c933103
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CX: "Never say never" for LCC business, learning from strength of LCC

Mon May 28, 2018 2:45 pm

In a recent interview with local media (Chinese link): https://m.mingpao.com/pns/dailynews/web ... 7444108368

The reporter asked the Customer and Commercial Officer of CX will they start developing the LCC business in the future, he responded with "never say never" and said they are going to continues thinking about and explores the LCC model.

He then further went on saying that the line between LCC and FSC have become more and more blurry in recent years with value added services similar to FSC being offered by LCC , while FSC are also offering cheap fares like the fanfare offers by CX every week and better Asian Miles offer, as such, while they are not going to fully convert Cathay Pacific into a LCC carrier, they are always learning from strength of LCC carriers to compensate their own weakness, and their current focus is to become a more "down to earth" FSC and to become even more so days after days.

The media then interprete these statements as that they are going to add more elements of LCC operations into their service.

Then they went onto talk about their 3-4-3 777 seats, claims despite their reduced width, they are actually more comfortable and with bigger IFE screen and phone stand. And they also said that they focus on the experience for the whole journey start from the process of customers buying tickets, claims it is probably more important for customers to be more easily and cheaply purchase tickets for their entire family to take a trip than the width of the seats.

And then they also talked about the fuel, saying that if the fuel price continues to growth then it might ve possible for their fuel hedging contract to turn positive, but still it will increase their fuel cost and that fuel hedging is only a short term measure and thus one of their long term measure against the fuel price increase is to get more fuel efficient planes like the 35Ks they are getting this year.

They also mentioned that although they were still losing money
last year, but their result in second half of last year have already improved and turned a profit, and that they have already passed
"the stage of taking antibiotics" and is now time to "strengthen our base by taking TCM" and believed that the performance for Cathay this year will be further improved from second half of last year.
 
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LAX772LR
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Mon May 28, 2018 10:20 pm

In a phrase: "...told ya."
It's starting, even with CX.

People laughed when those of us who see it coming, tell them that "Eventually, at least in economy: EVERY airline will be NK."

It's going to be death-by-a-thousand-cuts, until you can't tell the difference between CX/QR and NK/U2 if you're not sitting in the front.

If you think the separate-brand thing is the end of it, and the likes of SQ/CX/etc won't eventually just integrate it fleet-wide in given time, just look back at the US industry 15yrs ago or so. Anyone still naive enough to believe the "Oh, they'd never do that. What will people think about their brand's service?!" is in for a nassssty surprise.

It's coming. Just give it a market downturn or two.
I myself, suspect a more prosaic motive... ~Thranduil
 
9252fly
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 1:29 am

LAX772LR wrote:
In a phrase: "...told ya."
It's starting, even with CX.

People laughed when those of us who see it coming, tell them that "Eventually, at least in economy: EVERY airline will be NK."

It's going to be death-by-a-thousand-cuts, until you can't tell the difference between CX/QR and NK/U2 if you're not sitting in the front.

If you think the separate-brand thing is the end of it, and the likes of SQ/CX/etc won't eventually just integrate it fleet-wide in given time, just look back at the US industry 15yrs ago or so. Anyone still naive enough to believe the "Oh, they'd never do that. What will people think about their brand's service?!" is in for a nassssty surprise.

It's coming. Just give it a market downturn or two.


I agree with you completely. Been watching the evolution for many years, it subtle when seen over a shorter period of time, yet very pronounced over longer periods. Change is very much perpetual in aviation as we see in technology.
 
Max Q
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 2:22 am

They already have an LCC don’t they ?


It’s called Dragon Air or whatever the latest name is
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tullamarine
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 2:25 am

Max Q wrote:
They already have an LCC don’t they ?


It’s called Dragon Air or whatever the latest name is

Cathay Dragon is not a LCC. It is a full-service carrier operating from HKG on regional services. It is more like a Silk Air. It may have lower operating costs than CX but it is definitely not a low-fare alternative.
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 2:28 am

Then they went onto talk about their 3-4-3 777 seats, claims despite their reduced width, they are actually more comfortable and with bigger IFE screen and phone stand.


Are they seriously saying that you should be more comfortable now despite the seat being over an inch narrower because you have somewhere to stand your mobile phone?
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LAX772LR
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 2:36 am

Surprised there aren't more up-to-date pics in the database of KA's First and Business class seats than this, from 2014.

I myself, suspect a more prosaic motive... ~Thranduil
 
c933103
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 2:39 am

tullamarine wrote:
Then they went onto talk about their 3-4-3 777 seats, claims despite their reduced width, they are actually more comfortable and with bigger IFE screen and phone stand.


Are they seriously saying that you should be more comfortable now despite the seat being over an inch narrower because you have somewhere to stand your mobile phone?

"and".
 
juliuswong
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 3:13 am

The ship has sailed long ago for CX to set up an LCC. You have a big competitor (Hong Kong Airlines) at your home base with their own LCC (HK Express), wouldn't be it an unwise move since you're making loss for past few quarters/years? Also, you could have spent your energy on setting up your own LCC a decade ago rather than spending your sweet time fighting your own oneworld partner when they wanted to set up LCC (Jetstar HK) in HK. Perhaps getting your house in order first would be a greater idea.
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zakuivcustom
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 3:20 am

c933103 wrote:
And they also said that they focus on the experience for the whole journey start from the process of customers buying tickets, claims it is probably more important for customers to be more easily and cheaply purchase tickets for their entire family to take a trip than the width of the seats.


This pretty much sums it up. For all those whinings and complaints I've seen on various HK websites, at the end of the day, when the ticket is cheap, who are they going to fly with? CX.

As for starting their own LCC - never say never, but I would think it would probably be some joint venture (Jetstar is out of question, though) rather than CX going at it on their own if they go that route.
 
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zeke
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 3:56 am

juliuswong wrote:
The ship has sailed long ago for CX to set up an LCC. You have a big competitor (Hong Kong Airlines) at your home base with their own LCC (HK Express), wouldn't be it an unwise move since you're making loss for past few quarters/years?.


Rumours are HK express is up for sale, rumours are QF are apparently looking at buying it. Rumours are the airline has never been profitable.
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juliuswong
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 3:58 am

zeke wrote:
juliuswong wrote:
The ship has sailed long ago for CX to set up an LCC. You have a big competitor (Hong Kong Airlines) at your home base with their own LCC (HK Express), wouldn't be it an unwise move since you're making loss for past few quarters/years?.


Rumours are HK express is up for sale, rumours are QF are apparently looking at buying it. Rumours are the airline has never been profitable.

