At current stage, Hong Kong Airlines is developing its cargo business by using the limited belly capacity of each passenger flight to carry the cargo to most of the existing destinations. With the utmost efforts in team work, the Cargo team has established a 28 tons start-up record in January 2007 and finally achieved a 525 tons outstanding performance in September 2007. On the other hand, by fully deploying Hong Kong as a hub for transit cargo and working closely with various Interline Partners like China Airlines, EVA Airways, Nippon Cargo Airlines, etc., our Cargo Department has also assisted out-stations to carry over 100 tons of transit cargo to those destinations beyond Hong Kong, and now that the Interline Cargo is sharing 20% of our total uplifted tonnage. Hong Kong Airlines targets to increase the Interline Cargo tonnage to be sharing 50% of our total uplifted tonnage eventually as our goal.

In order to diversify the cargo services products, we have successfully secured the support from CPO (Chinese Post Office) and kicked off the first mail shipment in the beginning of August, 2007 on Fuzhou to Hong Kong sector. Now the mail shipment has become one of the most regular businesses on our daily flights from Fuzhou to Hong Kong. By applying the accumulated valuable experience of serving CPO’s mail shipments, our Cargo team is also targeting to expand this mail business to other stations such as Xiamen, Tianjin, Qingdao. Optimistically the mail business is expected to materialize on a station-by-station basis.

Since our company management has recognized that a good cargo operation system is crucial to be further upgrading the quality of our cargo services and to meet the needs and expectations of our cargo customers, Hong Kong Airlines has duly contracted with Infosky, a subsidiary of the renowned global cargo system provider, SITA, to introduce the i-Cargo system. For the time being, our home base in Hong Kong and other 4 out-stations: Tianjin, Kunming, Hanoi and Ho Chi Min City, have duly cut over to use i-Cargo for the daily booking and flight operation as the phase I environment. We are expecting to further expand i-Cargo to be used by all of our on-line stations as well as providing track and tracing function to our cargo customers by the end of 2008.

In order to further enhance Hong Kong Airlines to be a full-function Cargo Operator, our company management has duly approved a five-year Freighter Fleet Plan for our cargo development. We are planning to introduce a medium size such as B757-200F freighters fleet which will consist of 6 to 8 airplanes eventually and will help Hong Kong Airlines to play a role as regional cargo operator. Viewing the recent rapid economic growth in both Asia and China, we strongly believe the cargo demand within Asia will provide us with a very good opportunity to grow even stronger and faster.