Cargo 747s in China Pt1: Air Hong Kong

Air Hong Kong was a brave attempt to compete against the might of Cathay Pacific in the Hong Kong cargo market. But as with Dragonair in the passenger domain, it could only ultimately survive by partnering rather than competing with its Kai Tak neighbour.

Air Hong Kong was formed in 1986 by three local businessmen as a cargo charter operator but didn't gain its AOC from the HK Civil Aviation Department until 1988, by which time it had acquired a Boeing 707-336C (VR-HKK). Initial services operated to Kathmandu, Bombay and the UK. Scheduled cargo services began in October 1989 and the airline acquired traffic rights to a host of destinations. Operational growth saw a pair of ex-Pan Am 707-321Cs arrive. One (G-BNGH) on sublease from the British cargo airline Tradewinds and the other (VR-HKL) from Trans Arabian Air Transport.

AHK upgraded its fleet from mid-91 with the addition of a pair of ex-Delta/Flying Tigers/Fed-Ex 747-132SFs via Polaris leasing. VR-HKM arrived in August and was preceded by VR-HKN in July. Soon afterwards, in November, an ex-Pan Am 747-121 joined following her conversion to a freighter. She became VR-HKB. A fourth and last 747-100 of similar ancestry to the first pair joined the fleet in May 1993 as VR-HKC. By this time the 707 fleet had been completely replaced by the 747s with all three aircraft returned by the end of 1992.

Sadly despite the fleet renewal Air Hong Kong was not in good financial shape having struggled against the dominance of Cathay Pacific, which ran its own cargo subsidiary and no doubt had huge underfloor freight capacity in its passenger fleet. Bankruptcy was only narrowly averted in 1992 when its primary shareholder Shun Tak Holdings wrote off its HK$187 million investment. Then in 1993 the airline was thrown a lifeline when Polaris Aircraft Leasing agreed to suspend lease payments on 3 of the airline's 747s in return for an option to buy into the carrier. The other 747 (VR-HKB the ex-Pan Am aircraft, and so the odd one out) was returned to its lessor in April.

Air Hong Kong Boeing 747-132SF VR-HKN Aeroclassics 1:400 Scale Model Airliner

This option was too dangerous to Cathay who successfully trumped Polaris and signed a letter of intent with Shun Tak Holdings to buy 75% of their 80% share of the airline for HK$200 million in March 1994. By then the carrier was operating its 747s to Manchester via Brussels 5 times weekly as well as on regional flights to Singapore, Ho Chi Minh City, Kuala Lumpur and Nagoya. As well as these assets Cathay also acquired valuable slots at Kai Tak and AHK's route rights. Shun Tak held onto 5% of the airline with the other 20% remaining with a private company owned by Stanley Ho the chairman.

Air Hong Kong Boeing 747-132SF VR-HKN Aeroclassics 1:400 Scale Model Airliner

As with Dragonair Cathay Pacific decided to run the airline separately and it was not merged with its own Cathay Pacific Cargo brand, which at the time operated four 747 freighters itself. Despite the buyout Air Hong Kong's prospects did not immediately improve and in fact in January 1995 the fleet was reduced to only a pair of 747s. A leased Heavylift 707 had already been returned in November 1994. The 747 that was returned to Polaris was VR-HKM leaving only HKN in the fleet of the original four. Fortunately there had been some reinforcement in the form of a single 747-249F (VR-HKO, an ex-Flying Tigers/Fed Ex and American International frame) from March 1994 though this aircraft had been used to replace VR-HKC.

---

From this low Air Hong Kong gradually recovered and in 1996 purchased three 747-2L5B SFs which had been in service with VARIG, but had originally been built for Libyan Arab. These aircraft, VR-HMD-F, joined the last series 132SF (HKN) to make a fleet of four again as the short-lived 249F VR-HKN and O were returned to Polaris by November 1996. At the same time as this fleet renewal was ongoing a new more sedate livery was adopted. The 747s continued to fly familiar routes to Brussels, Dubai, Manchester and Osaka until in 2002 Cathay Pacific purchased the remaining 25% of the airline and refocused its operations on the regional market. This signalled the end for the remaining 747s. Three of the four ex-Air Hong Kong 747-100s, including HKN, joined Polar Air Cargo. HKN became N856FT. She was finally broken up in late 2001.

References

1988 March. Air Hong Kong news. Flight International.
1994 March. Cathay plans Air Hong Kong Takeover. Flight International.
1995 January. Weak demand forces Air hong Kong to cut fleet. Flight International.