Oh hell no, CX will flip if QF indeed buy into UO. Interesting.... Won't be surprised it is not profitable since it is operating out of one of the world's most expensive city, frequent change in management and their small fleet is made up of different aircraft and engine type.
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zakuivcustom
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 4:28 am

juliuswong wrote:
zeke wrote:
juliuswong wrote:
The ship has sailed long ago for CX to set up an LCC. You have a big competitor (Hong Kong Airlines) at your home base with their own LCC (HK Express), wouldn't be it an unwise move since you're making loss for past few quarters/years?.


Rumours are HK express is up for sale, rumours are QF are apparently looking at buying it. Rumours are the airline has never been profitable.

Oh hell no, CX will flip if QF indeed buy into UO. Interesting.... Won't be surprised it is not profitable since it is operating out of one of the world's most expensive city, frequent change in management and their small fleet is made up of different aircraft and engine type.


Umm...pretty sure it has more to do with HNA Group trying to sell anything that is worth something rather than UO losing that much money.

On the other hand, while QF can make move, isn't HNA Group much closer to Virgin Australia (they own part of it IIRC)? UO sister carrier in HX also codeshare with VA right now.

Yes, QF can move in, take HX as well, and increase the HK-Australia share via HX (just to really piss off CX, of course).

And not sure what you mean by UO's fleet. Their A320/321ceo are all IAE V2500, while their 320neo are all PW. Their fleet are not all that different from, let say, NK.
 
c933103
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 8:01 am

zakuivcustom wrote:
juliuswong wrote:
zeke wrote:

Rumours are HK express is up for sale, rumours are QF are apparently looking at buying it. Rumours are the airline has never been profitable.

Oh hell no, CX will flip if QF indeed buy into UO. Interesting.... Won't be surprised it is not profitable since it is operating out of one of the world's most expensive city, frequent change in management and their small fleet is made up of different aircraft and engine type.


Umm...pretty sure it has more to do with HNA Group trying to sell anything that is worth something rather than UO losing that much money.

On the other hand, while QF can make move, isn't HNA Group much closer to Virgin Australia (they own part of it IIRC)? UO sister carrier in HX also codeshare with VA right now.

Yes, QF can move in, take HX as well, and increase the HK-Australia share via HX (just to really piss off CX, of course).

And not sure what you mean by UO's fleet. Their A320/321ceo are all IAE V2500, while their 320neo are all PW. Their fleet are not all that different from, let say, NK.

If HNA really need to sell HX and UO I don't think it will be up to them to decide who will buy them. Last time I heard about it I was told that for HX, the holding structure have already changed so that HNA no longer directly control the airlines, and my understanding is that the structure would allow creditors sell that portion of stock away to whomever placing the highest bid in case HNA fails to repay its debts
 
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 8:45 am

zeke wrote:
juliuswong wrote:
The ship has sailed long ago for CX to set up an LCC. You have a big competitor (Hong Kong Airlines) at your home base with their own LCC (HK Express), wouldn't be it an unwise move since you're making loss for past few quarters/years?.


Rumours are HK express is up for sale, rumours are QF are apparently looking at buying it. Rumours are the airline has never been profitable.

if CX does not purchase HX or bid for it, they deserve to go bankrupt...
 
Kashmon
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 8:48 am

juliuswong wrote:
The ship has sailed long ago for CX to set up an LCC. You have a big competitor (Hong Kong Airlines) at your home base with their own LCC (HK Express), wouldn't be it an unwise move since you're making loss for past few quarters/years? Also, you could have spent your energy on setting up your own LCC a decade ago rather than spending your sweet time fighting your own oneworld partner when they wanted to set up LCC (Jetstar HK) in HK. Perhaps getting your house in order first would be a greater idea.

aaah
the old CX should let OW partners start competitor airlines at its hub.... Like to see if QF would allow CX to start competitor international airlines at MEL and SYD.....

HK airlines is still not bigger than KA....

CX never wanted to set up an LCC, CX was becoming the LCC in economy... if anyone read/listened to the managements comments in 2008-09 they would have known this slow but clear strategy
( started with removing amenity kits in Y and intensifying the regional 777'S..._
 
juliuswong
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 10:40 am

Kashmon wrote:
juliuswong wrote:
The ship has sailed long ago for CX to set up an LCC. You have a big competitor (Hong Kong Airlines) at your home base with their own LCC (HK Express), wouldn't be it an unwise move since you're making loss for past few quarters/years? Also, you could have spent your energy on setting up your own LCC a decade ago rather than spending your sweet time fighting your own oneworld partner when they wanted to set up LCC (Jetstar HK) in HK. Perhaps getting your house in order first would be a greater idea.

aaah
the old CX should let OW partners start competitor airlines at its hub.... Like to see if QF would allow CX to start competitor international airlines at MEL and SYD.....

HK airlines is still not bigger than KA....

CX never wanted to set up an LCC, CX was becoming the LCC in economy... if anyone read/listened to the managements comments in 2008-09 they would have known this slow but clear strategy
( started with removing amenity kits in Y and intensifying the regional 777'S..._

Not going into argument with you since your business towards CX is pretty profound in this forum. Let's agree to disagree.
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vhtje
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 1:20 pm

I never understood why CX didn't 'do a Japan Airlines' and setup a Jetstar franchise in HK with QF. Yes, I know according to this forum QF and CX "do not get on" but what does that even mean? They are both business that exist to make money and if the idea is mutually and financially beneficial, why should they not pursue it?

Mind you, one has to have doubts about how wise QF's management can be after witnessing their heavy-handed tactics resulting in the debacle of Jetstar HK. QF should have worked with CX on the Jetstar Hong Kong franchise from the outset.
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c933103
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 1:52 pm

vhtje wrote:
I never understood why CX didn't 'do a Japan Airlines' and setup a Jetstar franchise in HK with QF. Yes, I know according to this forum QF and CX "do not get on" but what does that even mean? They are both business that exist to make money and if the idea is mutually and financially beneficial, why should they not pursue it?

Mind you, one has to have doubts about how wise QF's management can be after witnessing their heavy-handed tactics resulting in the debacle of Jetstar HK. QF should have worked with CX on the Jetstar Hong Kong franchise from the outset.

QF was cooperating with MU at the time if I recalled correctly
 
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 2:00 pm

LAX772LR wrote:
Surprised there aren't more up-to-date pics in the database of KA's First and Business class seats than this, from 2014.



Funnily enough, i did a flight in that seat today. Very comfortable for regional.

