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Is CX Going To Establish A Low Cost Airline?  
User currently offlineFear_of_fly From Hong Kong, joined Feb 2001, 13 posts, RR: 0
Posted (12 years 1 week 2 days 7 hours ago) and read 2164 times:

Qantas and Virgin have already established their low cost airlines, is CX going to follow this action?

20 replies: All unread, jump to last
 
User currently offlineThe Coachman From Australia, joined Apr 2001, 1421 posts, RR: 0
Reply 1, posted (12 years 1 week 2 days 7 hours ago) and read 2107 times:

You have got be kidding right?

Why should they do this?

Qantas and Virgin are different animals to CX. QF has nowhere else to expand except internationally and to do so profitably it has to lower costs, which launching Australian Airlines allows them to do. Virgin Blue is a low-cost operation in Australia which before Virgin and Impulse entered had some of the highest airfares in the world.

CX doesn't need to do this.



M88, 722, 732, 733, 734, 73G, 73H, 742, 743, 744, 752, 762, 763, 772, 773, 77W, 320, 332, 333, 345, 388, DH8, SF3 - want
User currently offlineGuyBetsy1 From Canada, joined Aug 2001, 838 posts, RR: 6
Reply 2, posted (12 years 1 week 2 days 7 hours ago) and read 2087 times:

CX has no domestic market.

Besides, other than HKG, CX fares are pretty low compared to the others.


User currently onlineUnited Airline From Hong Kong, joined Jan 2001, 9116 posts, RR: 15
Reply 3, posted (12 years 1 week 2 days 6 hours ago) and read 2069 times:

What for? Where should they?

User currently onlineUnited Airline From Hong Kong, joined Jan 2001, 9116 posts, RR: 15
Reply 4, posted (12 years 1 week 2 days 6 hours ago) and read 2067 times:

Besides, other than HKG, CX fares are pretty low compared to the others.

What do you mean?


User currently offlineHkg82 From Hong Kong, joined Apr 2002, 1245 posts, RR: 1
Reply 5, posted (12 years 1 week 2 days 4 hours ago) and read 2059 times:

I don't think CX are going to start a low cost airline now, not in the near future. It isn't part of their strategy. They're focused on mainly business travellers by offering a premium product.





User currently offlineBluewhite From Hong Kong, joined Jul 2001, 333 posts, RR: 0
Reply 6, posted (12 years 1 week 2 days 4 hours ago) and read 2033 times:

Maybe using the now, wholly-owned, Air Hong Kong?
That would be a smart move, starting off with cargo flights.

I actually don't see why they wouldn't consider it - business-wise, there is a leisure travel market around Asia, and the new start-ups like Australian Airlines will start competing on routes with them soon.
For me, I would and do fly economy class for short-haul flights - what's the problem, as long as it's safe, punctual and the service is friendly? I don't need a full-course meal every 2-3 hours!!
(I still think CX has a great product though!)
BW


User currently offlineCX829 From , joined Dec 1969, posts, RR:
Reply 7, posted (12 years 1 week 2 days 3 hours ago) and read 2019 times:

You could probably expect route expansions as the economy picks up. CX will not launch any low cost carrier. Only troubled airlines do that. Take a look at AC, for instance. (no offense)

User currently offlineBowen0614 From Hong Kong, joined Nov 2001, 132 posts, RR: 0
Reply 8, posted (12 years 1 week 2 days ago) and read 2004 times:

Oh yeah~ I don't think that CX is going to launch a low-cost airline either. That's because CX don't have short-haul route (within Mainland China). If CX is going to launch low-cost airline within southeast asia routes, that's not a wise move also. Think about it, all CX fleets are now wide-bodied jet. If CX is going to launch a low-cost airline, they must buy some narrow-bodied fleets like A319, A320 or some B737 New Generation.

Meanwhile, CX wants to concentrate on their Cargo business. They have also grounded some jets! I don't think they will launch a low-cost airline.


User currently offlineA380 From Canada, joined Dec 2000, 658 posts, RR: 1
Reply 9, posted (12 years 1 week 1 day 19 hours ago) and read 1976 times:

Asian passengers generally still expect full service and are pampered by the fine airlines like CX and SQ.

User currently offlineBluewhite From Hong Kong, joined Jul 2001, 333 posts, RR: 0
Reply 10, posted (12 years 1 week 1 day 17 hours ago) and read 1960 times:

I would think CX don't want to start one up either. As someone rightly pointed out, their fleet is wide-body and their service is always top-notch full service.

The major thing that is changing is the competitive environment, external influences which may affect CX/SQ's "full-service" flights and current market / passengers, in the future. Any business has to adapt to changes, whether they want to or not, or else they become uncompetitive.

BW


User currently offlineDocpepz From Singapore, joined May 2001, 1968 posts, RR: 3
Reply 11, posted (12 years 1 week 1 day 16 hours ago) and read 1958 times:

Singapore Airlines launched Silk Air. Can Silk Air be considered a low cost airline? It has a Business Class though, and gives hot meals on most flights. And it still costs S$700 to get to Laos from Singapore! (Northwest can get you to LAX for the same price)

User currently offlineAirbus A3XX From Australia, joined May 1999, 507 posts, RR: 1
Reply 12, posted (12 years 1 week 1 day 11 hours ago) and read 1931 times:

Silk Air is definitely not a low cost carrier, but a full service, regional carrier though.

