This week, a mix of good and bad news for the Pearl River Delta airspace.

HK Airlines dumps loss-making London service
Hong Kong Airlines seems to be in a tailspin. The airline already cancelled its all-business class service to London Gatwick only seven months after it announced the service amid much fanfare.

All tickets from September 3 were shown as sold out last week, which raised speculation the London route was about to fall under the axe. Poor planning and miscalculations have led to the service being “deep in the red” ever since the launch, according to the SCMP.

Post reporter Charlotte So has more figures on HK Airlines’ errors:

The operating cost of the 14-hour flight is estimated at HK$3 million, including fuel costs, crew allowances and inflight meals.

Insiders said the carrier burns about HK$1 million to HK$2 million a day on the service and around HK$10 million a month. The monthly losses are lower than they would normally be because the airline cancels the services from time to time depending on the demand.

The company blamed troubles in Europe for failing to lure passengers away from Cathay Pacific and British Airways.

Now, HK Airlines, backed by the HNA Group, owner of China’s fourth largest carrier Hainan Airlines, will attempt to build on its Asian connections.

In the days leading up to the cancellation of its London service the airline was cited by regulators for poor service, blocking any expansion to the fleet.  According to Reuters, this lead to HK Airlines cancelling its $3.8 billion order for 10 Airbus A380s.

Jeffrey Lowe, general manager of Asian Sky Group, a Hong Kong-based aviation consultants group told Reuters:

It sounds like a very diplomatic way to say that we think your safety standards are slipping so, until you can show us you can handle any additional aircraft being added to your fleet, we would not approve it.

And the airline is still reeling from Typhoon Vicente, taking over a week to clear the backlog of passengers caught up in the worst storm to batter the South China coast in 13 years.

The final flight will pick up Hong Kong’s Paralympians, as the official carrier for the athletes, from London on September 10.

Kangaroo versus Canton? The battle of the skies heats up
Guangzhou’s China Southern Airlines (CSA) is bringing out its best aircraft for its new Sydney-London route, adding pressure to competitors in the battle for passengers, profits and prestige.

CSA president and CEO Tan Wangeng told Australian Business Traveller the airline’s new 787 Dreamliner will be deployed on the route.

We will spare no effort in building the Canton Route into a premium product, using new Airbus A380 superjumbo and Boeing 787 Dreamliner aircraft.

The news will cause some concern at Qantas, where its struggling international outfit, including that of their Kangaroo Route via Singapore, faces stiff competition against the likes of Singapore Airlines, Cathay Pacific, Emirates and more.

China Southern will be the first airline to utilise the aircraft in British and Australian airspace beating both country’s own flagship carriers.

Japan-China seal Open-Skies deal
Japan and China have signed a new air deal boosting the number of flights between the two countries, liberalising the Sino-Japan market.

The deal, announced on August 8, will see new routes and increased frequencies which include Guangzhou-Tokyo Haneda for the first time. The pact has already roused interest with many Japanese-based airlines eyeing new departures to China.

Ethiopian u-turn on 787 service to Guangzhou
Ethiopian Airlines has dropped plans to deploy its new 787 Dreamliner to Guangzhou. While not good for passengers, it will be good news for China Southern which will have the honour of being the first carrier to utilise the newest aircraft in the mainland.

Hong Kong Airlines picture by Benson Kua on Flickr