I was sitting at HKG today looking out the window wondering why Cathay Dragon hasn't been rolled into CX mainline.
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zakuivcustom
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 2:12 pm

Kashmon wrote:
juliuswong wrote:
The ship has sailed long ago for CX to set up an LCC. You have a big competitor (Hong Kong Airlines) at your home base with their own LCC (HK Express), wouldn't be it an unwise move since you're making loss for past few quarters/years? Also, you could have spent your energy on setting up your own LCC a decade ago rather than spending your sweet time fighting your own oneworld partner when they wanted to set up LCC (Jetstar HK) in HK. Perhaps getting your house in order first would be a greater idea.

aaah
the old CX should let OW partners start competitor airlines at its hub.... Like to see if QF would allow CX to start competitor international airlines at MEL and SYD.....

HK airlines is still not bigger than KA....

CX never wanted to set up an LCC, CX was becoming the LCC in economy... if anyone read/listened to the managements comments in 2008-09 they would have known this slow but clear strategy
( started with removing amenity kits in Y and intensifying the regional 777'S..._


One thing I just noticed is that they finally roll out "Seat Selection Fee" for the cheapest Economy Fare (Economy Save). Before you can't even pay to select a seat (Only during check-in 48 hrs prior, and trust me, the only thing left most of the time are those middle seats :white: ).

Now just waiting for them to put more luggage allowance restriction on the lowest fare. Right now they have a fairly generous allowance on non-US routes (Max 2 pieces/30kg Total), maybe they would reduce that back to 20kg for the cheapest fare (i.e. fanfare tickets)? Well, either that or introduced a true bare-bone "Economy Basic" fare.

vhtje wrote:
Mind you, one has to have doubts about how wise QF's management can be after witnessing their heavy-handed tactics resulting in the debacle of Jetstar HK. QF should have worked with CX on the Jetstar Hong Kong franchise from the outset


Umm...maybe CX was not all that interested? LCC in the region (particularly NE Asia i.e. South Korea/Japan) was in its infancy. HX, its main competitor right now, has a network of a bunch of mainland Chinese routes and that's about it. No UO back then (didn't transform into full-LCC until mid-2013) either. CX was also making a nice profit back in 2012 and has no need to work with anyone trying to form a LCC.

Then UO became an LCC, HX grew, regional LCC keep growing, CN3 grew (thus mainland Chinese doesn't have to use HKG as a transfer point nearly as much). Then come the fuel hedging loss. By then, with CX already fighting for QF over Jetstar HK for 2 years, there's just no way they can worked with each other.

c933103 wrote:
vhtje wrote:
I never understood why CX didn't 'do a Japan Airlines' and setup a Jetstar franchise in HK with QF. Yes, I know according to this forum QF and CX "do not get on" but what does that even mean? They are both business that exist to make money and if the idea is mutually and financially beneficial, why should they not pursue it?

Mind you, one has to have doubts about how wise QF's management can be after witnessing their heavy-handed tactics resulting in the debacle of Jetstar HK. QF should have worked with CX on the Jetstar Hong Kong franchise from the outset.

QF was cooperating with MU at the time if I recalled correctly


Indeed they were. It started as 50-50 between QF and MU. To try to get HK Authority to approve the application, they get Shun Tak Holding (i.e. Stanley Ho's company aka Macau's Casino tycoon for those not from the region) to invest, and it become 1/3 each between QF, MU, and Shun Tak. CX continues to fight them, though.

Meanwhile, HKExpress start transforming into a LCC back then almost unnoticed, and the rest is history.
 
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vhtje
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 2:27 pm

zakuivcustom wrote:
Umm...maybe CX was not all that interested? LCC in the region (particularly NE Asia i.e. South Korea/Japan) was in its infancy.


But that is my point: by partnering with QF, CX would gain access to expertise on running a LCC and therefore rapid deployment of a known working model (and, to a lesser extent, brand). QF, by partnering with CX, would gain expertise on navigating the intricacies of the HK and Chinese bureaucracy, not to mention cultural sensitivities. We learned from the previous Jetstar Hong Kong attempt this is expertise QF desperately need.
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klakzky123
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 2:30 pm

Kashmon wrote:
juliuswong wrote:
The ship has sailed long ago for CX to set up an LCC. You have a big competitor (Hong Kong Airlines) at your home base with their own LCC (HK Express), wouldn't be it an unwise move since you're making loss for past few quarters/years? Also, you could have spent your energy on setting up your own LCC a decade ago rather than spending your sweet time fighting your own oneworld partner when they wanted to set up LCC (Jetstar HK) in HK. Perhaps getting your house in order first would be a greater idea.

aaah
the old CX should let OW partners start competitor airlines at its hub.... Like to see if QF would allow CX to start competitor international airlines at MEL and SYD.....

HK airlines is still not bigger than KA....

CX never wanted to set up an LCC, CX was becoming the LCC in economy... if anyone read/listened to the managements comments in 2008-09 they would have known this slow but clear strategy
( started with removing amenity kits in Y and intensifying the regional 777'S..._


Yeah but a lot of an LCC is lowering costs of operation. That's why airlines will spin up a separate airline as the LCC. You can negotiate lower labor costs, fly planes that are maximized for density, and operate those planes with higher utilization. Most importantly, they can lower costs of economy seats all they want but their operating costs won't change. Singapore Airlines created Scoot for that reason. Even if the LCC is a money loser that cannibalizes your own traffic, it still means that the LCC that you own is owning market share rather than a competitor. QF did this with Jetstar for a long time.
 
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hongkongflyer
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 2:38 pm

zeke wrote:
juliuswong wrote:
The ship has sailed long ago for CX to set up an LCC. You have a big competitor (Hong Kong Airlines) at your home base with their own LCC (HK Express), wouldn't be it an unwise move since you're making loss for past few quarters/years?.


Rumours are HK express is up for sale, rumours are QF are apparently looking at buying it. Rumours are the airline has never been profitable.


You are completely wrong. According to UO's press release,
https://www.hkexpress.com/sites/default/files/160802%20HK%20Express%20Business%20Performance%202015%20%2020161H%20July%20EN_1.pdf
2015 is the first year they made a full year profits.

In addition, although this article is in Chinese, basically UO is profitable since 2015 till Sep 2017 as at the date of the news reporting.
https://www.hk01.com/%E7%B6%93%E6%BF%9F/119406/hk-express%E5%B0%88%E8%A8%AA-ceo%E8%A6%AA%E8%87%AA%E5%88%86%E4%BA%AB%E6%85%B3%E7%9A%AE%E5%A6%99%E6%B3%95-%E6%A5%AD%E5%8B%99%E6%9C%80%E5%A4%A7%E9%A2%A8%E9%9A%AA%E4%BE%86%E8%87%AA%E5%8C%97%E9%9F%93
 
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 2:40 pm

zakuivcustom wrote:
juliuswong wrote:
zeke wrote:

Rumours are HK express is up for sale, rumours are QF are apparently looking at buying it. Rumours are the airline has never been profitable.

