The flight to Cairo would help build economic connections as part of HK's strategic positioning to try and create more Middle East business links. The flights to Japan are just cannibalizing one another to cater to middle class HKers going on vacations and spending their HKD outside HK. Building HK's economic profile would redound further to the benefit of CX, which would have more customers on long hauls and cause to add more of them. UO serving every third village in Japan hardly serves as an investment like this at all.

Granted, this is a totally academic debate since the planes don't exist to add that many long hauls right now, but you could probably make the case that there might be better strategic business choices /long haul feeder routes in the mainland or Southeast Asia.

My concern is that HKG is becoming, at least in terms of the percentages of destinations and types of flights served, more and more like a large UK provincial airport and less like a global hub - maybe increasingly akin to Manchester, which is a still a decently substantial airport but with a large amount of its capacity taken up with a thousand flights to Mediterranean holiday destinations - only the HK equivalent is Japan and a few other nearby places. The numbers of passengers etc, growing look good but this is concealing the fact that it's lost ground in terms of long haul and business travel.

Well when SIN and DOH have more long haul flights, and their home airlines allow people to book in advance which is more common for long haul flights.
It makes sense why HKG has become just a regional hub.
Pre covid HKG had more long haul flights than either of those 2 hubs and advanced booking was available with CX.

I don't understand this comment. Why would the additional Japan flights jeopardize long-haul flights? You make it sound like the additional Japan flights take up the slots that belong to long-haul flights. Important fact: HKG now has a new runway and will soon have a new terminal. These additional Japan flights are enabled by the increased take-off and landing slots provided by the new runway. As for long-haul flights, CX will have new 779s coming next year. There is plenty of potential for new long-haul flights.

My gut reaction was the more basic supposition; perhaps more people want to travel between HK and Japan than between HK and the Middle East? CX has a fiduciary duty to its shareholders; if any government entities want it to cater to their whims, they should make it worth their while.

Do you know how much adding these future hypothetical long haul customers is going to add more to the CX bottom line and what the likelihood is? The Japan-goer money is real and now and CX would be silly to leave money on the table now for some hypothetical sorta kinda maybe intangible benefit down the line that may or may not result in an actual dollar in the bank for CX. I would also have more sympathy if it was CX operating CAI but that hasn't been the case historically. Even if CX was the one operating, I doubt the yields to CAI would be as strong as to Japan which should make it less of a priority. Having a long haul just to have a long haul is pretty pointless if the yields aren't there.

On cannibalizing, I would agree with you if prices were dropping as capacity is being added but at least IME, that hasn't been the case. Either CX adds the capacity or someone else will (JL's peak travel double red-eye adds for example are a smart play). And whats wrong with catering to people wanting to spend their HKD elsewhere? Are their dollars somehow less desirable?

Mainland feeder maybe given the disparity in product but SEA, they would just be chasing low(er) yield traffic against SQ, TG etc. so I am not sure why that would be a good strategic business choice versus just flying to Japan which is a tried and tested business opportunity.

I don't really have an issue with that. Ultimately, whats the point of having a Cairo flight when its probably lower yield than a flight to Toyko? People want to go to Japan more than they want to go to Cairo and CX is just reacting to the market as they should - thats what a profit seeking business does.

The reality is that business travel is down globally not just to/from Hong Kong and that traffic is progressively moving towards the back of the plane. Airlines like UA are reacting to that, thinking outside the box and going for exotic/higher end leisure traffic to places like Mongolia and Greenland because thats where the demand is. Airlines like AA are still stuck in the business travel mindset and falling behind.

Now if HKers wanted to go to places like Mongolia and Greenland, I am sure CX would be jumping on it but thats not where they want to go. It is what it is and even though I am not going to be on the Japan village flights, I applaud CX for reacting appropriately.

The demand to middle east cities, such as Cairo, Tehran, Jordan, Bahrain and Istanbul etc is pretty low and if there is such demand, they are pretty much met by EK, QR and TK.

Don’t forget CX will/have return 8x777-300ER in 2024-2026. So any increase in capacity will be offset initially. Further we dunno how fast the 779 will be deliver.

The thing missing from this discussion - as in so many discussions of route planning to the point at which it gets tiresome pointing out - is that demand isn't static. If you start a nonstop route, you help create demand. Saying "people want to go to Japan, not the Middle East" ignores this.

Let me give you an example. Newcastle is an airport focused very heavily on LCC leisure travel to the Mediterranean. It would be very easy to say, akin to some of the comments above, "why should an airline bother with a route somewhere exotic? Everyone clearly wants to go to Greece and Spain. There's very little traffic going beyond Europe and BA can handle it." But Emirates bet on a direct flight to Dubai from a city that otherwise had no connections outside Europe. The result was direct trade between the UAE and the region around Newcastle has blossomed (as a consequence of both people to people exchanges and cargo potential). This is the same reason why the HK government is pushing CX to expand direct routes to places it wants to expand its trading relationship with. And like all investments, while it might not be the quickest money grab it's potentially much more lucrative to sell longer haul and more expensive seats than the cheapest possible seats for quick Japan tourist jaunts.

