It’s an oft-repeated truism that businesses in China and Hong Kong have excelled because they are willing to be bold, and Hong Kong Airlines is taking several bold steps at once with the launch of its all-business service to Gatwick.
Running before it can walk? Not a jot – the airline seems to know exactly what it is doing.
By launching its first-ever route to Western Europe as an all-business service between Hong Kong and London Gatwick, Hong Kong Airlines is banking on untapped high-yield demand for direct connections to make the venture viable. But it’s a challenge the airline, and London Gatwick Airport, which encouraged them to launch the route, believe is worth the risk.
“The new daily service will meet the increasing demand from SMEs (small and medium enterprises) and high net worth individuals seeking a premium service connecting these two global business capitals,” explains Gerard Clarke, UK general manager for Hong Kong Airlines.
Launched on March 8, the new service is the first all-business-class service from Hong Kong to London. This is also a first in that no airline has fitted out A330-200 equipment (Hong Kong Airlines will be using three for the route) in an all-business set-up. So what makes the airline so confident it can make the model work?
“Hong Kong Airlines is offering an altogether different experience and range of benefits on the route. The uniquely configured aircraft offers a spacious and comfortable flying experience unlike any competitor,” Clarke explains.
The airline is offering two levels of service – 82 Club Classic seats and 34 Club Premier seats. The Club Classic cabin comprises reclining seats, while Club Premier boasts lie-flat beds.
“The Club Classic product provides exceptional added value for its price point in the market and is expected to become a major draw for customers seeking significantly more comfort than competitors offer in Premium Economy,” remarks Clarke:
Onboard service will be premium – gourmet food and wine, free movies and magazines, Wi-Fi and a bar for each cabin, while in something of a coup, the airline has recruited Michelin star London chef Jason Atherton – who worked at Spain’s legendary El Bulli and with Gordon Ramsay – to design its menus. A limo service will be offered at each end for Premier flyers, with lounge access for all.
All-business-class products have had something of a chequered history. Exclusive business airlines such as Eos, MaxJet and Silverjet failed and went bankrupt. Legacy carriers have had more luck, with Lufthansa and Singapore Airlines offering all-business flights, while BA subsidiaries OpenSkies and CityFlyer offer all-business configured aircraft on transatlantic routes.
Indeed, Hong Kong Airlines will no doubt be aware that this is not the first time an airline has tried to make the Gatwick–Hong Kong route work.
In 2006, long-haul, low-cost carrier Oasis Hong Kong Airlines tried the Hong Kong to Gatwick route until its failure in 2008. Of course, its business model was very different – it used ageing B747s and a low fares model, which proved impossible to turn a profit on.
So why has the carrier chosen Gatwick? Since its change of ownership, Gatwick has been working hard to attract new long-haul carriers, particularly to Asia, and has seen this paying off better than perhaps even it could have anticipated.
So far it has landed Vietnam Airlines services to Hanoi and Ho Cho Minh City (Saigon), Air China to Beijing, Korean to Seoul and recently secured the AirAsia X (former Stansted) route to Kuala Lumpur, before it was pulled by the airline in March this year.
“Bringing in business routes like this one is key, but we also have a lot of work to do in changing the business travel communities’ perceptions of Gatwick,” explains Simon Edwards, Gatwick’s airline business development manager.
“So we are upping the ante in terms of providing more business travel facilities throughout the airport.” He explains, “Quick and easy access into the City is a key consideration for business travellers too. Gatwick is within an hour’s drive for around 15 million people and we have fast and excellent rail connections to central London.”
Indeed Gatwick has made investments of its own. “We know that if someone is purchasing a premium priced seat on a flight and receiving a premium level service from the airline, that he or she will want the experience at the airport to match the value of the flight ticket,” reasons Edwards. “And that is why we have introduced premium security lanes and parking.”
Although Hong Kong Airlines operates the route from its home base to Gatwick exclusively, there is strong competition between London and Hong Kong with Cathay Pacific, British Airways, Virgin Atlantic, Qantas and Air New Zealand all serving the market.
Around 20,000 seats a week were available between the two cities before Hong Kong Airlines began operations. What load factor does Clarke need to hit to break even? “We are working to quickly reach a seat factor of around 70% soon after launch and continue to develop the route further.”
But Hong Kong Airlines will no doubt be aware that this is not the first time an airline has tried to make the Gatwick–Hong Kong route work.
So can the new pretender to this route make a premium business model work? Clarke believes so: “Our decision to opt for Gatwick allows the airline to operate the most convenient flight times for business travellers from the newly refurbished Gatwick North Terminal. The development and innovation of this terminal will ensure that a premium ground experience is provided to all our customers.
Will Hong Kong Airlines align itself with either Star Alliance or SkyTeam as a rival to the Cathay and BA oneworld dominance on this route? “We have been approached by the leading alliances and are in discussions at this stage,” Clarke reveals to Routes News.
This article features in Routes News 2012 Issue 2