Oh hell no, CX will flip if QF indeed buy into UO. Interesting.... Won't be surprised it is not profitable since it is operating out of one of the world's most expensive city, frequent change in management and their small fleet is made up of different aircraft and engine type.


Umm...pretty sure it has more to do with HNA Group trying to sell anything that is worth something rather than UO losing that much money.

On the other hand, while QF can make move, isn't HNA Group much closer to Virgin Australia (they own part of it IIRC)? UO sister carrier in HX also codeshare with VA right now.

Yes, QF can move in, take HX as well, and increase the HK-Australia share via HX (just to really piss off CX, of course).

And not sure what you mean by UO's fleet. Their A320/321ceo are all IAE V2500, while their 320neo are all PW. Their fleet are not all that different from, let say, NK.


HX and UO will be one of the last non-PRC business they would dispose completely.
Although no longer directly be the controlling shareholder of HX, HU still controling HX..
 
c933103
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 2:51 pm

zakuivcustom wrote:
c933103 wrote:
vhtje wrote:
I never understood why CX didn't 'do a Japan Airlines' and setup a Jetstar franchise in HK with QF. Yes, I know according to this forum QF and CX "do not get on" but what does that even mean? They are both business that exist to make money and if the idea is mutually and financially beneficial, why should they not pursue it?

Mind you, one has to have doubts about how wise QF's management can be after witnessing their heavy-handed tactics resulting in the debacle of Jetstar HK. QF should have worked with CX on the Jetstar Hong Kong franchise from the outset.

QF was cooperating with MU at the time if I recalled correctly


Indeed they were. It started as 50-50 between QF and MU. To try to get HK Authority to approve the application, they get Shun Tak Holding (i.e. Stanley Ho's company aka Macau's Casino tycoon for those not from the region) to invest, and it become 1/3 each between QF, MU, and Shun Tak. CX continues to fight them, though.

Meanwhile, HKExpress start transforming into a LCC back then almost unnoticed, and the rest is history.

Was Shun Tak's involvement at the time one of the reason that they're codesharing with Cotai instead?
 
zakuivcustom
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 2:51 pm

vhtje wrote:
zakuivcustom wrote:
Umm...maybe CX was not all that interested? LCC in the region (particularly NE Asia i.e. South Korea/Japan) was in its infancy.


But that is my point: by partnering with QF, CX would gain access to expertise on running a LCC and therefore rapid deployment of a known working model (and, to a lesser extent, brand). QF, by partnering with CX, would gain expertise on navigating the intricacies of the HK and Chinese bureaucracy, not to mention cultural sensitivities. We learned from the previous Jetstar Hong Kong attempt this is expertise QF desperately need.


You never know whether QF asked CX or not (Yes, the "QF and CX hate each other" is mostly quibblings on a.net or other aviation forums, but I can't really say it's completely false, either). Maybe QF literally ignored CX and went with MU instead (MU would helped with the lucrative mainland China market more than CX), maybe CX showed no interest in forming a LCC at all. Even now, CX could have started their own LCC for years, but it took the heavy losses from fuel hedging to finally wake up their ultra-arrogant management.

BTW, HX/UO also fought against Jetstar HK also. Not surprising as that would introduced an additional competitor.

hongkongflyer wrote:
You are completely wrong. According to UO's press release,
https://www.hkexpress.com/sites/default ... 20EN_1.pdf
2015 is the first year they made a full year profits.


It should be added that UO didn't transform into a full-LCC until 2013. So basically, in 2 years, they turn from a carrier that was bleeding money to one that are in the black (and growing).

Last note, isn't the rumored buyer for HX/UO being SQ/Temasek Holdings instead of QF?
http://www.scmp.com/business/companies/ ... rlines-and
 
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 4:15 pm

zakuivcustom wrote:
vhtje wrote:
zakuivcustom wrote:
Umm...maybe CX was not all that interested? LCC in the region (particularly NE Asia i.e. South Korea/Japan) was in its infancy.


But that is my point: by partnering with QF, CX would gain access to expertise on running a LCC and therefore rapid deployment of a known working model (and, to a lesser extent, brand). QF, by partnering with CX, would gain expertise on navigating the intricacies of the HK and Chinese bureaucracy, not to mention cultural sensitivities. We learned from the previous Jetstar Hong Kong attempt this is expertise QF desperately need.


You never know whether QF asked CX or not (Yes, the "QF and CX hate each other" is mostly quibblings on a.net or other aviation forums, but I can't really say it's completely false, either). Maybe QF literally ignored CX and went with MU instead (MU would helped with the lucrative mainland China market more than CX), maybe CX showed no interest in forming a LCC at all. Even now, CX could have started their own LCC for years, but it took the heavy losses from fuel hedging to finally wake up their ultra-arrogant management.

BTW, HX/UO also fought against Jetstar HK also. Not surprising as that would introduced an additional competitor.

hongkongflyer wrote:
You are completely wrong. According to UO's press release,
https://www.hkexpress.com/sites/default ... 20EN_1.pdf
2015 is the first year they made a full year profits.


It should be added that UO didn't transform into a full-LCC until 2013. So basically, in 2 years, they turn from a carrier that was bleeding money to one that are in the black (and growing).

Last note, isn't the rumored buyer for HX/UO being SQ/Temasek Holdings instead of QF?
http://www.scmp.com/business/companies/ ... rlines-and


But not the controlling interest. Many airlines have some interest in others, which not necessary means that they will exercise their rights as a shareholder to influence the airlines' operation. In addition, HU still hold a large portion of HX's shares.
 
timtam
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 4:38 pm

Ironically CX unintentionally did QF a very big favour by stopping Jetstar HK going ahead. What started out looking like a promising venture quickly turned south. QF would have invested a lot of cash and suffered significant startup losses at the same time as the very costly capacity war broke out with VA in the domestic Australian market.

Since that time the fortunes of QF and CX has diverged markedly. QF has significantly restructured driving down its costs. It has improved its profitability and is churning out $1.3bn per year in net cashflow. Its market capitalisation has tripled since the Jetstar HK days and it has bought back around 25% of its stock over the last 3 years.

Whilst it has the cash, it would be a bit of a surprise if QF was to invest in a HK LCC.
 
