DHL Express and Air Hong Kong have finalised a new 15-year block space agreement, first announced earlier this year, under which the airline, a subsidiary of Cathay Pacific, will continue to operate a regional freighter network within Asia for the express group.
The new agreement, which takes effect on January 1, 2019, will initially provide DHL with the same service and access to Air Hong Kong’s capacity as per the current agreement, but it also allows for greater growth and flexibility in aircraft deployment and route selection to support DHL’s express services in the Asia Pacific region, a company statement underlined.
It said that Air Hong Kong remained an important partner in DHL’s Asia Air Network that utilizes more than 800 daily flights to the US, Europe and around the Asia Pacific region.
“Asia is expected to experience exponential trade growth and our renewed block space agreement with Air Hong Kong forms a natural complement to DHL’s broader growth strategy in Asia Pacific to meet continually strong market demand,” said DHL Express CEO, Ken Allen.
“Air Hong Kong has provided the backbone of our air express capabilities in Hong Kong for 15 years since 2002, and the latest agreement with Cathay Pacific will allow it to reach even greater heights as we consolidate its operations for maximal efficiency and availability.”
For his part, Cathay Pacific CEO Rupert Hogg said: “Air Hong Kong is a joint venture between Cathay Pacific and DHL that has proven extremely valuable to both our businesses, and we expect it to yield even better results and operational agility in its newest iteration.”
He added: “With Air Hong Kong becoming a wholly-owned subsidiary of our group, and with the block space agreement in place, these will enable us to invest in the long-term success of Air Hong Kong which benefits from the prospering express air cargo market in the region, and capture the abundant business opportunities that are prevalent.”
DHL Express Asia Pacific CEO, Ken Lee, enthused that the new block space agreement “reinforced the successful and long-standing collaboration between DHL Express and Air Hong Kong as we gear up for ongoing growth in Asia Pacific trade, guaranteeing capacity on many of our critical routes that use Hong Kong as a logistics hub.”
Lee noted that with Hong Kong’s merchandise exports between January and September 2017 growing by 8.5% compared to last year, DHL was keenly aware of the upward momentum that the region’s trade lanes are facing.
“Our renewed partnership with Air Hong Kong, combined with the new leaseback deal governing its fleet, gives us greater flexibility to add new routes and optimize our aircraft utilization in the face of unpredictable changes or sudden increases in demand,” he explained.
As part of other, new commercial arrangements between the parties announced earlier this year, DHL is selling its 40% stake in Air Hong Kong to Cathay Pacific, which as a result will take 100% control.
Provision has also been made for DHL to purchase eight of Air Hong Kong's A300-600F cargo planes which will then be leased back to the carrier.
The new arrangements, the statement added, “will provide a stable revenue stream to Air Hong Kong and a predictable cost base for DHL.”
Separately, last month, DHL Express unveiled plans to invest €335 million in a much-needed 50% capacity increase at its heavily utilised Central Asia hub in Hong Kong.
