HKExpress

To counter the growing LCC incursion into the Hong Kong market, Hong Kong Airlines decided in 2013 to restructure it’s loss-making Hong Kong Express subsidiary as an LCC. Mango were contracted to develop a business, financial & transition plan to turn this airline into a competitive LCC. Mango expert resources were then appointed to drive the business restructuring and rapid growth.

Project background

Hong Kong Express was founded in 2003/4 by Stanley Ho. HNA Group subsequently became an investor eventually securing control together with local Hong Kong investors. To compete more effectively against Cathay Pacific/Dragon Air, over the years, Hong Kong Express was steadily integrated with Hong Kong Airlines with most internal functions unified other than those required to maintain a separate AOC, route rights and legal entity.

Operating as a full service carrier in tandem with Hong Kong Airlines, Hong Kong Express operated routes across Asia. A poor customer reputation, low aircraft utilisation, high costs resulted in 10 years of continuous losses. This left both Hong Kong Express and Hong Kong Airlines unable to effectively compete with full service carriers and LCCs.

Expertise provided

  • New business plan, re-establishing the airline as Hong Kong’s LCC operating under a twin-brand strategy alongside Hong Kong Airlines
  • New management team recruited from Mango and applied to a restructured organisation operating under revised and market competitive terms & conditions
  • Full separation from Hong Kong Airlines with fully independent shareholding and legal structure, management team and decision-making process
  • Revised fleet plan replacing B737-800’s with A320 family aircraft, with fleet growing from 5 X A320 CEO aircraft to over 25 A320 CEO/NEO and A321 CEO aircraft
  • Wholly restructured route network, market proposition, brand, pricing, on-board product significantly enhancing HKExpress’ market position and resulting in significant revenue growth
  • Aircraft utilisation doubled; OTP performance significantly improved to match LCC best practice
  • Extensive benchmarking used to halve unit costs to LCC standard; extensive revenue build including ancillary revenues taking HKExpress to one of the world’s top 10 generators of ancillary revenues
  • Over 10m passengers carried by 2018, with numerous awards being won
  • Balance sheet restructuring and move into profitability in 2014 with consecutive years of growing profitability in 2015 and 2016
  • Initiated a strategic divestment/sale process in 2018, culminating in the sale of 100% of HKExpress on 27 March 2019 to Cathay Pacific for a consideration of US$628m, realising significant value for shareholders

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