Hong Kong’s flagship carrier Cathay Pacific Airways has confirmed that it is in talks to acquire shares in budget airline Hong Kong Express Airways from struggling Chinese conglomerate HNA Group.
The confirmation follows media reports that suggested the company’s plans to secure a deal to purchase a stake in full-service carrier Hong Kong Airlines from HNA.
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Hong Kong Express started services in 2013 and flies to Asian destinations such as China, South Korea, Japan and Vietnam. The companies have yet to reach an agreement.
If a deal is finalised, it is expected to give Cathay Pacific an advantage in the growing budget-travel market and meet the demand for cheaper travel options in Asia.
The company’s efforts to establish its own budget brand have been affected by a lack of slots at Hong Kong International Airport (HKIA), Reuters reported.
However, a source told the news agency that Cathay is not interested in Hong Kong Airlines because it has both similar routes and full-service positioning.
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By GlobalDataAnother source added that the company has entered an exclusivity period to negotiate a deal with HNA for a stake in HK Express.
Cathay chief executive Rupert Hogg associated the creation of a budget carrier to the completion of a third runway at the airport in 2024, which would open up more slots.
According to South China Morning Post, Cathay Pacific and Cathay Dragon collectively control 45% of runway slots at HKIA. The parent company and its subsidiary operate a combined fleet of 201 passenger and cargo planes, flying to 232 destinations in 53 countries and territories.
The report added that the proposed acquisition would increase the company’s control of runway slots to 50%.