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vhtje
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 5:35 pm

zakuivcustom wrote:
vhtje wrote:
You never know whether QF asked CX or not (Yes, the "QF and CX hate each other" is mostly quibblings on a.net or other aviation forums, but I can't really say it's completely false, either). Maybe QF literally ignored CX and went with MU instead (MU would helped with the lucrative mainland China market more than CX), maybe CX showed no interest in forming a LCC at all. Even now, CX could have started their own LCC for years, but it took the heavy losses from fuel hedging to finally wake up their ultra-arrogant management.


Well, no, we do not know if QF made any approach to CX or if QF did and CX rejected their approach. Does it matter? The point is, they did not work together. That only strengthens my argument that it would have been a better outcome for QF (and CX) had they worked together.
I only turn left when boarding aircraft. Well, mostly. All right, sometimes. OH OKAY - rarely.
 
c933103
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 7:20 pm

klakzky123 wrote:
Kashmon wrote:
juliuswong wrote:
The ship has sailed long ago for CX to set up an LCC. You have a big competitor (Hong Kong Airlines) at your home base with their own LCC (HK Express), wouldn't be it an unwise move since you're making loss for past few quarters/years? Also, you could have spent your energy on setting up your own LCC a decade ago rather than spending your sweet time fighting your own oneworld partner when they wanted to set up LCC (Jetstar HK) in HK. Perhaps getting your house in order first would be a greater idea.

aaah
the old CX should let OW partners start competitor airlines at its hub.... Like to see if QF would allow CX to start competitor international airlines at MEL and SYD.....

HK airlines is still not bigger than KA....

CX never wanted to set up an LCC, CX was becoming the LCC in economy... if anyone read/listened to the managements comments in 2008-09 they would have known this slow but clear strategy
( started with removing amenity kits in Y and intensifying the regional 777'S..._


Yeah but a lot of an LCC is lowering costs of operation. That's why airlines will spin up a separate airline as the LCC. You can negotiate lower labor costs, fly planes that are maximized for density, and operate those planes with higher utilization. Most importantly, they can lower costs of economy seats all they want but their operating costs won't change. Singapore Airlines created Scoot for that reason. Even if the LCC is a money loser that cannibalizes your own traffic, it still means that the LCC that you own is owning market share rather than a competitor. QF did this with Jetstar for a long time.

Maybe slot at HKG is a problem. LCC are nice and can attract VFR and leisure travellers, but if their planes can only be flown after sacrificing slots from mainline flying then it probably won't be attractive to the airlines.
 
Kashmon
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 8:40 pm

vhtje wrote:
zakuivcustom wrote:
Umm...maybe CX was not all that interested? LCC in the region (particularly NE Asia i.e. South Korea/Japan) was in its infancy.


But that is my point: by partnering with QF, CX would gain access to expertise on running a LCC and therefore rapid deployment of a known working model (and, to a lesser extent, brand). QF, by partnering with CX, would gain expertise on navigating the intricacies of the HK and Chinese bureaucracy, not to mention cultural sensitivities. We learned from the previous Jetstar Hong Kong attempt this is expertise QF desperately need.

Actually QF's expertise on JQ would have been terrible

they entire JQ operation is subsidized by QF;s operations
 
zakuivcustom
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 8:51 pm

c933103 wrote:
klakzky123 wrote:
Kashmon wrote:
aaah
the old CX should let OW partners start competitor airlines at its hub.... Like to see if QF would allow CX to start competitor international airlines at MEL and SYD.....

HK airlines is still not bigger than KA....

CX never wanted to set up an LCC, CX was becoming the LCC in economy... if anyone read/listened to the managements comments in 2008-09 they would have known this slow but clear strategy
( started with removing amenity kits in Y and intensifying the regional 777'S..._


Yeah but a lot of an LCC is lowering costs of operation. That's why airlines will spin up a separate airline as the LCC. You can negotiate lower labor costs, fly planes that are maximized for density, and operate those planes with higher utilization. Most importantly, they can lower costs of economy seats all they want but their operating costs won't change. Singapore Airlines created Scoot for that reason. Even if the LCC is a money loser that cannibalizes your own traffic, it still means that the LCC that you own is owning market share rather than a competitor. QF did this with Jetstar for a long time.

Maybe slot at HKG is a problem. LCC are nice and can attract VFR and leisure travellers, but if their planes can only be flown after sacrificing slots from mainline flying then it probably won't be attractive to the airlines.


Slot can indeed be a problem. An article (Chinese only, sorry) about the same topic earlier in an interview with (former) CX CEO Ivan Chu:
https://www.hkcnews.com/article/3187/%E ... 187/cathay

Basically, the first paragraph indicated that while there are market demand for LCC, and how customer focus on price in addition to services. The "hardware" is just not there as HKG slots are pretty full, and CX may considered a LCC once the third runway is finished in 2024. (Remember, though, that the article is old, as Ivan Chu got kicked out of his position 5 days after the article was published)

There is the typical concern of their own LCC cannibalizing the mainline load, of course.

Ultimately, though, we all know CX management more or less just blame their loss on everything else (increased competitions from CN3/ME3/LCC/whatever) and used that as an excuses to "reform" the company (i.e. laying off people, cut back on services, cut back on employee benefits, etc.) when that fuel hedging contract is the one and only cause that they're losing this much money. At least they should make a profit this FY with the fuel hedging contract beginning to ease out, along with fuel price actually increasing.
 
klakzky123
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 9:13 pm

Kashmon wrote:
vhtje wrote:
zakuivcustom wrote:
Umm...maybe CX was not all that interested? LCC in the region (particularly NE Asia i.e. South Korea/Japan) was in its infancy.


But that is my point: by partnering with QF, CX would gain access to expertise on running a LCC and therefore rapid deployment of a known working model (and, to a lesser extent, brand). QF, by partnering with CX, would gain expertise on navigating the intricacies of the HK and Chinese bureaucracy, not to mention cultural sensitivities. We learned from the previous Jetstar Hong Kong attempt this is expertise QF desperately need.

Actually QF's expertise on JQ would have been terrible

they entire JQ operation is subsidized by QF;s operations


They did that on purpose. Everyone knew JQ would be a money loser. QF didn't care. The point was to hold market share even if it meant cannibalizing customers from higher yielding seats on QF flights. Remember Virgin Blue was still a problem for QF and it was arguably better to lose money on JQ than to surrender market share to Virgin Blue.

