Air Hong Kong in the spotlight

Not just an overnight express service, the DHL-branded carrier has added capacity for the Cathay Pacific Group

It is 2am on a mild morning at Hong Kong International Airport. On the cargo side, it’s business as usual – which means very busy indeed. Chief among the aircraft taxiing to and from the parking bays are the yellow tailfins of the Air Hong Kong (AHK) fleet, particularly around the DHL Express terminal – the brand-yellow façade the perfect colour match to the tailfins.

The early morning marks the witching hour for these aircraft. It is the peak period for flying in and out from this crucial DHL Express Asia Pacific hub, one of its three global ‘gateways’ along with Leipzig in Germany and Cincinnati in the US. The aircraft and ramp area are full of containers laden with priority packages going to and from 13 destinations across Asia for next day delivery.

Despite the DHL branding on the tail, AHK is a wholly owned subsidiary of the Cathay Pacific Group, run in partnership with DHL Express, which is the priority customer. Cathay Pacific Cargo acts as the general sales agent for any space left.

AHK has a 13-strong fleet, made up of nine Airbus A300-600 freighters and four A330 freighters – including the first A330-300P2F (passenger to freighter) conversion in the world. This fleet is ordinarily dedicated to operating DHL’s overnight express parcels service.

That means on time performance (OTP) is the main focus for this fleet, enabling DHL to deliver its customer promise for priority shipments. Currently, OTP is close to an industry-leading 98 per cent against a stringent 97.5 per cent target. In normal times, this is helped by the operating pattern and schedule: the fleet would arrive at the outport from Hong Kong in the early hours and depart the following night, flying back to Hong Kong with DHL shipments to unload before reloading and flying on to another outport. This long period of ground time would scandalise the revenue management department of a low-cost carrier but prioritises the schedule and on time performance by lowering the risk of maintenance issues – especially as the A300 fleet averages out at about 16 years old.

But as with so much else, the pandemic has changed the operating model. With varying travel restrictions in place across the region, pilots would not be able to rest and fly back the next night, as Clarence Tai, AHK’s Chief Operating Officer, explains. ‘Our pilots would be subject to a lot of COVID-related restrictions, so we convinced our key customers that we needed our aircraft back here in Hong Kong after each outbound sector.’

Clarence Tai, Chief Operating Officer at Air Hong Kong

That presented an opportunity for both DHL and AHK’s other key customer, Cathay Pacific Cargo. ‘With the shortage in belly capacity and high demand for cargo capacity, we were perfectly positioned in this crisis to provide extra capacity,’ Tai says, ‘provided we maintain our OTP performance for DHL Express.’

So far, it’s worked well. OTP has been unaffected, while AHK’s flying programme has increased by around 30 per cent since the pandemic hit with additional daytime flights. It means that these aircraft, once nocturnal, are becoming a familiar sight in and around Hong Kong during the day.

Tai, who has been in his post since September, is fulsome in his praise for his team, and suppliers to keep the balance between revenue opportunity and duty for DHL Express. ‘I think these things go hand in hand,’ he says. ‘It’s like two legs – if we can stay together in rhythm, keeping up OTP and our ability to offer more flights for DHL and Cathay Pacific Cargo, then we can move together. But if one side stumbles, they both fall.’

Ensuring that aircraft can get there and back ahead of the night runs from Hong Kong, and focusing on maintenance are top priorities. But it has meant heightened pressure for flight crew.

‘There has been a toll on our pilots with the restrictions, and that is something that we are monitoring very closely with regards to any serious fatigue issues,’ Tai says.

‘There is also external pressure on them because many of their families do not live in Hong Kong; most will not have been home since late January.’

This is being addressed by Tai’s team arranging for the airline’s 118 pilots to go on leave in blocks of up to six weeks, so that they can go through the 14-day quarantine in their home countries, spend a couple of weeks with their families and then spend 14 days in quarantine in Hong Kong.

Over the past year, AHK started flying to four new destinations – Chengdu, Hanoi, Jakarta and Kuala Lumpur. This has been made possible by a dedicated back office team of just 44, and closer collaboration with colleagues in Cathay Pacific.

Tai is confident that, despite the extra demands, the nine A300 aircraft have quite a few years left in them. ‘There are some engineering issues but we are managing them well,’ he says. ‘At times I have felt more like a GM of engineering. Our first priority is always safety.’

The daytime appearance of the fleet has elicited attention for what had been one of Hong Kong International Airport’s better kept secrets. So now more people know about the brand, what does the future hold?

Tai says: ‘We will be better known because our planes are in more cities now. Air Hong Kong is a small company, but the people are enthusiastic, delightful and cheerful.

‘This year with COVID-19, we have been operating on a bigger scale and we will probably expand more. If we work more closely with our customers, there is scope to do things together and grow.’

One natural area for growth is the e-commerce boom. DHL has committed to expand its Hong Kong facility, and the pandemic has accelerated the home shopping trend. Tai adds: ‘We are fortunate not to have been as affected as other aspects of the aviation industry. We have a unique business model and we are benefiting from the cargo boom that is a result of COVID-19.’

It’s not often you hear aviation people say that these days.

Air Hong Kong by the Numbers

Air Hong Kong Fleet    No.
A300-600F    9
A330-200F    2
A330-300P2F    2
   13

 

Network    No.
Bangkok, Beijing, Cebu, Chengdu, Hanoi, Ho Chi Minh City, Jakarta, Kuala Lumpur, Manila, Nagoya, Osaka, Penang, Seoul, Shanghai, Singapore, Taipei and Tokyo    17*

 

Weekly frequency    No.
DHL Express    63
Cathay Pacific Cargo    2
   65**
*Including temporary and regular charters
**Excluding supplementary flying

Customer voice: Ingrid Raj, Vice-President Aviation & Network Management, Asia Pacific, DHL Express

How important is Air Hong Kong to DHL Express?

The Air Hong Kong (AHK) network is key for DHL Express in Asia Pacific. From the base in Hong Kong, it operates 13 wide-body aircraft to and from 13 intra-Asia destinations, making it one of the largest capacity providers for DHL Express in the region. Both parties have worked closely since 2004 and have grown to develop a highly efficient air network with outstanding reliability. AHK’s schedules are finely tuned to the business needs of DHL Express allowing us to offer the best possible service to our customers.

Do you have plans to develop your Hong Kong hub as e-commerce grows?

DHL Express has invested to expand the cargo-handling capacity at our Central Asia Hub in Hong Kong. E-commerce is an integrated part of DHL Express’ shipment profile so will benefit from this expanded capacity. We recently announced a €750m (HK$6.96b) investment plan in Asia Pacific covering upgrades to our facilities and increased air network capacity.

 

How has the operation changed during the pandemic?

The aviation industry has been turned upside down by COVID-19. With passenger aircraft being grounded, dependence on full freighters is more pronounced. This has also been the case for AHK and DHL Express. Due to practical challenges such as crew restrictions and to ensure crew safety, some flights that previously operated at night are now operating by day. AHK is currently operating more flights per week than ever.

 

Could AHK have a role to play with distribution of a vaccine? 

Absolutely. As vaccines get closer to being released, DHL Express is preparing to distribute them through our network. AHK and DHL Express are prepared, based on the expectations of how to ship them safely, and we can be ready at short notice should we be contracted on sectors where AHK is providing the capacity for DHL Express.

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