But by the way - it's not just about HK passengers, but people who can be lured the other direction by a direct flight. That two-way traffic potential for Japan is pretty bad right now, with the yen in the state it's in vs. the USD/HKD and Japanese passport possession (the possible number of people who can leave the country) being down to under 17%.

I do agree more slots are coming online at HKG and this will help, but there's still a question of where CX/UO are deploying their aircraft/crew/other resources. And there is an issue of business travel declining and leisure being more prominent. But other airlines have been doing better selling premium leisure whereas mass UO to small Japanese cities is the low end of the market. Surely there are lots of Gulf, Indian, etc. UHNWIs to be tapped who could be lured to see/spend time in HK/maybe engage in some bleisure and CX is ceding this market to other hubs in favor of HK tourists to Japan who could be served by some other LCC if there's really that much money in it.

TMK, there are more flights from Mainland China to Hungary than all other countries except for HK/Macau, Taiwan, S Korea, and Japan, and fares are dirt cheap....yet, for some reason, Chinese aren't flocking to Hungary in droves. Is the "if you build it, they will come" rule somehow broken in this case, but still applies to HK-Cairo?

First, Mainland Chinese outbound travel, especially to Europe, is way down for a host of reasons, especially the mainland economy and changing perceptions since Covid. That doesn't apply as much for HK, clearly, with huge numbers of HKers leaving HK every possible weekend and much higher salaries, paid in highly valuated HKD.

Second, the type of travel this kind of route attracts is going to be by its nature different from a short haul one. It's going to involve more business travel and upper end leisure - so volume won't be as high.

Third, subsidies have meant that mainland carriers have *supersaturated* the world with routes. When you go too far, not all of them are going to perform well. Hainan just opened LHR-Haikou! The speculation is that this is more slot-squatting than anything. And even those with a purpose may cannibalize one another. By contrast, HK is underserved given its much more international profile and potential. It's embarrassing Shenzhen and Guangzhou are picking up routes to parts of the world HK is not and those flights are empty, whereas there is potential to fill them to a city that could be more enticing for foreigners, and provide outbound tourists and investors with much more cash to spend abroad.

https://cimg9.ibsrv.net/gimg/www.fly...5f516fbf72.png

This chart shows percentages of travelers, not absolute numbers. The latter are down for outbound tourism since Covid still. As for Europe, 2023 was two years ago when there was a blip in demand thanks to initial reopening fervor.

There is also data indicating an opposite trend between 2019-2025 which may be inclusive of changes since 2023:
https://www.scmp.com/economy/global-...-us-and-europe

Sure, I realize the overall numbers have yet to return to 2019 volumes, but TMK Europe has recovered more quickly than other long haul markets.

I wish I had more recent data, or more sources, but I'm not currently working in a research capacity, so I take what I can find from the common internet. What does the SCMP article (paywalled) say specifically about Europe?

ETA: Thank you to the forum member who privately shared the SCMP article with me. I thought it was a decent read, especially based on the paper's current standards; I was hoping they'd offer multiple sources, or at least a single source more useful than TravelEx data, though.

Thats not missing from this discussion. Again, what is the quantum and likelihood of any of these lets fly to random ME/Africa places actually resulting in a dollar going to CX's bottom line at some point?

Thanks for the Economics 101 but I understand how investments work. And it isn't based on hypotheticals and potentials. It is based on actual hard numbers. I mean hypothetically, CX could invest in horse drawn carriages and it could be all the rage again to travel in horse drawn because its so available and CX could make zillions off that but you don't see them doing that.

For it to make sense to make that kind of long term investment, it has to generate demand AND that demand has to be higher yield than what you are foregoing. That places like CAI, AMM, JED, AUH havn't come back is probably instructive...

I also don't know what you have against Japan vacations....thats a bit random. Your premise that Japan tickets are cheap and that longer haul tickets are necessarily more expensive is also wrong. Try getting a seat to Sapporo during peak season. To use actual hard numbers, you can't even get a seat tomorrow to Sapporo - thats how busy it is - but to fly the day after and come back on say next Tuesday on a nonstop, the cheapest CX is selling for is 6,885. Thats more expensive than London which is going for 6,397. Adjusted for stage length, the yield is 2x/3x depending on the costs which I obviously am not privy to. New York is a bit better at 17,888 but on a stage length adjusted basis, probably not crushing that Sapporo ticket on yield. You can also get Osaka 4,261 but thats still better London on a stage length adjusted basis. I don't know why this maths is so hard to understand.

That doesn't matter. As long as the plane gets filled at a good yield, the point of origin doesn't matter. CX couldn't care less if the passenger has three arms and six legs as long as they pay. And even if you want to look at point of origin, how many people in ME/Africa outside of the oil countries can actually afford to get a passport, let along a plane ticket...

Its probably more embarrassing to be flying empty planes to places people don't want to go to...