I doubt Scoot turns a profit either. No one is chasing immediate profits. The game in Southeast Asia and ANZ is to protect market share. You see this in Europe too. Eurowings is currently a money loser as well.
 
zakuivcustom
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 9:29 pm

klakzky123 wrote:
I doubt Scoot turns a profit either.


Scoot IS profitable, with their profit keep increasing also.
viewtopic.php?f=3&t=1394385

While you're at FSC's LCC, ANA's Peach makes profit since 2014 (Vanilla Air, its other LCC, is still in the red, though), Jetstar Japan (JL/QF) makes money since 2016. I believe KE's Jin Air is also profitable, along with OZ's Air Busan (Air Seoul is not yet profitable, but they're pretty new).

Just b/c Eurowings is poorly ran doesn't mean FSC-affiliate LCC lose money in general.
 
klakzky123
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 9:36 pm

zakuivcustom wrote:
klakzky123 wrote:
I doubt Scoot turns a profit either.


Scoot IS profitable, with their profit keep increasing also.
viewtopic.php?f=3&t=1394385

While you're at FSC's LCC, ANA's Peach makes profit since 2014 (Vanilla Air, its other LCC, is still in the red, though), Jetstar Japan (JL/QF) makes money since 2016. I believe KE's Jin Air is also profitable, along with OZ's Air Busan (Air Seoul is not yet profitable, but they're pretty new).

Just b/c Eurowings is poorly ran doesn't mean FSC-affiliate LCC lose money in general.


Scoot definitely lost money for several years when it launched. I'm not suggesting LCCs are guaranteed to lose money. I'm suggesting that it takes several years for most LCCs to start turning a profit. And Eurowings will probably eventually become profitable as well.

Similarly for CX, it would have been ideal to start an LCC, eat the losses for a few years and work your way to profitability like SIA did with Scoot. It might be too late now. I'm just suggesting that there were smarter moves to be made. CX didn't make those moves.
 
zakuivcustom
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 9:51 pm

klakzky123 wrote:
zakuivcustom wrote:
klakzky123 wrote:
I doubt Scoot turns a profit either.


Scoot IS profitable, with their profit keep increasing also.
viewtopic.php?f=3&t=1394385

While you're at FSC's LCC, ANA's Peach makes profit since 2014 (Vanilla Air, its other LCC, is still in the red, though), Jetstar Japan (JL/QF) makes money since 2016. I believe KE's Jin Air is also profitable, along with OZ's Air Busan (Air Seoul is not yet profitable, but they're pretty new).

Just b/c Eurowings is poorly ran doesn't mean FSC-affiliate LCC lose money in general.


Scoot definitely lost money for several years when it launched. I'm not suggesting LCCs are guaranteed to lose money. I'm suggesting that it takes several years for most LCCs to start turning a profit. And Eurowings will probably eventually become profitable as well.

Similarly for CX, it would have been ideal to start an LCC, eat the losses for a few years and work your way to profitability like SIA did with Scoot. It might be too late now. I'm just suggesting that there were smarter moves to be made. CX didn't make those moves.


I see what you mean. But yes, LCC losing money for the first 2-3 years is definitely typical. It's how fast one can turn a profit anyway. For instance, using my examples above, Peach was able to turn an operating profit from FY2013 on, while Jetstar Japan didn't achieved that until 2016 (FY2015 I believe), with both carriers started operation about 4 months apart (Peach in Mar 2012, Jetstar Japan in Jul 2012). For Hong Kong, as c933103 posted, UO didn't make a profit until 2015 (2 years after it transition to a LCC).

Things will definitely get interesting if fuel price continue to rise, though.
 
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 9:56 pm

What would they call their LCC? My bet is on Air Hong Kong!
 
Kashmon
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 10:05 pm

it made no sense to start a separate offshoot... going down the ANZ path of transforming the core airline into an LCC is the most successful strategy- AA/DL/BA
cannibalizing your own hub is silly.

as for CX"suffering" , your are merely then being fooled by the management, CX is very profitable without the fuel hedging, management failed at the hedging and used it as an excuse to cut costs claiming "the market had changed, etc etc"
 
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Tue May 29, 2018 10:20 pm

Kashmon wrote:
Actually QF's expertise on JQ would have been terrible

they entire JQ operation is subsidized by QF;s operations


Proof, and source, please. I am not interested in your opinion. I am interested, please, in hard facts that can back up the claim in your post. Please do show me where in QF's annual report that Qantas mainline subsidise JQ. Not an a.net post you read.
I only turn left when boarding aircraft. Well, mostly. All right, sometimes. OH OKAY - rarely.
 
klakzky123
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Wed May 30, 2018 1:00 am

Kashmon wrote:
it made no sense to start a separate offshoot... going down the ANZ path of transforming the core airline into an LCC is the most successful strategy- AA/DL/BA
cannibalizing your own hub is silly.

as for CX"suffering" , your are merely then being fooled by the management, CX is very profitable without the fuel hedging, management failed at the hedging and used it as an excuse to cut costs claiming "the market had changed, etc etc"


Cannibalizing your traffic makes sense when you have LCC competition. Hong Kong has plenty of it. You either eat the losses and preserve market share or you surrender market share to your competition. BA has a natural competitive advantage due to its slot position at LHR. There will be no LCC competition there for the forseeable future. In fact no other airline can come close to creating their route network. The US is so large that LCCs can't compete with the scale of the full service carriers. The scale problem is also a major unique competitive advantage in the US.

Southeast Asia is basically set up for LCCs to be able to compete well against legacy incumbents. There is a critical mass of price conscious travelers in a region and LCCs have successfully poached pretty sizeable amounts of market share. So the legacy carriers have a choice. Either they can just try to compete using their existing offering or create their own LCCs to capture the traffic. SIA opted for the later while CX opted for the former. And I'd argue that Singapore Airlines has come out ahead and preserved its dominant position in Singapore while CX's failure to protect its dominant position in Hong Kong has been a major problem. It doesn't matter if the traffic that you lost was the lower yielding stuff. CX needs to maintain its dominance at HKG and my argument is that it would have been wiser to create an LCC and eat the losses while preserving market share.

