Market Competition of Aviation Market in HK
Aviation Market in HK
Early Dragonair’s Position
Dragonair, based at Hong Kong International Airport, had styled itself as a low-cost carrier before Cathay’s takeover. Dragonair mainly focused on mainland China market which was an undeveloped market and had less-desirable routes in 1980s. It continued to see steady growth by primarily focusing on Asia market afterwards. Scheduled passenger services to Taipei, Bangkok and Tokyo were commenced in July 2002, November 2003 and April 2004, respectively (Source: International Directory of Company Histories, 2004).
Direct Competitors
Hong Kong Airlines, LCC Spring Airlines and Jetstar Hong Kong could be recognized as three direct Dragonair’s competitors which focused on mainland China mainly in the low-end aviation market.
Hong Kong Airlines could be considered Asia’s fastest-growing carrier which significantly expanded its frequency into mainland China over early 2013, allowing it to become the key competitors of Dragonair. Hong Kong Airlines believed that a competitive service with a lower cost base and sufficient frequency would make it attractive to a large portion of the market. Therefore, Hong Kong Airlines marketed the new services, for example some routes involved twice as much capacity as before. Price would be a key stimulant as Hong Kong Airlines was willing to reduce yields in return for higher load factors, whereas Dragonair was generally favouring yields over load factors (CAPA, 2013).
While Dragonair and Hong Kong Airlines principally focused on the additional frequency, Spring Airlines retained the edge by adapting the LCC model to the Chinese market as its strategy. Spring provided a no–frills flight service and charges for food and refreshments. This simplified service resulted in a cost saving of about US$2.5 per passenger in order to make it attractive to consumers, hence survived in this serious competitive market (Source: Aviation Strategy, 2007).
Another potential competitor
Early Dragonair’s Position
Dragonair, based at Hong Kong International Airport, had styled itself as a low-cost carrier before Cathay’s takeover. Dragonair mainly focused on mainland China market which was an undeveloped market and had less-desirable routes in 1980s. It continued to see steady growth by primarily focusing on Asia market afterwards. Scheduled passenger services to Taipei, Bangkok and Tokyo were commenced in July 2002, November 2003 and April 2004, respectively (Source: International Directory of Company Histories, 2004).
Direct Competitors
Hong Kong Airlines, LCC Spring Airlines and Jetstar Hong Kong could be recognized as three direct Dragonair’s competitors which focused on mainland China mainly in the low-end aviation market.
Hong Kong Airlines could be considered Asia’s fastest-growing carrier which significantly expanded its frequency into mainland China over early 2013, allowing it to become the key competitors of Dragonair. Hong Kong Airlines believed that a competitive service with a lower cost base and sufficient frequency would make it attractive to a large portion of the market. Therefore, Hong Kong Airlines marketed the new services, for example some routes involved twice as much capacity as before. Price would be a key stimulant as Hong Kong Airlines was willing to reduce yields in return for higher load factors, whereas Dragonair was generally favouring yields over load factors (CAPA, 2013).
While Dragonair and Hong Kong Airlines principally focused on the additional frequency, Spring Airlines retained the edge by adapting the LCC model to the Chinese market as its strategy. Spring provided a no–frills flight service and charges for food and refreshments. This simplified service resulted in a cost saving of about US$2.5 per passenger in order to make it attractive to consumers, hence survived in this serious competitive market (Source: Aviation Strategy, 2007).
Another potential competitor
References: 1. “International Directory of Company Histories”, Vol. 66. St. James Press, 2004. 2. CAPA (2013), “Hong Kong Airlines Continues expansion; Jetstar HK appoints CEO & Dragonair to grow closer to Cathay”, 11 February 2013. 3. Aviation Strategy (2007), “Spring Airlines: China 's self-styled First LCC”, April 2007. 4. The Standard (2014), "Jetstar Hong Kong sells three aircraft as it awaits approval", 22 August 2014. 5. Dragonair (2013), “Dragon News”, Issue 151, Feb 2013. 6. Dragonair (2014), “Dragonair’s Economy Class voted the best at 2014 Business Traveller China Awards”, Press Release, 13 November 2014. 7. Cathay Pacific (2014), “Interim Annual Reports 2014”, June 2014. 8. CAPA (2012), “Hong Kong Airlines, Asia 's fastest growing carrier, looks to become reckoning force in the region”, 15 November 2012.