareholders.

And governments that answer to their constituents through the ballot box put mechanisms in place to either prevent a monopolistic environment from being created or they legislate ways to hold the players to account if and when they abuse their position.

[hkth]

Xinhua news:
Cathay plans HK-Beijing freighter flights

[hkth]

RTHK news:
Airport Authority starts consultation on cargo terminal

[hkskyline]

Hong Kong Express Airways Announces June Passenger Figures
Corporate Press Release

Hong Kong, July 10h, 2006…Hong Kong Express Airways today announced its passenger traffic figures for the period June 1st 2006 to June 30th 2006.

The Hong Kong-based airline carried a total of 11,062 passengers in June, down 6.1 per cent from 11,741 in May. The number of flights operated however, climbed from 310 to 326 last month thanks to the launch of direct scheduled services between Hong Kong and Chiang Mai in Thailand. The most popular route in June was between Hong Kong and Hangzhou. Peak travel occurred on June 30th when 696 people flew with Hong Kong Express.

Hong Kong Express Airways Chief Executive Officer, Mr. Andrew Tse said, “In spite of the slight drop in passenger numbers, our overall growth trend as we near our first anniversary is positive and buoyed by our recent and forthcoming new route launches.”

Hong Kong Express Airways Chief Executive Officer, Mr. Andrew Tse said, “In spite of the slight drop in passenger numbers, our overall growth trend as we near our first anniversary is positive and buoyed by our recent and forthcoming new route launches.”

Following the inauguration of direct flights to Chiang Mai in June, Hong Kong Express Airways will continue its planned drive for increased market share with the launch later this month of its fifth scheduled service between Hong Kong and the Mainland Chinese city of Chongqing – said to be the world’s largest city.

 June 2006 May 2006 
Passengers 11,062 11,741 
Available Seat Kilometer (‘000) 32,257 31,704 
No of flights operated 326 310