The market dynamics in Southeast Asia are different. There are just too many price concious travelers so the strategy of just trying to adapt your product to the market while riding your brand's reputation won't work everywhere. Yes it works in the US and it works for BA. But those airlines have natural competitive advantages that CX doesn't have. Singapore Airlines also has a sterling reputation but creating an LCC like experience in economy while keeping the high fixed costs won't work in the phase of LCCs in Asia with far lower costs of operation. They need a separate airline that can shed some of CX's costs and can operate high density planes with LCC level utilization.
 
zakuivcustom
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Wed May 30, 2018 3:35 am

klakzky123 wrote:
Kashmon wrote:
it made no sense to start a separate offshoot... going down the ANZ path of transforming the core airline into an LCC is the most successful strategy- AA/DL/BA
cannibalizing your own hub is silly.

as for CX"suffering" , your are merely then being fooled by the management, CX is very profitable without the fuel hedging, management failed at the hedging and used it as an excuse to cut costs claiming "the market had changed, etc etc"


Cannibalizing your traffic makes sense when you have LCC competition. Hong Kong has plenty of it. You either eat the losses and preserve market share or you surrender market share to your competition. BA has a natural competitive advantage due to its slot position at LHR. There will be no LCC competition there for the forseeable future. In fact no other airline can come close to creating their route network. The US is so large that LCCs can't compete with the scale of the full service carriers. The scale problem is also a major unique competitive advantage in the US.

Southeast Asia is basically set up for LCCs to be able to compete well against legacy incumbents. There is a critical mass of price conscious travelers in a region and LCCs have successfully poached pretty sizeable amounts of market share. So the legacy carriers have a choice. Either they can just try to compete using their existing offering or create their own LCCs to capture the traffic. SIA opted for the later while CX opted for the former. And I'd argue that Singapore Airlines has come out ahead and preserved its dominant position in Singapore while CX's failure to protect its dominant position in Hong Kong has been a major problem. It doesn't matter if the traffic that you lost was the lower yielding stuff. CX needs to maintain its dominance at HKG and my argument is that it would have been wiser to create an LCC and eat the losses while preserving market share.

The market dynamics in Southeast Asia are different. There are just too many price concious travelers so the strategy of just trying to adapt your product to the market while riding your brand's reputation won't work everywhere. Yes it works in the US and it works for BA. But those airlines have natural competitive advantages that CX doesn't have. Singapore Airlines also has a sterling reputation but creating an LCC like experience in economy while keeping the high fixed costs won't work in the phase of LCCs in Asia with far lower costs of operation. They need a separate airline that can shed some of CX's costs and can operate high density planes with LCC level utilization.


One of the key thing that you forgot about - ASEAN overall is a much more liberalized air market, more similar to EU, with its wide-ranging inter-countries open-skies agreement. It's how LCC was able to even gain such a large foothold into the region anyway. Another thing that helps? Local authorities realizing where traffic growth would be, and start building LCC (budget) terminal, including SIN.

If anything, CX has everything you can ask for - protectionism (HK Civil Aviation Authority is totally in bed with CX), slot restricted airport (HKG slots are getting harder to come by), a near monopoly on many routes (Yes, they have to compete with ME3 to Europe and CN3 for greater China traffic flow, but ex-HKG long-hauls? HX has what? 5 long-haul destinations? And frequency to US cities? CX dominates. Europe non-stop? CX dominates, Australia? QF is a joke compare to CX ex-HKG in terms of network and capacity). Corporate Contract? CX dominates by miles ex-HKG. HKG is also a strong O&D city (71% O&D vs. 29% connecting as a major Asian hub), which usually helps yield. Yet with all these advantages (along with low fuel prices), CX still manage to lose money. Mainly thanks to its stupid fuel hedging contract, of course.

P.S. BA is in such a dominant position in LHR? You mean the same airline which can compete with UA's business class (as being awful), nickel and dime even premium pax (Seriously, buy a business class ticket? Now pay some more pounds to select a seat), and btw, will also be moving to 3-4-3 in their 777 Y. You mean, BA is not a LCC already? :white: (Ok, not really, or else IAG wouldn't try so hard to buy Norwegian Air Shuttle).

On the other hand, many things for CX to learned from (or not :white: ) before they even have to start their own LCC. Between reducing luggage allowance for the cheapest ticket (then pull a US3 and use the original "lowest fare" as the "Economy Basic" fare, and increase the price for everything else), maybe "Premium Meal" (Thus offering a more "premium" services as a "premium" airline; or just served Chicken Wrap while charging extra for "hot meal") similar to BA or "Snack Box" similar to US3, there are certainly many opportunities for CX before they have to spend tons of money starting their own LCC.
 
blandy62
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Wed May 30, 2018 4:02 am

juliuswong wrote:
The ship has sailed long ago for CX to set up an LCC. You have a big competitor (Hong Kong Airlines) at your home base with their own LCC (HK Express), wouldn't be it an unwise move since you're making loss for past few quarters/years? Also, you could have spent your energy on setting up your own LCC a decade ago rather than spending your sweet time fighting your own oneworld partner when they wanted to set up LCC (Jetstar HK) in HK. Perhaps getting your house in order first would be a greater idea.


I think you are spot on here. Instead of trying to "fight" with the LCCs by cutting everything that could be cut in term of service in Y (but with your high cost structure), they should have done what SQ did for example. Create your own LCC and join the party.
If you talk purely about the low yield leisure traffic, look at the presence HKExpress, AirAsia, Cebu pacific or even Jetstar have in HKG these days. If they want to start a LCC, what markets not yet covered do they really plan to serve?

They spent their time fighting against Jetstar HK. Well Jetstar eventually penetrated HK via they other subsidiaries in Japan, SE asia and Vietnam.
 
eamondzhang
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Wed May 30, 2018 4:44 am

Kashmon wrote:
vhtje wrote:
zakuivcustom wrote:
Umm...maybe CX was not all that interested? LCC in the region (particularly NE Asia i.e. South Korea/Japan) was in its infancy.


But that is my point: by partnering with QF, CX would gain access to expertise on running a LCC and therefore rapid deployment of a known working model (and, to a lesser extent, brand). QF, by partnering with CX, would gain expertise on navigating the intricacies of the HK and Chinese bureaucracy, not to mention cultural sensitivities. We learned from the previous Jetstar Hong Kong attempt this is expertise QF desperately need.

Actually QF's expertise on JQ would have been terrible

they entire JQ operation is subsidized by QF;s operations

When for Pete's sake the Jetstar group reported a profit of $413 million in FY2016/17?

Just continue to show your nonsense.

Michael
 
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FA9295
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Wed May 30, 2018 4:48 am

Captain77W wrote:
What would they call their LCC? My bet is on Air Hong Kong!

Probably something related to "Cathay". Maybe resurrection of "Cathay Dragon"...? ;)
No, "FA" in my username does not stand for "flight attendant"...
 
blandy62
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Wed May 30, 2018 5:07 am

FA9295 wrote:
Captain77W wrote:
What would they call their LCC? My bet is on Air Hong Kong!