User currently offlineVywh From Hong Kong, joined Feb 2002, 283 posts, RR: 0
Reply 13, posted (12 years 1 week 1 day 11 hours ago) and read 1923 times:

But it seems to be a trend for low-fare tickets.
I've heard that some other airlines are trying to promote low-fare tickets without meal and TV,they also choose a lower standard airport so that the parking fee can be lowered.
I don't know,maybe ten years later,there'll be two types of airlines.One is the normal one(that's the one existing),and the other is cheap-fee airlines in which they try to lower their operation cost in order to compete with the bigger airliners.
What do you think about these?Please kindly correct me if I'm wrong,thx.


User currently onlineUnited Airline From Hong Kong, joined Jan 2001, 9116 posts, RR: 15
Reply 14, posted (12 years 1 week 1 day 7 hours ago) and read 1898 times:

CX is always the most expensive in many routes.

I don't think CX will ever launch a low cost carrier. They don't have to. Unless they want to build Air Hong Kong into one by launching Passenger service.

Silkair is a full service carrier. Its just that it is a regional carrier


User currently offlineB-HOP From Hong Kong, joined Nov 2000, 603 posts, RR: 1
Reply 15, posted (12 years 1 week 1 day 6 hours ago) and read 1887 times:

No chance: -

A: - Are the new low cost airline use Shek kong as their base!?

B: - Cathay have a fairly low cost anyway
C: - NO one in HK these days would fly without PTV.

Regards
Kev



Live life to max!!!
User currently offlineBluewhite From Hong Kong, joined Jul 2001, 333 posts, RR: 0
Reply 16, posted (12 years 1 week 18 hours ago) and read 1871 times:

Just to extend the debate, what happens if competitors introduce "no-frills" service on routes competing with CX/SQ (which will start within the year)? Assume they grab some market share, which I think is highly likely.

If you were the CEO, how would you respond?

BW


User currently offlineThe Coachman From Australia, joined Apr 2001, 1421 posts, RR: 0
Reply 17, posted (12 years 1 week 18 hours ago) and read 1867 times:

Crush them!

I'd do this by loading up on capacity. If I was CX, I have A330-300's etc. at my disposal, I even have B777-200's and -300's. If I was SQ, I'd slug it out with B777's. A start-up no-frills carrier won't have the cash to take on carriers flying widebodies and the economics of widebodies, cargo capacity would easily absorb any losses I would incur.

I wouldn't worry too much about Australian Airlines, their management team has already announced that they won't offer drastically lower fares.



M88, 722, 732, 733, 734, 73G, 73H, 742, 743, 744, 752, 762, 763, 772, 773, 77W, 320, 332, 333, 345, 388, DH8, SF3 - want
User currently offlineBluewhite From Hong Kong, joined Jul 2001, 333 posts, RR: 0
Reply 18, posted (12 years 1 week 18 hours ago) and read 1864 times:

That's actually effective. (crushing them)

But of course, no-frills airlines have far lower cost bases, so they have the margin to squeeze as well, and I don't see any of the "traditional US Majors" squeezing out Southwest Airlines.......similarly in Europe.

We'll just have to wait and see if this is replicated in Asia.

BW


User currently offlineThe Coachman From Australia, joined Apr 2001, 1421 posts, RR: 0
Reply 19, posted (12 years 1 week 18 hours ago) and read 1862 times:

Southwest can't be crushed, it's business model is too well protected and strictly followed.

They are also very big now, one can't start operating a fleet of 10, let alone 30 or so A330-200/300's in Asia, that would require one massive bankroll. WN has several hundred B737's.

If someone started an airline that flew HKG-SIN, and started with say 2 A330's, then it would be swamped by the 4 and 5 dailiy flights that CX and SIN operate each (and add QF, UA etc. into that mix as well). It wouldn't attract any business traffic, and it would be hard to operate an A330-300 with about 350-380 pax and be profitable only offering low fares over such relatively short distances as HKG-SIN. CX and SQ could easily lower their fares in economy, and still charge their high fares for business and first class. Cargo in the A330's, B777's etc. would easily overcome the losses that putting extra cheap tickets on the HKG-SIN route would incur. It wouldn't take long for the new entrant to fold, otherwise, someone would have done it by now. To compete, the airline would need to attack routes where companies aren't so well entrenched.



M88, 722, 732, 733, 734, 73G, 73H, 742, 743, 744, 752, 762, 763, 772, 773, 77W, 320, 332, 333, 345, 388, DH8, SF3 - want
User currently offlineJesseycy From New Zealand, joined Aug 2001, 343 posts, RR: 0
Reply 20, posted (12 years 1 week 12 hours ago) and read 1834 times:

Nah.... Simply because CX, and SQ is really experienced in the field of introducing limited cheap fares that will appeal to us money minded asians!

Most people who fly HKG-SIN, maybe to visit their families, or friends, flying economy, how will they go about buying an air ticket? Let's say they plan to fly in June, they'll go down to the travel agent in Jan, reserve a seat, but not issuing it till the last moment.... In the meantime, they'll scan the newspapers and ads, and once an offer comes out, they'll grab it!

So why need a low cost carrier? People who really want to save have all types of tricks anyway! I never flew SIN-HKG return for more than S$450! What do you think the fare of a low cost carrier will be? Much lower than that? I don't think so.....

Low cost carriers won't really appeal to the ecomomic asians, and they can't tap into the frequent business flyers either....


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