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New Hong Kong airline spreads its wings, seeking over 100 routes

Chinese tycoon expands aviation operation with A-list executive team

The founder of Greater Bay Airlines previously launched China-based Donghai Airlines.   © AP

HONG KONG -- Hong Kong-based Greater Bay Airlines has applied for 104 routes, taking the upstart carrier another step closer to officially competing with rivals in a city that serves as one of Asia's top international hubs.

In the application filed Friday, 48 of the routes are to mainland cities, including Beijing and Shanghai. The airline intends to fly to 13 destinations in Japan, as well as flights to Singapore and other major Southeast Asian countries. Greater Bay applied in July for an aviation operation license.

India, South Korea, Guam and Saipan are also among the envisioned routes. All told, the flight network will cover 19 countries and territories.

The founder of Greater Bay, Chinese property tycoon Bill Wong Cho-bau, has been called Shenzhen's version of the Hong Kong tycoon Li Ka-shing. Just like Li, Wong made his fortune in real estate. Wong eventually branched out from the property game and founded Donghai Airlines, based in Shenzhen.

To help get Greater Bay off the ground, Wong loaded the airline's board with A-listers from China and Hong Kong, according to corporate filings. One director, Wang Wei, is the billionaire founder of the Chinese logistics group SF Express. From Hong Kong, there is Executive Councilor Arthur Li Kwok-cheung along with Andrew Leung Kwan-yuen, the Legislative Council president.

Also brought on board is Stanley Hui Hon-chun, the former chief executive of Hong Kong's airport authority. Algernon Yau Ying-wah, who served as the head of Cathay Dragon, the Hong Kong airline that abruptly shut down operations, also joined the team.

A distinctly political hue colors Greater Bay's nine-member boardroom. At least five are involved in China's National People's Congress or the Chinese People's Political Consultative Conference, the country's top advisory body known as the CPPCC.

Wong, who is known as Huang Chubiao in mainland China, became close with Hui because both are CPPCC members. Hui, an aviation industry veteran, said the body acted as a "platform" that brought them together in an interview with Nikkei Asia. Hui has been advising Wong throughout the new venture.

The company's name "Greater Bay" refers to China's ambitious initiative to develop a massive economic sphere that spans Guangdong Province on the mainland as well as special administrative regions Hong Kong and Macao. The carrier's employment recruitment literature says the company will support Hong Kong's airline hub in line with the "national development policy."

"If [Greater Bay] has a close relationship with the local [Hong Kong] government or mainland government, this will help with the development of the company," said Andrew Yuen, associate director of the Aviation Policy and Research Center at the Chinese University of Hong Kong. "In the aviation industry, the arrangement of traffic rights is an important factor."

Greater Bay has signed agreements to lease three secondhand Boeing aircraft. The company is hiring approximately 500 people, mainly those with experience in the aviation industry.

There are plans to expand the fleet to 30 aircraft over the next five years, and bring the workforce to between 2,500 and 3,000 people within that time frame.

Excluding cargo and helicopter services, there are three carriers headquartered in Hong Kong: flagship Cathay Pacific Airways, Hong Kong Express Airways and Hong Kong Airlines. Since Hong Kong Express, a budget carrier, is a subsidiary of Cathay Pacific, Greater Bay will essentially be the third airline group in the mix.

Hong Kong Airlines, an affiliate of Chinese conglomerate HNA Group, had been struggling financially prior to the coronavirus pandemic. The carrier has slimmed down in part by abandoning long-haul flights. The only barrier to Greater Bay's success is Cathay Pacific.

With a history in Hong Kong dating back more than seven decades, and with ties to a British conglomerate, Cathay Pacific has been the poster child of the "one country, two systems" framework governing the territory.

But in 2019, the company was warned by Chinese authorities that some of its employees had participated in anti-government protests. The next year, the COVID-19 pandemic struck a blow to air travel. Cathay Dragon, the medium haul carrier under Cathay Pacific, is in the middle of cutting about 8,500 jobs.

Greater Bay is meanwhile busy scooping up former Cathay Dragon pilots. The airline looks to provide mainland routes Cathay Dragon relinquished to aviation authorities, as well as flights to Japanese destinations, which has been Hong Kong Express's strength.

Hong Kong officials responsible for assigning routes told Nikkei that a decision on the routes will be made in consideration of factors such as healthy competition, strengthening the city's position as an aviation hub and the development of the airline industry.

As Cathay Pacific anticipates a recovery of demand for business travel, a highly profitable area, it plans to capture demand for short-haul trips through Hong Kong Express. Greater Bay will target passengers to the mainland, who are highly cost conscious.

Greater Bay "would also gain from establishing a strong foothold in the [Hong Kong-mainland] market," said Luya You, analyst at Bank of Communications International. "With the dissolution of Dragon, there will likely be a vacuum in this specific market once demand picks up post-COVID."

Hong Kong benefits from a geographical advantage of being in the heart of Asia, as well as fully equipped airport infrastructure, according to You, who predicts robust profitability on the horizon.

Yuen believes that Greater Bay, which specializes in regional flights, will not prove to be a short-term threat to Cathay Pacific, which embraces a business model of long- and short-haul flights. But still Greater Bay is a concerning presence.

On the political front, China's influence in Hong Kong is mounting as evidenced by the rise of crackdowns on pro-democracy activists. On the industrial end, Chinese enterprises are challenging Hong Kong rivals with names that date back to the British colonial era.

Additional reporting by Kenji Kawase.

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