Probably something related to "Cathay". Maybe resurrection of "Cathay Dragon"...? ;)


Seems that quite a bit of CX route to the second tier cities have been transferred to KA lately. So if they were to restructure it into a LCC, quite a few of KA route would have to be transferred back to CX?
 
Kashmon
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Wed May 30, 2018 10:09 am

blandy62 wrote:
FA9295 wrote:
Captain77W wrote:
What would they call their LCC? My bet is on Air Hong Kong!

Probably something related to "Cathay". Maybe resurrection of "Cathay Dragon"...? ;)


Seems that quite a bit of CX route to the second tier cities have been transferred to KA lately. So if they were to restructure it into a LCC, quite a few of KA route would have to be transferred back to CX?


1 route....
KL
 
zakuivcustom
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Re: CX: "Never say never" for LCC business, learning from strength of LCC

Wed May 30, 2018 1:30 pm

Kashmon wrote:
blandy62 wrote:
FA9295 wrote:
Probably something related to "Cathay". Maybe resurrection of "Cathay Dragon"...? ;)


Seems that quite a bit of CX route to the second tier cities have been transferred to KA lately. So if they were to restructure it into a LCC, quite a few of KA route would have to be transferred back to CX?


1 route....
KL


And it's not just 1 single route (KUL) that they convert to KA, that comes with transferring 5x A333 from the "premium" airline call CX to KA, with seatings that are less premium (i.e. way more Y-heavy) than KA's existing A333s. And yet, you still have the myth on a.net that KA is suppose to be "less premium", leisure-heavy, subsidary of CX when it's not. If anything, for years, the general consensus in Hong Kong is that KA has BETTER services than CX (It has since "fallen" back to CX-level, though). Also, it's hard to really say whether KA's cost base is even that much lower than CX's.
 
B-HOP
Posts: 775
Joined: Wed Nov 22, 2000 8:09 pm

Re: CX: "Never say never" for LCC business, learning from strength of LCC

Wed May 30, 2018 3:59 pm

Kashmon wrote:
zeke wrote:
juliuswong wrote:
The ship has sailed long ago for CX to set up an LCC. You have a big competitor (Hong Kong Airlines) at your home base with their own LCC (HK Express), wouldn't be it an unwise move since you're making loss for past few quarters/years?.


Rumours are HK express is up for sale, rumours are QF are apparently looking at buying it. Rumours are the airline has never been profitable.

if CX does not purchase HX or bid for it, they deserve to go bankrupt...


I don't think US, EU regulatory bodies would let CX or even KA bought HX or UO without major concessions on its network, slots etc, beside, if they are to be sold tomorrow, they are a decent business somebody else could have interested, you can stay in your own imaginary world on how CX could have been like, but anti-trust laws means you can't get away with it, let's stop here

The response from CX is very typical CX mindset, they think they were superior to all and that Hong Kong and the government owes them support unlike ME3,SQ etc and that they deserve to be 'looked after' as the major 'flagship carrier'. What they don't realize is they already located at one of the best place to have an airline in the world, huge O&D market, a major airport with slot shortage of which you have majority of the slots, a 50 million metropolis next door, the only similar airline that have this advantage is BA, but they have competition in Gatwick. When the gamble to keep low cost out of HKIA was lost and fare ex HKG high, they made vague voices, if they are serious enough about LCC, they could have one four years ago, not to wait UO to evolve into one, did CX stopped other Jetstar companies came, NO. I think they have yet taste the power of LCC, I believe at traffic with UO could grew to the point they have A330 widebodies to places like ICN, NRT, KIX etc, replacing 2 A320 that could save them a slot for something else
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zakuivcustom
Posts: 1635
Joined: Sat Jun 10, 2017 3:32 am

Re: CX: "Never say never" for LCC business, learning from strength of LCC

Wed May 30, 2018 6:28 pm

B-HOP wrote:
Kashmon wrote:
zeke wrote:

Rumours are HK express is up for sale, rumours are QF are apparently looking at buying it. Rumours are the airline has never been profitable.

if CX does not purchase HX or bid for it, they deserve to go bankrupt...


I don't think US, EU regulatory bodies would let CX or even KA bought HX or UO without major concessions on its network, slots etc, beside, if they are to be sold tomorrow, they are a decent business somebody else could have interested, you can stay in your own imaginary world on how CX could have been like, but anti-trust laws means you can't get away with it, let's stop here

The response from CX is very typical CX mindset, they think they were superior to all and that Hong Kong and the government owes them support unlike ME3,SQ etc and that they deserve to be 'looked after' as the major 'flagship carrier'. What they don't realize is they already located at one of the best place to have an airline in the world, huge O&D market, a major airport with slot shortage of which you have majority of the slots, a 50 million metropolis next door, the only similar airline that have this advantage is BA, but they have competition in Gatwick. When the gamble to keep low cost out of HKIA was lost and fare ex HKG high, they made vague voices, if they are serious enough about LCC, they could have one four years ago, not to wait UO to evolve into one, did CX stopped other Jetstar companies came, NO. I think they have yet taste the power of LCC, I believe at traffic with UO could grew to the point they have A330 widebodies to places like ICN, NRT, KIX etc, replacing 2 A320 that could save them a slot for something else


To be fair, UO already moved to A321 (50 more seats) to the like of ICN/KIX/NRT. I doubt they'll go to A330s for now, though, instead just let its parents HX fly those A333s (Quite frankly, once you factor in all the ancillary fees, HX can be cheaper than UO anyway).

On the other hand, why would US or EU regulatory bodies care? CX is a business based in Hong Kong, and any business regulation they have to follow, it's Hong Kong only and nowhere else. Plus how much can US or EU regulatory bodies do anyway? HX doesn't fly to any places in EU, and only just started flying to US. Ok, so you mean CX can't use HX's single pair of slot (each) and LAX and SFO (Actually only 4/wk at SFO, although I think HX planned to go daily eventually)? Big deal, they fly 3 RTs to SFO and LAX each already, and certainly has no uses for that additional slot anyway. YVR or (soon) YYZ? That's up to Canada. HND? That's up to Japan.

If anything, mainland Chinese gov't would have a bigger say in everything than EU/US will ever do, with HX/UO being under umbrella of a mainland Chinese company (HNA Group).

P.S. Yes, CX IS arrogant, and still is. The heavy losses (chiefly due to fuel hedging) woke them up a little bit, but their response is nothing more than your typical corporation - i.e. "cut cost" and make low-level employees suffered while those fat cats up top are almost untouched, even though management personnels are the one that f**ked up big time.

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